People approaching retirement age might want to consider acquiring critical illness insurance as a part of their overall estate or elder care plans. Many people have experienced the phenomenon where their copay they have to make when visiting their doctor increases every year. This “copay creep” is often accompanied by rising premiums or deductibles as well.
What this all boils down to is that the out-of-pocket expenses that many people approaching retirement age have to consider are much greater than they have been in recent years. For example, in 2011, employees were responsible for an average of 34% of their healthcare costs. Today, that percentage is almost 37%, and the increase does not appear to be slowing.
So what happens if you are suddenly faced with a critical or serious illness? The answer might lie in critical illness insurance.
Critical Illness Insurance
Critical illness insurance is designed to help you deal with the out-of-pocket medical expenses you might encounter if you are diagnosed with a serious illness. These plans typically pay policyholders a specific sum if the insured suffers a stroke, heart attack, or cancer.
For example, let’s say you suffer a heart attack. Though you have insurance, you also face significant out-of-pocket expenses because you have a relatively high deductible, copay, or because you have other expenses not covered under your plan. If you don’t have critical illness insurance you would have to pay for these expenses out of your own pocket. However, with the critical insurance plan you receive a lump sum payment once you experience the significant medical condition. This payment is designed to help you pay for the expenses you would otherwise have to pay for on your own.
Savings or Insurance
Many people with insurance plans that require significant out-of-pocket expenses rely on their own savings to cover additional costs. Yet out-of-pocket medical costs have increased substantially. One recent study shows that the average out-of-pocket expenses a person will have to pay for critical injury is nearly $7600. Some injuries, such as heart attacks, can have an average out-of-pocket expense that exceeds $14,000.
So, when people experience a critical injury or illness, they often have to make these significant payments from their savings. Yet only about half of all families in the country have more than $10,000 in a savings account or emergency fund.
So, the calculation boils down to whether you believe you have enough in savings to cover critical illness. The average 50-year-old person can expect to pay about $14 a month, or little over $140 per year, for a critical illness plan that provides $10,000 in benefits. Plans that provide greater benefits, or plans that offer additional options, are also available.
The important idea to understand is that critical injury insurance is one option available to you as you develop your estate and elder care plan. Even if you have not considered what happens to you if you should suffer from such an illness, or you believe your current insurance is sufficient, you should take the time to consult with your estate planning attorney to determine what your insurance needs are and what you can do to cover any gaps.