Chronic illness insurance is a rider, or addition, to your standard life insurance (or mortgage protection) policy. It pays for medical care and non-medical care that your health insurance does not cover.
Chronic illness insurance may be needed more and more these days because people are at a greater risk of developing a chronic illness due to a poorer diet, lack of exercise and being overweight. The average American lifestyle puts you at risk of getting a chronic illness even if you are young.
A chronic illness is one that lasts for a lifetime.
The illness or condition cannot be cured and doesn’t go away on its own. Cancer, heart disease, and stroke are some common causes of chronic illness. With the right treatment, you can survive many of these illnesses, but they often leave you with a chronic condition of some sort.
In addition to the need for ongoing medical treatment, you may also need help doing necessary daily activities. The six activities that people with chronic illness are most likely to have problems with are called Activities of Daily Living, or ADLs.
The chronic illness rider pays you if you have been diagnosed with a chronic illness, AND you are unable to perform at least
…two of the ADLs.
Activities of Daily Living
The six ADLs are:
- Bathing – get into and out of the bathtub, wash, brush teeth, shave, or perform other grooming activities
- Dressing – pull clothes on, fasten buttons, or close zippers
- Eating – manage the silverware to eat independently
- Transferring – walk or otherwise transfer from the bed to a wheelchair and back
- Toileting – get on and off the toilet without help
- Continence – to control bladder and bowel functions
How Chronic Illness Insurance Works
Most chronic illness insurance is offered as a rider to your life insurance; not as a separate policy.
This means that you get to choose to add this coverage to your standard life insurance (or mortgage protection) policy. The rider will list the chronic illnesses that it covers and the number of ADLs that you must be unable to perform (usually two).
When you take out a standard life insurance policy for a certain amount of money (the death benefit), this amount of money will be paid to your loved ones when you die. The chronic illness rider allows you to get a portion of the insurance money in advance that would normally go to your loved ones. You will be able to decide how much you want your policy to cover when you purchase your life insurance (or mortgage protection) policy.
For example, you take out a life insurance (or mortgage protection) policy for $50,000 with a chronic illness rider for $10,000. Then you get diagnosed with a chronic illness. You would then receive the $10,000 in a one-time payment. The money is tax-free, and you can use it however you need to, not just for medical expenses. You can pay your healthcare bills, your mortgage, your in-home care and more.
The $10,000 you receive is part of the insurance money (death benefit) that would have gone to your loved ones. Now, there will be $40,000 left for them. The rider is not additional money. It is part of the insurance money from your life insurance policy that you can get while you are still alive (also known as ‘living benefits’).
Check on Payment Status
When you get life insurance (or mortgage protection) with a chronic illness rider, find out if you will still have to pay premiums (your monthly payments) if you have a chronic illness. Some policies allow you to stop paying once you have been diagnosed with a chronic illness to protect you from the monthly expense. This will also ensure your policy doesn’t get canceled if you forget or are unable to pay.
Why Health Insurance Isn’t Enough
What would happen to your income if you became seriously ill? Even if you have good health insurance, you might be unable to pay your premiums if you couldn’t work.
When you have a chronic illness, you may need medical treatment for the rest of your life. This may include medications, physical or occupational therapy or special medical equipment. Your health insurance may not pay the entire cost of these treatments. Some will not be covered at all.
Medical bills are the leading reason that people file for bankruptcy in this country.
Another issue related to health insurance is that the insurance company limits your choices. There may be medications or treatments that will work better for you, but many insurance companies will only pay for the cheapest options.
Chronic illness insurance gives you more options. You can use the money to pay deductibles, copays, and costs not covered by your health insurance.
Do You Need Chronic Illness Insurance?
If you think that chronic illness is something that only happens to other people; you aren’t alone. Most of us never think that we will be seriously ill.
The statistics related to chronic illness tell a different story.
- About half of all the adults in this country have at least one chronic condition. One in four has at least two!
- The leading cause of death is, by far, chronic disease with cancer and heart disease being responsible for nearly half.
- Arthritis is the leading cause of disability and the biggest reason that people are unable to perform many of the ADLs.
Who Is At a Greater Risk for a Chronic Illness?
Stroke, arthritis, heart disease, cancer, and type 2 diabetes are common causes of chronic diseases and conditions. Anyone who matches with any of the conditions below might be at a greater risk for a chronic illness.
- Being Overweight
- Not Getting Enough Exercise
- Drinking Alcohol
- Not Getting Enough Sleep
- Eating an Unhealthy Diet
If any of these apply to you, take steps now to change your lifestyle to reduce your risk of developing a chronic illness.
Know Your Choices
In addition to chronic illness insurance, there are many other rider (add-on) options to your life insurance or mortgage protection. Make sure to discuss all of your options with your insurance agent. In addition to, or instead of, chronic illness insurance, you may choose long-term care insurance or a waiver of premium rider. You have more options than you know!
- Long-term Care Insurance vs Chronic Illness Insurance
- Life Insurance (and Mortgage Protection Life Insurance) Riders and All You Need to Know
Asurea offers Life Insurance, Mortgage Protection Life Insurance, Medicare Supplement Insurance, Final Expense Insurance, Disability Insurance, Long-term Care Insurance, Retirement Planning products and more. For additional information, click on the ‘Get A Quote’ button below. Want to have articles just like this delivered to your inbox? Just enter your email address in the box below and click ‘Subscribe.’
This information is provided for general consumer educational purposes only and is not intended to provide legal, tax or investment advice. Dollar amounts are for illustrative purposes, not actual.
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