There are two types of insurance that offer benefits for serious illness – long-term disability insurance and critical illness insurance. While a regular health insurance plan typically offers comprehensive coverage for all types of illnesses many of those plans require the policy holder to pay a considerable amount of money out-of-pocket for critical illnesses. These other two types of insurance allow you to cover the gap and may even help provide for non-medical expenses such as paying the mortgage or childcare.
First, let’s take a look at critical illness insurance. This type of policy provides a one-time cash payment to help the insured avoid major financial loss. The money provided can pay for healthcare related costs and any household expenses. You can buy an individual policy or a group plan. The average cost for a critical illness insurance plan is an annual premium of approximately $200 for a $10,000 policy.
The main difference between critical illness policies and a regular disability insurance policy is that critical illness insurance only covers a few specific conditions. Disability insurance covers most injuries or illnesses that would prevent or limit a person from working and earning income. Disability insurance policies also cover severe injuries, blindness, loss of hearing and mental illness.
Another difference is that unlike the single lump sum payment of the critical illness policy, disability policies pay a monthly benefit for a predetermined amount of time. Based on these differences, critical illness policies are not a substitute for disability insurance. The one-time benefit you receive from a critical care policy may be depleted quickly and then disability benefits can provide an income stream that can last for several years. The disability policy will also cover a range of conditions that may not be covered by the critical illness policy.
Making sure that you have all of your insurance needs met is part of comprehensive estate planning. At Stouffer Legal in the Greater Baltimore area we pride ourselves on covering all the details. We want to create an estate plan that mitigates all risks to ensure your planning goals are reached. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufflerlegal.com.
