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| A New Form of Insurance - Critical Condition | |
by Dave Blackmon
daveblackmon@lifeinsurance.net
CA Lic. #0B89710
Although popular in Europe, Japan and South American for almost ten years, so-called "critical condition" insurance has hit America. This general category includes policies that pay you if you develop a particular health condition such as heart attack, stroke, cancer, etc. Some include life insurance and some don't. One of the most important features of these policies is that they allow people to get a form of disability insurance when they might not qualify otherwise. For example, a telephone lineman may not qualify under the "occupational listings" simply because his or her occupation is too risky. But most of these policies do not have occupational guidelines. It doesn't matter what you do for a living. The important thing to recognize, if you are considering these policies for disability, is that most of them pay a lump sum rather than monthly payments. But this is a blessing in disguise. If you have a heart attack, stroke, life-threatening cancer, a terminal illness, renal failure, or any of the covered provisions, you will likely need much more than a monthly income of $1,500 or $2,000. You will need to pay for hospital charges, transportation, current bills, etc. You may need to go to a special clinic on the other coast. Whatever you need, a lump sum is usually better than monthly payments. If you are looking for one of these policies, there are some important things to consider. First, to get the most for your money, make sure the policy has a provision that pays for "death from any cause." This makes the policy life insurance. Some policies pay 10% of face in the event of death, and some pay the lesser of accumulated premiums paid or face. That means that if you pay in $600 or $800 on a $200,000 policy you will only get back your $600 or $800 if you die. (Or your beneficiary will.) Make sure you get a policy that pays 100% of the face amount for death. Next, get as many critical conditions covered as possible, including heart surgery for any reason, angioplasty, major transplant, heart attack, stroke, renal failure, any terminal illness, life-threatening cancer, and, if you are lucky, total permanent disability. Check to see if the policy has level premiums for the term covered, and if it is renewable and exchangeable. See if the premiums go up when you move into a different age group. Also, find out how long you have to live after contracting a covered condition. Some policies say you must last 30 days. Others only need to know if you are diagnosed with the condition. It will be scant help to your family if you have a heart attack and die on the 29th day you have if a policy with a "death from any cause" policy and it takes 30 days of living after the incident to collect. Another thing to have explained is what it would take to assemble the policy you are considering from regular life insurance and disability insurance. Most times, it can't be done. Or if it can, your premium level is much higher than a straight critical condition policy. That is the great feature of these policies. They combine several different kinds of insurance into one package. On an underwriting note, be sure you know how much you can get without taking a medical exam or a blood test. The best policies allow you to apply for up to $100,000 by only answering a few questions and approving a check of your medical records. Some professional policies of over $250,000 are quite extensive in their medical requirements. The last thing you want to consider, especially when thinking of adding to your life insurance holdings, is wouldn't one of these policies achieve the same purpose (if they had a "death from any reason" clause) instead of another full-blown life policy? After all, you want to add more life insurance, but you may not have considered one that also gave you critical condition protection to boot. There are various marketing slogans among these companies, but the one I like the best asks: "Wouldn't it be better to receive $50,000 instead of a get-well card? Indeed. Critical condition policies will no doubt have the same popularity in America that they have experienced in other countries - as soon as agents learn about them and know how to fit them into client's financial planning. That is beginning now. You will certainly hear more about Life/Critical Condition policies.
