Katia Iervasi is an assistant assigning editor at NerdWallet. An insurance authority, she previously spent over six years covering insurance topics as a writer, where she loved untangling complicated topics and answering readers’ burning money questions. She holds a Bachelor of Arts in communication and has studied writing, fact-checking and editing with Poynter. Her writing and analysis has been featured in The Washington Post, Forbes, Yahoo, Entrepreneur, Best Company and FT Advisor. Originally from Sydney, Australia, Katia currently lives in New York City.
Reviewed by Tony Steuer Life insurance expert Tony Steuer
Life insurance expert | Life Insurance
Tony Steuer is a financial wellness advocate, podcaster and speaker, and the author of "Questions and Answers on Life Insurance." His advice has been featured in media outlets including The New York Times, The Washington Post, Fast Company, Forbes and CNBC. He has a bachelor of science degree in finance from California State University and holds the following designations: Chartered Life Underwriter (CLU), Life and Disability Insurance Analyst (LA) and Certified Personal and Family Finance Educator (CPFFE).
At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.
Assigning Editor Lisa GreenLisa Green leads the life insurance team and oversees insurance-focused data journalism at NerdWallet. A professional journalist since high school, she was an insurance writer at NerdWallet before becoming an assigning editor. Previously, Lisa spent more than 20 years as an editor at The Tennessean in Nashville, where she led business and consumer coverage for several years. At The Tennessean, she was part of a 2011 Pulitzer Prize finalist team for coverage of devastating floods in Middle Tennessee. Her work has also won awards from the Society for Advancing Business Editing and Writing, Investigative Reporters and Editors, and the Society of Professional Journalists. Lisa is an alumna of the Wharton Seminars for Business Journalists at the University of Pennsylvania. She has also studied data journalism with the National Institute for Computer-Assisted Reporting, business editing with the American Press Institute and writing, editing and news research with the Poynter Institute. In addition to her work at NerdWallet, Lisa is a real estate investor and has taught a seminar on how to earn college scholarships. She is based in Nashville.
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In the United States, somebody has a heart attack every 40 seconds, according to 2024 data from the American Heart Association [0]
This statistic is perhaps not as alarming as the cost of a heart attack, which can run tens of thousands of dollars. A 2017 study in Circulation, a medical journal from the American Heart Association, found the median cost of hospital care following a heart attack to be $53,384 for uninsured patients [0]
. Add the rising costs of medical care and inflation to the mix, and that number is likely even higher now.
If you had a heart attack tomorrow, how would you pay for it?”
Critical illness insurance is touted as one way to answer that question.
Many Americans have been surprised to discover their medical insurance won’t cover all expenses. Think of critical illness insurance as a way to bridge the gap between your primary health insurance and out-of-pocket costs. It’s designed to make your recovery easier financially and take care of costs you might incur as a side effect of getting sick.
With critical illness insurance, you’ll get a cash payout if you suffer a serious illness. The list of covered illnesses varies, but heart attacks, strokes and cancer are the big ones. The coverage also typically kicks in if you experience organ or kidney failure.
The money can be used however you like. You could funnel it toward day-to-day expenses or deductibles, copays and procedures. Some people spend the money on rehabilitation, in-home care and lifestyle expenses to get healthier, such as programs to quit smoking. You might prioritize child care or cleaning services to allow you to recuperate.
Critical illness insurance can prevent you from dipping into your savings to meet your health insurance deductible. For example, if your plan has a $10,000 deductible, you might buy a $10,000 critical illness policy to plug that gap.
One of the main selling points is there’s typically no waiting period. This sets it apart from long-term disability insurance, which generally has a three-month waiting period.
Critical illness insurance has limitations, though. It won’t pay out if your illness isn’t serious and it doesn’t cover pre-existing conditions , which means you’d need to apply for coverage before developing a health issue.
Premiums for critical illness policies go up as you age. It’s a good idea to apply for coverage as soon as you identify a need for it.
Here are sample monthly rates from Aflac for a $10,000 critical illness policy, with and without additional cancer coverage.
Amount of coverage
$10,000 + cancer coverage
$15,000 + cancer coverage
$20,000 + cancer coverage
Source: Aflac. These are sample monthly rates for a nonsmoking California resident with no pre-existing health conditions.
Note: With cancer coverage, the policy pays out on the date the policyholder is diagnosed with noninvasive, internal or skin cancer.
If you’re looking for a way to replace your income and ease the financial burden on your family when you die, a life insurance policy should be a higher priority than critical illness insurance. Life insurance is more flexible, and the payout applies to a broader range of scenarios.
Critical illness insurance can be an affordable form of income protection for people who aren’t eligible for disability insurance and might struggle to make ends meet if they get sick. This may include stay-at-home parents, freelancers or those working part-time, as well as people who can’t traditionally access disability insurance.
Critical illness insurance might also be a good call for those with a family history of certain serious conditions, like heart disease.
For everyone else, the money might be better spent elsewhere — such as boosting a life insurance policy .
If you’re in the market for term life insurance, some companies include a critical illness rider for free. For permanent policies, you might have the option to add a life insurance rider for an extra charge. This add-on is likely to be cheaper than buying a separate critical illness policy.
Like standalone policies, a critical illness rider is activated when you’re diagnosed with a qualifying illness, and the money is yours to spend how you wish. The sum of money you’ll receive is spelled out in your policy documents and disbursed tax-free.
The downside? Your insurer will subtract that dollar amount from the final payout to your beneficiaries if you die while your life insurance policy is in force.
Let’s say you have a $500,000 life insurance policy, and a critical illness rider worth $50,000. If you experience a covered illness, you can get a check for $50,000, which leaves $450,000 to your life insurance beneficiaries when you die. If you’re never diagnosed with a serious illness, your loved ones will receive the full life insurance death benefit .
Keep in mind you can’t add a critical illness rider to an existing policy — only new ones.
As for whether you need one, that comes down to your health insurance or the situation you’d find yourself in if you were slapped with unexpected medical bills.
For example, for people with a very high deductible on their health insurance, adding a critical illness rider to a permanent life insurance policy might make sense. This group may include those who are self-employed, so they have extra protection in the case of a stroke, cancer diagnosis or other critical health condition.
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Katia Iervasi is an assistant assigning editor and spokesperson at NerdWallet. An insurance authority, she previously spent over six years covering insurance topics as a writer, where she loved untangling complicated topics and answering readers’ burning money questions. She holds a Bachelor of Arts in communication and has studied writing, fact-checking and editing with Poynter. Her writing and analysis has been featured in The Washington Post, Forbes, Yahoo, Entrepreneur, Best Company and FT Advisor. Originally from Sydney, Australia, Katia currently lives in New York City. See full bio.
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