A critical illness plan is a policy that pays the insured a lump sum following the diagnosis of an illness covered under the plan. Critical-illness plans often cover diseases like cancer, organ transplant, heart attack, stroke, renal failure, and paralysis, among others. There is no coverage if you’re diagnosed with a disease that isn’t on the specific list for your plan, and the list of covered illnesses varies from one plan to another.
There are many different critical illness plans available, with benefit amounts ranging from $5,000 to $200,000 or more. Premiums are based on the benefit amount and the age of the applicant. In the individual market, pre-existing conditions are not covered, and medical underwriting is used to determine an applicant’s eligibility for coverage. Critical illness plans are not regulated by the ACA and are not suitable to serve as a person’s only medical coverage.