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What is Critical Illness Insurance?
Wednesday, 07 October 2020 17:59

Critical Illness Insurance was invented by a surgeon, Dr. Marius Barnard.

He noticed that many of his patients, despite having health insurance, suffered financially. Critical Illness Insurance was the product developed to solve this problem, with the first policy issued in 1983.

If you’re diagnosed with a serious illness, one of the last things you want to worry about is your finances. A Critical Illness insurance policy helps provide protection from a variety of covered conditions, so you can focus on getting well.

The Need

  • Every 34 seconds someone suffers a heart attack.1
  • Every 40 seconds someone suffers a stroke.1
  • Nearly 50% of men will be diagnosed with some form of cancer.2
  • The lifetime cancer risk for women is more than 1-in-3.3

The good news is that because of modern medical science and technology today more people can survive a critical illness.

  • The survival rate for kidney failure is up to 90%.4
  • 86% of heart attack patients survive if they reach a hospital.4
  • 80% of stroke patients survive their first event.5
  • Patients survive major organ transplants, including the heart, lungs, liver, and kidneys from 50% to 90%.6

Improved medical treatment and better survival rates are only half the story. Even if you have good health insurance, there are many expenses that may not be covered.

For example:

  • High deductibles and co-insurance payments
  • Unpaid leave from work
  • Experimental treatment may not be covered by traditional health insurance
  • Mortgage, rent, and other bills still need to be paid

A Harvard Study on personal bankruptcy noted that:

  • 62% of all personal bankruptcies were due to illness and medical bills.2
  • 78% of those that filed for the above reason had health insurance when they got sick.2
  • Those who had health insurance reported an average of $17,749 in medical bills not covered by their insurance.7
  • That shortage of less than $18,000 was enough to force them into bankruptcy.

This form of insurance originally covered four primary human health conditions:

  • Cancer
  • Stroke
  • Heart attack
  • Coronary bypass surgery

Today, they may cover additional illnesses, such as:

  • Angioplasty
  • Aortic surgery
  • Heart valve replacement
  • Coma
  • End-stage renal failure
  • Major organ transplant
  • Paralysis

How Does Critical Illness Insurance Work?

  • Pays a lump sum of cash upon first diagnosis of a critical illness
  • Pays in addition to any other insurance you have
  • You can use that cash to pay anything you choose:
  • Deductibles and co-insurance due on other health insurance
  • Mortage, rent, and other bills
  • Experimental treatment
  • Day to day living expenses, such as childcare
  • Special equipment
  • Home modifications necessary for recovery
  • Travel expenses, whether for medical treatment somewhere else, or a dream vacation

Why Own Critical Illness Insurance?

A person’s emotional state can play an important role in their recovery from a serious illness. A critical illness affects more than just the body. In fact, critical illness insurance was originally developed by a world-renowned heart surgeon, Dr. Marius Barnard, after he realized that the recovery of many of his patients was being hindered by the emotional strain of struggling to pay medical bills. According to Dr. Barnard, you need critical illness insurance “Not because you’re going to die, but because you’re going to live.”5

What price would you put on peace of mind? When facing a critical illness, peace of mind can be a simple matter of cold, hard cash at just the right time. For just a few dollars a week or the price of your favorite daily latte, you can purchase a plan that will give you the advantage of options and flexibility when you need it most. Having a plan in place that pays you a lump sum of cash, rather than borrowing or dipping into your personal savings, and the ability to spend the money at your own discretion could be worth its weight in gold. Dr. David Himmelstein, Harvard associate professor of medicine and lead author of the study on personal bankruptcy, sums it up best, “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick.”5

1 Heart Disease and Stroke Statistics, 2010 Update At-A-Glance, American Heart Association
2 Clinical Research Study. Harvard U. 16 Mar. 2011.
3 American Cancer Society, Cancer Facts and Figures 2010
4 The Merck Manuals Online Medical Library, Acute Kidney Failure, 16 Feb. 2011,
5 Essential Benefits, “Why do I need critical illness insurance?” 2 Feb. 2011,
6, Health, “Organ Transplantation” 16 Feb. 2011,
7 Bloomberg Businessweek “Study Links Medical Costs and Personal Bankruptcy.”
4 Jun. 2009. Web. 3 Mar. 2011,