What is critical illness insurance?

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Critical illness insurance can help you cover medical expenses that your primary health insurance doesn’t fully cover.

Even when you’re doing everything you possibly can to live a healthy lifestyle, there are some things you just can’t control. While it’s impossible to prevent every serious illness that might arise, it is possible to mitigate the financial hardship that serious diagnoses can cause. Critical illness insurance can help ensure you are financially prepared in case of an unexpected diagnosis so you can focus on recovery instead of your finances.

How critical illness insurance helps you pay your medical bills

Critical illness insurance is a type of supplemental health insurance. It can help you cover out-of-pocket medical expenses that your primary health insurance plan doesn’t cover. 

Critical illness insurance pays a cash benefit in the event that you or a family member experience a covered serious illness, such as cancer or a stroke. This cash payout is paid directly to you and can go to cover whatever expenses you choose.

Many people who experience a critical illness wind up facing serious financial difficulties along with their recovery. As high-deductible health insurance plans become increasingly common, a regular health plan may not be enough to cover high costs associated with diagnosing, treating, and living with a critical illness. In fact, 34% of all Americans with medical insurance find it difficult to afford their deductible¹. No wonder the American Journal of Public Health found that 67% of all bankruptcies are tied to medical issues².

In order to receive critical illness insurance coverage, you’ll pay a low monthly premium. Most critical illness insurance plans don’t involve any deductibles, co-pays, or lifetime maximums.

Critical illness insurance vs. accident insurance

Critical illness insurance and accident insurance are two common supplemental insurance plans. They work in similar ways but pay out benefits for different incidents. Accident insurance only pays cash benefits in the event of an accident. The benefits paid depend on the type of injury sustained, the severity of the injury, and the type of treatment. 

Critical illness insurance pays out a cash benefit if you or a family member is diagnosed with a serious illness. Once the diagnosis is verified, your insurance company will pay out a lump sum cash benefit depending on the type of illness. No need to wait until you receive treatment to submit a claim – critical illness benefits are only dependent on diagnosis. 

If you’re interested in minimizing out-of-pocket medical costs, both accident insurance and critical insurance are excellent options. You can benefit from having both; there’s no need to choose between one or the other.

Critical illness insurance vs. cancer insurance 

Other supplemental insurance plans include cancer insurance and hospital indemnity insurance. Though critical illness insurance typically covers cancer as well, cancer insurance provides additional benefits specifically for cancer diagnosis, treatment, and screenings. It’s worth considering for any individual with a family history of cancer. Hospital indemnity insurance provides additional benefits when admitted to a hospital or ICU for a covered sickness or injury. Each of these supplemental health insurance products can give you an added level of protection against high medical bills.

Critical illness insurance vs. health insurance

Both critical illness insurance and health insurance can help cover the costs associated with the diagnosis and treatment of serious illness. However, while they serve similar purposes, they are not interchangeable.

Also known as medical insurance, health insurance covers a portion of the cost of medical expenses. Though coverage and out-of-pocket costs vary greatly from plan to plan, all Marketplace health insurance plans cover several essential health benefits. These include hospital and medical expenses incurred not only due to critical illness, but also disease, injuries, prescription drugs, preventative services, and more.

Critical illness insurance only pays out benefits if you are diagnosed with a covered critical illness. It is meant to be used in conjunction with your primary health insurance. Rather than taking the place of your health insurance, it can help cover some out-of-pocket costs that often come with a serious diagnosis.

The process of purchasing these two types of insurance also varies significantly. In most cases, health insurance is only available for purchase at specific times of the year or during a qualifying life event. Purchasing health insurance is usually a lengthy process requiring a lot of personal information. Critical illness insurance is typically much less expensive and easier to purchase. You can purchase it directly from an insurance provider year-round.

How does critical illness insurance work?

Critical illness insurance pays a lump sum cash benefit directly to you after diagnosis of a covered critical illness. This cash benefit varies depending on the type of illness. Once you receive a diagnosis of a covered illness, you’re eligible to receive the benefit outlined in your policy, regardless of the cost or type of treatment.  

Critical illness insurance is unique because it pays out benefits directly to you rather than to your medical provider. This gives you the freedom to decide what to spend it on, whether you use it to cover out-of-pocket medical expenses or non-medical expenses, such as rent or childcare.

Your critical illness insurance policy can cover just you or your entire family, depending on your needs. 

Plans vary from provider to provider, but all Guardian Direct critical insurance policies don’t involve any deductibles, co-pays, maximums, healthcare provider restrictions, or waiting periods. That means you can start benefiting from comprehensive critical illness insurance coverage right away for just the cost of your monthly premium.

How to use critical illness insurance

When you have good critical illness insurance, receiving your cash benefit is a quick and easy process. Here’s how to use critical illness insurance, step by step:

  1. Verify your diagnosis - Once you or a family member are diagnosed with a covered critical illness, present your physician’s diagnosis to your insurance provider for verification. (No need to submit any claim forms, bills, or proof of treatment.)

