Under a lump sum benefit plan, you will receive the benefit upon the first confirmed diagnosis of a covered illness. Some plans will only pay this amount once and the policy will then expire, while other plans have a multiple payout.
The indemnity plan pays a benefit based on a per-service and pre-determined amount for each service rendered. The insured collects the bills, completes a claim form and mails it to the insurance company to receive the benefit payment. This type of plan will not terminate once a benefit is paid as long as premiums continue being paid.
Some of the services that receive a benefit often covered include:
- Intensive Care
- Surgery and anesthesia
- Radiation and chemotherapy
- Daily Room Benefit
- Preventative care
- First diagnosis
- Physician’s hospital visits
- Private nursing
- Prescription drugs
- Blood and plasma
- Family lodging
Types of Underwriting
There are generally 3 different types of underwriting: Guaranteed Issue,
Simplified Issue and Fully Underwritten
Amounts will vary from $10,000 to $500,00 in benefits and based on the amounts will dictate which form of underwriting is required.
Guaranteed Acceptance is just that, you apply and you qualify. This type of coverage is generally found in the workplace.
Simplified Issue is generally used where benefit amounts are $70,000 and below. Simplified issue generally has very few health questions to answer and when answered with NO, you qualify.
Fully underwritten comes into play when you are requesting a higher amount of benefit. This could require a medical profile from your doctor, a blood and urine sample or any report the insurance company deems necessary to make a decision.
This is the first article in a series on critical illness plans and how they fit into the marketplace. Future articles will include marketing tips, who to sell it to, how to sell it, etc.