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Critical Illness: What Young Adults Don’t Know Can Hurt Them

We don’t like to think about cancer. But it can affect anyone, and there’s one group that’s lacking serious education about prevention and care: young adults.This week is Young Adult Cancer Awareness Week, meant to share the unique challenges that young adults with cancer face.

For example, young adults often don’t have access to quality education about their insurance options. Fortunately, organizations like Critical Mass and Invincible Youth are working to bridge the insurance information gap.

According to the Institute of Medicine, failing to address employment, health insurance and financial concerns may threaten a patient’s return to optimum health. This is especially pertinent to young adults, who often fall into the low-income, uninsured or underinsured populations.

Finding and financing the right insurance coverage can be confusing for anyone, regardless of age. That’s why it’s not surprising that young adults often don’t find out about supplemental types of insurance until it’s too late.

Health insurance is only the first step

The Affordable Care Act has ensured that more than 3 million more young adults now have health insurance. This is a great first step, as young adults without insurance are more likely to receive a diagnosis of difficult-to-treat, late-stage cancer. But we all know that even health insurance benefits aren’t always enough to cover costly medical bills, especially for diseases such as cancer.

That’s where supplemental policies, such as critical illness insurance, become highly valuable. Critical illness insurance policies are a supplement to health insurance policies that will help with the financial hit of a cancer, heart attack or stroke diagnosis.

This particular type of insurance is meant to cover everything typical health insurance coverage won’t, such as co-pays, prescription drugs, and other expenses resulting from a cancer diagnosis.

Critical illness insurance is available as individual coverage or through an employer’s group plan and even as a rider on some life insurance policies.

Coverage can range from $10,000 to as much as $1 million. The benefits are paid as a single, lump sum payment after the individual is diagnosed with a covered condition. The waiting period for benefits varies depending on the condition and the policy.

What qualifies as ‘critical’ illness?

Though it has its advantages, critical illness insurance isn’t meant to take the place of health or disability insurance. It’s important to read the policy from beginning to end so there are no misunderstandings about your coverage.

Critical illness policies contain strict definitions of what is and isn’t considered a critical illness, so make sure to read the fine print that lists additional restrictions to a covered loss.

When looking at critical illness insurance policies, know these terms and how they apply to you:

  • Pre-existing Conditions: Pre-existing condition limitations vary, so read the fine print.
  • Covered Illnesses: What specific illnesses are covered? Will they be paid at 100%?
  • Underwriting: Simplified underwriting applies to policy benefits less than $100,000; full underwriting applies to benefits over $100,000.
  • Guaranteed Renewable “To Age”: Most policies are guaranteed renewable; some continue for life, others terminate at age 75-80.
  • Issue Ages: When a policy can be purchased. Ages are generally 18-69; some companies have maximum issue ages of 65, 70 or 75.
  • Minimum and Maximum Benefit Amounts: $10,000 up to $1 million or more.
  • Waiting Period: How many days you must wait before benefits are paid.
  • Survival Period: Number of days the insured must live following diagnosis, to receive benefits.
  • Conditions of Payment: Specific criteria that must be met before the benefit is paid.
  • Benefit Reduction Age and Amount: With most policies, the maximum benefit drops by 50% at age 65.
  • Return of Premium: Most policies refund your premium less the benefits paid only upon the death of the insured.

The actual cost

Are there other ways to cover the cost of critical illness expenses? Certainly. You could create a tax-advantaged flexible spending account or health savings account. But this type of saving might not be a feasible option for many young adults.

If you identify with any of the following characteristics, you might benefit from having a critical illness policy that automatically deducts the premium from your salary:

  • You aren’t disciplined about putting money aside
  • You’re a sole bread-winner
  • You just got out of debt and have very little savings
  • You don’t earn enough money to easily save

So what will critical illness insurance actually cost? Rates may depend on your age, gender, use of tobacco products, health and the coverage amount. For example, a non-tobacco-using, 25-year-old female living in Los Angeles could pay an average of $25 to $30 in monthly premiums for $50,000 of coverage. A 25-year-old male with the same characteristics could pay anywhere from $15 to $30 monthly for the same coverage.

This can still be costly for many young adults, so it’s important to evaluate how much coverage you think you might need. However, one serious illness can generate medical expenses that could bury you in debt for years to come. To determine if critical illness insurance is right for you, do your research and talk to a trusted insurance agent or broker.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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