Chronic Illness Insurance

If you live with a chronic illness or you have a family history of chronic illness, you likely already have health insurance to ensure that you receive the regular, ongoing treatments you need to stay safe and healthy. Unfortunately, even with health insurance, many men and women who are diagnosed with a chronic illness find themselves unable to cover all of the associated costs of these intensive treatments out of pocket.

Adding chronic illness insurance to your current list of life insurance coverages can help you mitigate some of the costs associated with a chronic illness that aren’t covered by your health insurance policy. Though some people believe that if they have a history of chronic illness in their family, they will not qualify for life insurance coverage. However, the truth is that you have plenty of options for chronic illness insurance and life insurance that can protect your family and your financial interests. 

What is Chronic Illness Insurance?

Contrary to the name, chronic illness insurance is not itself an individual type of insurance policy that will cover the costs associated with regular medical costs. Your health insurance policy will help cover the majority of these expenses. However, you may also have a number of costs that your health insurance won’t cover. For example, most health insurance plans do not cover the cost of an in-home health aid, which may be necessary if you’re diagnosed with a chronic condition that makes it difficult to perform regular, basic tasks like bathing or preparing meals.

Health insurance plans also include costs like copays, deductibles and coinsurance percentages that you’ll need to pay out of pocket — even with health insurance coverage. These costs can quickly compound with a chronic health condition, especially if you require regular treatments.

Chronic illness insurance is most often sold as a rider addition on a life insurance policy. Depending on the terms of your life insurance policy, a chronic illness rider can allow you to access your life insurance benefits before you die in the event that you’re diagnosed with a chronic condition or a condition that is deemed to be terminal or impede major life functions. This rider allows you to use a portion of your life insurance policy’s death benefit to cover costs associated with your chronic condition while you’re still living, which can help lessen the financial burden on your family as you focus on mitigating your condition. 

Chronic Illness Insurance Explained

Chronic illness insurance is most often sold as a rider that you add onto your life insurance policy. A life insurance policy is a type of insurance coverage that compensates named beneficiaries on your policy if you die when the policy’s term is active. This payout is referred to as your death benefit. You can choose between a term life insurance policy that is active only for a set term of years or a permanent life insurance policy that guarantees a payout to your beneficiaries when you pass, no matter your death date.

You also have the option to add riders onto your life insurance policy that allows you to extend the functionality of your policy and access your death benefit under circumstances beyond your death. The chronic illness insurance rider allows you to access a select portion of your death benefit while you’re still alive if you are diagnosed with a chronic condition that requires ongoing care. The specific percentage of your death benefit that you’re able to access will vary depending on the specifics of your life insurance policy and the company you purchase your policy through. For example, 1 life insurance provider may allow you to access 100% of your death benefit while living if you choose, while another may cap your access to 50% of your death benefit. Any remaining percentage of your death benefit is paid out to your beneficiaries at the time of death, assuming that your policy is still active.

Though the term chronic condition can refer to any type of illness or health need that lasts more than 1 year, most insurance companies place limitations on the type of chronic conditions that will allow you to access your death benefit early. For example, though HIV and high blood pressure are both technically chronic conditions, your life insurance company may not allow you to execute your chronic illness insurance rider if you are diagnosed with hypertension. Understanding exactly when you can use your chronic illness rider is an essential part of selecting coverage. 

Best Chronic Illness Insurance

Choosing the right chronic illness insurance rider for your needs doesn’t need to be a challenge. Consider starting out your search with a few of our recommended life insurance policy providers below.

Best For

• Short-term policies

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Best for Full Death Benefit Access: Prudential Financial Inc.

Some life insurance policy providers cap the total amount of your death benefit that you can access while you’re still alive. Prudential Financial (NYSE: PRU) allows you to access up to 100% of your death benefit when you’re diagnosed with a qualifying chronic illness under your rider. This can be a major benefit if you anticipate that a hereditary condition will cause long-standing financial needs.

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Best for Percentage Installments: John Hancock Life Insurance Co.

Select chronic conditions can make it difficult to perform basic tasks in your own home. If you’re diagnosed with a terminal illness that requires long-term care and you need to withdraw a large percentage of your coverage while living, you may want to consider John Hancock as your insurance provider. With a qualifying diagnosis, you may be able to access your benefits in percentage installments distributed on a monthly basis if you cannot perform regular day-to-day tasks like bathing and transportation.

Best For

• Life insurance as an investment tool

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Best for Term Life Insurance: American International Group Inc. (AIG)

Term life insurance policies are more affordable than permanent life insurance policies but may limit the riders you can use to customize your plan. AIG (NYSE: AIG) offers affordable term life insurance policies and the ability to add a terminal illness rider onto your insurance coverage. If diagnosed with a chronic terminal illness, you can access up to 50% of your death benefit, up to $200,000, while you’re still living.

Best For

• Under Age 64

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Best for No Medical Exams: Haven Life

Most life insurance providers require that you undergo a medical exam before the company will issue you a policy. Haven Life is a term life insurance provider offering a 100% online buying experience and no medical exams. If you have a family history of debilitating chronic illnesses, you can add Haven Life’s disability waiver of premium onto your coverage, and your premiums will be waived if your condition causes you to become totally disabled. Though not a traditional form of chronic illness insurance, this rider can make your end-of-life care easier on you and your family. 

How to Compare Chronic Illness Insurance

A few unique factors you’ll want to consider when you compare chronic illness insurance riders, include:

• Covered conditions: Most life insurance policy riders include specific chronic illnesses that allow you to access your rider. Compare your family history to the chronic illnesses covered under each life insurance rider.
• Policy types and options: Some life insurance companies only allow you to add chronic illness riders to permanent life insurance policies, which are significantly more expensive than term policies. Contact an insurance agent to ask whether you can add chronic illness insurance to a term policy before you begin your application.
• Total access limitations: Select life insurance providers limit the total percentage or dollar amount of benefits you can access while living. Compare treatment costs for hereditary conditions in your family and total benefit access levels with each insurance provider before you select an insurance provider.

How to Buy Chronic Illness Insurance

Buying chronic illness insurance begins by comparing life insurance options. Speak with a few of Benzinga’s recommended life insurance providers and consider how much coverage you need. You may also want to consult directly with an insurance agent from multiple companies to compare your options for quality-of-life protections when you have a chronic illness.

After deciding how much coverage you need and which company you want to work with, complete a life insurance application. You may need to submit medical information or undergo a medical exam before your policy goes into effect. Be sure to keep your insurance coverage current by tracking your premium payments and knowing your benefits. 

Protecting Your Quality of Life

No one wants to believe that a chronic illness will ever affect them. Unfortunately, the truth is that these illnesses can affect anyone at any time. Start comparing coverage options from a few of our recommended providers to begin exploring protections you can use to give you peace of mind. 

Frequently Asked Questions