Critical Illness Insurance –The Basics

WHAT IS CRITICAL ILLNESS?
Critical Illness is a serious medical condition from which people used to die shortly following diagnosis. Critical Illnesses include Heart Attack, Stroke, Cancer that has spread, Renal Failure, the need for Major Organ Transplant, Permanent Paralysis and many other conditions. Advances in medical science over the past half century have enabled many people to survive these conditions.

WHAT IS THE FINANCIAL IMPLICATION OF CRITICAL ILLNESS?
When Critical Illnesses were of short duration followed quickly by death, Medical Expense Insurance paid much of the cost and Life Insurance proceeds covered the remaining balance. In today’s environment, the cost of new medical remedies strains people’s ability to pay the deductibles, co-pays, procedure expenses that exceed plan allowances, experimental drugs and higher stop-loss limits. In addition, since the patients now live, they may strain the ability of their disability income insurance to cover their family’s personal living expenses for the full duration of the disability. Many conditions are now best treated if the patient is able to travel to a medical center in some other city that specializes in the condition being treated. Furthermore, life after a Critical Illness may demand capital expenditures such as the installation of ramps and lifts to aid wheelchair bound patients. Finally, with no death, the life insurance benefits don't kick in and without the loss of at least two Activities of Daily Living (ADL), there is no benefit available from Long Term Care Insurance.

HOW DO PERSONS CURRENTLY COVER THESE ADDITIONAL COSTS?
Without Critical Illness Insurance, people are left to their traditional resources to cover these expenses. They can use their savings, make loans or withdrawals from retirement plans, borrow from the cash value of their life insurance or sell the policies outright, refinance their homes, borrow from banks, friends and relatives, borrow from their credit cards, etc. Every one of these money sources has the effect of reducing the financial viability of the family.

Family members who did not work may have to return to the workplace, families may have to move to less expensive housing and major expenses, such as the education of children, may have to be reconfigured to include significant student loans by each child.

It is no wonder that Critical Illness remains the leading cause of Hardship Loans from Qualified Retirement Plans as well as Personal Bankruptcy.

WHY BUY CRITICAL ILLNESS INSURANCE?
Critical Illness Insurance has the ability to help people bypass these traditional options for gathering funds by paying a large amount of money to the insured immediately following the diagnosis of a Critical Condition as covered by the policy.  The benefit is paid as a lump sum following submittal of a claim form in which a physician states the diagnosis. The policy owner can use the money in any way they wish.

CRITICAL ILLNESS FOR KEY EXECUTIVES
Many companies buy life insurance on their key executives so that the death of a person who contributed to the profit of the company results in a flow of tax-free cash to the company. But what happens in the Executive suffers a Heart Attack, Stroke, has Life Threatening Cancer, needs a Major Organ Transplant, has End Stage Renal Failure or becomes permanently disabled? The company still loses the services of the executive but, because the executive didn’t die, there is no benefit from the life insurance policy. The purchase of a Critical Illness policy by companies on their key executives, in which the payment of the benefit goes to the company, can help to solve this problem.

ADDITIONAL NEEDS FOR SMALL EMPLOYERS
f a fire, flood or other casualty loss interrupts a company’s business, Business Interruption Insurance will pay for the costs of maintaining the business during the period of interruption. If the owner of that business has a Critical Illness and becomes unable to perform his duties, he may collect income from a personal Disability Income plan, but still needs money to cover business overhead during the period he/she is away. A Critical Illness policy can provide that source of funds.

*Securities are offered through Nationwide Planning Associates, Inc., Member FINRA/SIPC, located at One Paragon Drive, Suite 100, Montvale, NJ 07645, (201) 476-0029