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Critical Illness Insurance Report
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Critical Illness Insurance
Consumer Overview

Second Event Rider:
A very limited number of plans offer a “second event” rider which provides additional coverage for a specific condition if you have already suffered a certain covered condition.

If the insured has received a critical illness benefit for a Heart Attack or Stroke prior to age 65 the second event rider will cover the insured for Life-Threatening Cancer if it occurs within 11 years of the survival period of the first critical illness but not later than age 75. If the insured suffered Life-Threatening Cancer prior to age 65 the second event rider will cover the insured for a Heart Attack if it occurs within 11 years of the survival period of the first critical illness but no later than age 75.
The benefit under the second event rider will be the lesser of 50% of the benefit amount of the base policy and $50,000. No second event coverage will be paid if it occurs within one year of the original critical illness claim.

Comprehensive Critical Care Rider:
One product offers an optional rider that covers any illness or accidental injury not covered under the base plan. Benefits are paid monthly after 30 days for illness and 90 days for accidental injury when the insured can’t perform his/her regular occupation. No claim can exceed 2 years.

If one of the base plan’s conditions occurs while the monthly benefit is being received, the policy’s face amount minus the sum of the monthly benefits received is paid. If the insured receives monthly benefits and then recovers and does not experience any further claims for three years the plan’s original amount is reinstated.

Minimums and Maximums:
Some C.I. plans will offer coverage as low as $25,000. and the maximum currently available is $2 million.

Rate Banding:
Insurance companies frequently provide discounted premiums for larger policies. The discounts are based on “rate banding”. A smaller policy has a higher rate per thousand. Banding changes regularly occur at $100,000.; $250,000.; and $500,000.

Individual or Group:
An individual C.I. policy is a guaranteed contract between the policy owner and the insurance company. Only the insured can cancel the policy. The insurance company can only terminate coverage if the premiums are not paid when due or prior to the expiration of the grace period.

An individual C.I. policy must be approved by an underwriting process, which often includes medical tests, a review of the insured’s medical history records, the family’s medical history, alcohol and drug use, driving record and travel destination, among other things.

A group C.I. plan is either issued on a mandatory or optional basis. A plan issued on a mandatory basis is generally issued without requiring any medical evidence and is contingent upon a high participation level of the group’s employees. The larger the group the higher the amount of guaranteed issue without requiring medical evidence. The group premium is a composite rate based upon the group’s demographics and everyone is charged the same premium, regardless of their age or smoking status. Premiums are subject to a yearly review and are adjusted accordingly. Unlike an individual policy, a group plan can be cancelled by the carrier or employer. An optional group plan requires underwriting and premiums are usually based on gender; smoking status; present and past medical history.

Definitions of Covered Events:
The single most important consideration when purchasing a C.I. Insurance plan is the wording of the definitions. Definitions determine when and if you will be paid. Approximately 38% of denied C.I. claims result from an event’s failure to satisfy the policy’s covered condition’s definition.

The wording of a covered condition should be medically and legally sound. A definition, if the wording is not legally precise, can sometimes cause confusion or surprises at claim time. Some policies have unusually restrictive conditions, which in certain cases mainly involving Cancer, can unilaterally terminate coverage while denying a claim at a time when you will be uninsurable and unable to obtain any other C.I. policy.

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