Critical Illness - Learn More

The single most important consideration when purchasing Individual Critical Illness Insurance is the strength of the definitions’ wordings.  These determine if and when you will be paid and therefore, should be legally and medically sound.  An industry survey of individual policies revealed that 38% of denied claims resulted from an event’s failure to satisfy the policy’s covered condition’s definition.  Examples can be seen in some policies’ Cancer definitions.  One states: “Cancer is a malignant tumor characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue.”  That definition does not cover “Leukemia” or “Hodgkin’s Disease”, as neither is a tumor.  Can you imagine contracting either of those two types of Cancer only to find out you’re not covered?

A definition can also create confusion at claim time if its wording is not legally precise.  If a policy’s definition states “both kidneys”, this wording could cause problems.  We all know that you can survive with one kidney.  But, consider the dilemma if an insured is in a car accident, severely damages a kidney necessitating its removal, and several years later contracts a virus that causes the remaining kidney to fail, requiring a transplant.  The policy states “both kidneys”.  Such a dilemma can be avoided by selecting a policy that simply states “a kidney”.  This is one of many examples of problems caused by poorly worded definitions.  Good definitions eliminate unwelcome surprises at claim time.

Whatever you do, don’t simply read a list of covered conditions and think that you will be covered upon the diagnosis of any of the events listed.  There can be a significant difference in claim payment procedures amongst Critical Illness plans, whether Group or Individual.  One example is Parkinson’s Disease.

Parkinson’s Disease can be definitively diagnosed.  The usual symptoms are: muscle rigidity; tremors; and bradykinesis (abnormal slowness of movement, sluggishness of physical and mental response).  With a definite diagnosis and those symptoms, you would expect a Critical Illness policy to pay a benefit claim after the mandatory thirty day survival period, but not in all cases. Some policies go beyond the normal symptoms and confirmed diagnosis by requiring that you must also be unable to perform two or more activities of daily living.  This additional restriction means that even though you have Parkinson’s Disease you will not be receiving a payment until deteriorating to a state that you may require institutionalized care.  Who knows how long you will have to wait from the initial diagnosis until your condition fulfills the policy’s conditions and a claim is paid.  Your wait could be years.  You might even die before qualifications are met.  A severe or excessively restrictive definition such as this is one of the many means by which the carrier’s risk can be reduced or delayed.  It’s bad enough receiving news that you’re ill; the last thing you want is a delayed claim.

We would be remiss if we didn’t tell you that we have found only one individual CI product in the marketplace that offers consumers definitions which are medically and legally sound and without severe restrictions.  It’s called LifeBeat. 

When purchasing Group Critical Illness Insurance, the two most important considerations are: 

1. The pre-existing conditions clause, and
2. The strength of the definitions’ wordings.
 

According to the Reinsurers two important facts are known based on claims experience to date: 

1. 80% of all claims made are denied because the event was pre-existing, and
2. 20% of denied claims were because they did not satisfy the policy definition.
 

Most Group Critical Illness plans have a 2 year pre-existing conditions clause.  A few companies will remove this on larger size firms, usually over 300 lives.  We have found only one Group CI plan designed for firms of 300 or more employees that has no pre-existing conditions clause and has the best policy definitions in the industry and that is VitalCheque©. 

For firms with less than 300 employees the best plan with no pre-existing conditions clause is SmartChoice Benefits.  Of the 15 conditions or events covered, in the majority of instances, they have the exact same policy definitions as VitalCheque©.  In fact, these same policy definitions represent 97% of all Group Critical Illness claims paid to date.

Some group plans will allow for conversion upon termination making all or a portion of the benefit completely portable.  Given the fact that individual Critical Illness plans are more expensive then group plans, and that individual plans have stringent underwriting practices, a conversion option can be a key feature of any group CI product.

The only person who can explain this well enough to you is an insurance broker who specializes in this type of coverage and if you are looking at implementing a group Critical Illness benefit at your company, then you need to seek out a group insurance specialist.  Be wary of agents with a business card representing a single insurance company because this may be the only plan or proposal you’ll ever see.  A true specialist will have knowledge of many other Critical Illness plans and won’t hesitate to show you how each company compares with one another.

For a free assessment of your Group or Individual Critical Illness Insurance needs, call Gary White at Gary White Insurance - (800) 433-5307.  We are your Critical Ilness specialist.