Critical illness insurance is often viewed as a supplementary product, and sales are small. The coverage pays a tax-free, lump-sum cash benefit upon diagnosis of a covered critical illness, such as cancer, heart attack, stroke, kidney failure or a major organ transplant.
When buying critical illness insurance, clients need to be sure it is the right type of coverage, particularly older clients who are in relatively good health. There is a risk that the policyholder may outlive the survival period of the contract and the insurance company retains the right to raise premiums during the contract’s life.
Some say clients should buy a critical illness policy when they take on a mortgage. Others suggest using it to supplement a large deductible health insurance policy or as a perk for employees of small businesses. If someone has a long family history of a debilitating disease, they may also want to consider critical illness insurance.
Most people obtain long-term care insurance because it covers both skilled and unskilled home health care, adult day care, assisted living and nursing home care. Health insurance covers the medical expenses.
For people in their 50s, long-term care coverage may cost about $2,400 annually—about half the cost for those in their 60s and 70s. Couples might consider shared care coverage. For those with extra assets or individuals who want some coverage but can’t afford standalone long-term care, a hybrid long-term care life and annuity product may be appropriate.
Should you suggest that your clients obtain critical illness insurance or long-term care coverage for their old age? A lot depends on the client’s health and financial needs.
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