Editor-in-chief of My Own Advisor
1. What type of Critical Illness insurance do you own?
My wife and I don’t own critical illness insurance. However, my employer provides coverage for, basic life insurance, long-term disability coverage and business accident travel insurance. I hope I never use any of these benefits through work. I recall that my disability insurance is 67% employer-paid and 33% employee-paid.
2. What factors did you consider when determining the coverage amount?
Well, I have considered critical illness insurance in the past but I’m concerned about some of the definitions carriers use for some conditions. I have learned some carriers do not use the same definitions or definitions from the medical industry for their policies. Another reason I don’t have critical illness is because my wife and I are trying to self-insure as much as possible.
3. Do you think people underestimate the importance of critical illness insurance and if so why?
Maybe, but I also see it this way: critical illness insurance is a bridge between salaried income and when disability benefits kick in. If you can self-insure as your bridge, that’s ideal but I can appreciate some folks cannot do this and others don’t want to take on that financial risk.
4. What are some limitations or exclusions should people watch out for?
I would be worried about the lack of comprehensive coverage. I think insurance is great when you pay premiums and the coverage is 1) guaranteed and 2) it protects you from all perils. For example, home or auto insurance. I worry about the underwriting process of critical illness insurance since policyholders may or may not be covered depending how their illnesses arose and how pre-existing medical conditions precipitated the illness. I would also be concerned about how any family history is taken into consideration, even if age is not a major factor. I see insurance this way – you need to be covered by insurance when you are most vulnerable financially. I don’t see critical illness insurance always covering you.
5. If you had to choose between critical illness and life insurance which one would you choose and why?
Based on my reasons above, I would choose life insurance. Depending upon issues such as the financial risks, what I need to protect my family from and for how long I need that protection, my life insurance could be a 10-year, 20-year term insurance policy or it could be guaranteed permanent life insurance.
Mark Seed runs My Own Advisor, a personal finance and investing blog dedicated to chronicling his saving and investing journey to financial freedom. You can subscribe to his blog and join over 1,000 other readers to My Own Advisor here. You can join over 2,100 My Own Advisor followers on Twitter @myownadvisor. You can also Like My Own Advisor on Facebook here.”