  2. Receive your cash benefit - Once your diagnosis is verified, your insurance company will pay a lump sum cash benefit directly to you – not to doctors or hospitals. The benefit paid will depend solely on the verified critical illness diagnosis. This is usually a very quick process, with no waiting period, no deductible, and no extra hoops to jump through.

  3. Pay your bills - Use your cash benefit to pay your bills. Whether you cover out-of-pocket medical expenses, such as deductibles, co-pays, or coinsurance, or non-medical expenses, like groceries, rent, or your mortgage, the choice is yours. You can even put your cash benefit toward experimental treatments your medical insurance may not cover.

What is covered by critical illness insurance?

Critical illness insurance covers a variety of life-changing illnesses. Exact coverage amounts and policies vary widely depending on your provider and your plan. Guardian Direct critical illness insurance covers over 30 major illnesses in the following four categories: 

  • Heart and vascular conditions – Heart attack, stroke, heart failure requiring a transplant, and arteriosclerosis requiring intervention.

  • Cancer – Invasive cancer, cancer in situ, and benign brain tumors.

  • Kidney failure – Kidney failure requiring dialysis or a transplant.

  • Other major organ failure – Other major organ failure requiring a transplant, including lungs, pancreas, liver, and bone marrow.

  • Chronic illnesses like diabetes and asthma are not covered.

Benefits paid will depend on the type of illness you are diagnosed with. You may even receive benefits for both the first and second diagnosis, in case you happen to be diagnosed with more than one covered critical illness. 

Do I need critical illness insurance?

Given the name, you might think critical illness insurance is only for people who have a critical illness. But actually, it’s the opposite. Healthy people are the best candidates for critical illness coverage. Even healthy people can be diagnosed with a serious illness down the line – this type of insurance helps you be financially prepared in case that happens to you.

Here’s how to determine if you’re a good candidate for critical illness insurance:

  • You’re in good health

  • You have no pre-existing critical conditions

  • You’re under 65 years of age

  • You have health insurance

  • You do not have a history of heart conditions, cancer, blood disorders, diabetes, or organ diseases

Keep in mind that your age and your medical history may affect your eligibility and/or your monthly premium.

Your health isn’t the only factor that might make critical illness insurance a good option for you. Critical illness insurance is for people who wish to avoid draining their personal savings to cover the out-of-pocket costs of a critical illness. If your medical insurance plan has a high deductible or if you simply don’t have the funds available in savings to cover an unexpected out-of-pocket medical expense, consider investing a small amount in a basic critical illness insurance policy.

Is critical illness insurance worth it?

Critical illness can pay off even if you’re currently experiencing perfect health. Since you never know whether you’ll be diagnosed with a serious illness down the road, critical illness can be worth it for anyone.

Many critical illnesses are more common than you’d think. Shockingly enough, the average American has a 40% chance of developing cancer, according to the American Cancer Society³. And every year, about 805,000 Americans have a heart attack – meaning that someone has a heart attack every 40 seconds in the United States⁴.

Critical illness insurance can help you cover out-of-pocket medical expenses or the cost of missed days at work without having to drain your savings. Critical illness may be worth it for you, especially if you don’t have much in savings or if your family has a history of serious illness. 

Do I already have critical illness insurance?

Chances are, you don’t already have critical illness insurance without knowing it. Some employers offer critical illness insurance as a voluntary benefit that employees can choose to opt into. But unlike health insurance, employers aren’t required to offer critical illness insurance to their employees. Since critical illness insurance is a type of supplemental insurance coverage, it's often easier to purchase it on your own directly from an insurance provider.

How to purchase critical illness insurance

Purchasing critical illness is usually a quick process. In some cases, you may be able to purchase a policy through your employer. 

If your employer doesn’t offer critical illness insurance benefits, or if you’d prefer to choose a plan that best suits your individual needs, you can also purchase critical illness directly from an insurance provider online. 

In order to retrieve an accurate quote for critical illness insurance, here’s all the information you’ll need to provide:

  • Your zip code

  • Who needs coverage

  • Your age

  • Your name

  • Whether you’ve used tobacco in the last 6 to 12 months

  • Whether you have a history of certain serious conditions, such as cancer or heart disease

Guardian Direct offers various affordable critical illness insurance plans to fit your needs and your budget. It’s quick, secure, and available for purchase every day of the year. 

Critical illness insurance can offer you support and protection when you need it most. While you can’t control whether or not you develop a serious illness, you can minimize the high costs often associated with it. Obtaining critical illness insurance coverage is an excellent way to make sure a critical illness diagnosis doesn’t turn into a financial crisis for you and your family.

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.

Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice. This is not dental care advice and should not be substituted for regular consultation with your dentist. If you have any concerns about your dental health, please contact your dentist's office.


  1. https://www.kff.org/health-costs/issue-brief/data-note-americans-challenges-health-care-costs, 2012.

  2. https://www.eurekalert.org/pub\_releases/2019-02/pfan-6ob020719.php, 2019

  3. https://www.cancer.org/cancer/cancer-basics/lifetime-probability-of-developing-or-dying-from-cancer.html, 2020

  4. https://www.cdc.gov/heartdisease/facts.htm, 2020


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Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.(exp.07/22)