Some of the questions are simple, like, "Who needs critical illness insurance?" Others are more complicated: "Isn't 'first diagnosis' like having a lifetime pre-existing clause?" Either way, these are the questions critical illness experts say come up over and over again.

Take a minute and make sure you're ready the next time a colleague or employee asks you one of these.

David Acselrod, MetLife
Q: What is critical illness insurance?

It is a form of supplemental health insurance and is a stand-alone product that helps to offset expenses when a covered person is diagnosed with one of the covered conditions and meets the requirements of the certificate. CI is not medical insurance.

How does CI complement other types of insurance?

Medical coverage, depending on the plan, provides coverage for things such as doctor visits, hospital stays, surgery, rehabilitation and prescription drugs. Disability income coverage pays a portion of your income if you are disabled and unable to work. CI was designed to help fill the insurance needs not fully addressed by other insurance products.

Why purchase CI?

There are many reasons to purchase a policy. Among them are trends that include the increasing cost of health care, increased life expectancy, ongoing medical advances, lower rates of personal savings, and most importantly, increased survival rates following a critical illness.

Consider this:

• Every 26 seconds, an American will suffer from a coronary event (American Heart Association).
• On average, every 45 seconds someone in the United States has a stroke. (American Heart Association).
• The five-year relative survival rate for all cancers combined is 65% in the United States (American Cancer Society).

How much does CI cost?

Although premiums vary depending on the demographics of a particular group, on average, $10,000 of coverage for a 39-year-old would cost about $4 to $5 per month.

What are the common types of CI coverage?

There are two main types of CI policies being offered, as defined by how benefits are paid:

• Multiple payment (reimbursement): provides a schedule of payments to the insured based on the actual undergoing of covered treatments for a covered illness.
• Lump sum: provides a lump-sum payment upon diagnosis of a covered condition or the undergoing of certain procedures.

Both types of policies serve the same purpose - to help people financially survive a critical illness.

What types of illnesses are covered?

With the exception of cancer insurance that only provides benefits for cancer, some of the conditions covered by CI policies include heart attack, stroke, cancer, kidney failure, major organ transplant and coronary artery bypass graft. Some insurance companies also cover additional illnesses.

How does the lump-sum policy work?

A lump-sum CI policy works like many other traditional insurance products. First, the person must select the amount of coverage he or she wants to purchase. The amount of coverage available varies from company to company. Next, the person must apply for coverage and often answer a series of medical questions. The answers to the questions will determine the person's eligibility and/or rates for the coverage.

What are the likely uses for the lump-sum benefit?

The lump-sum payment can be spent on anything the insured wants - whether or not it is directly related to the critical illness. Some possible uses may be to help pay for: rehabilitation costs, copays, deductibles, experimental and/or alternative medicine, out-of-network services, child care costs or to make up for lost income for family members on FMLA leave.

Other possible uses for the lump-sum benefit are: travel to and from treatment centers for the insured and their companion; supplementing lost income; maintaining a standard of living; reducing existing debts; or helping to realize lifetime ambitions, such as sending children to college, taking a family vacation or establishing a trust.

Bill Cook, Trustmark Insurance
Q: What does first-diagnosis benefit mean and how does it work?

First-diagnosis benefit means a covered condition is eligible for a benefit as long as it has not been diagnosed before the policy date. For instance, if a policyholder has a heart attack after his policy date, and it is his first, this would be a first diagnosis of heart attack and be eligible for a benefit.

Isn't first diagnosis like having a lifetime pre-existing condition clause?

No. If a covered condition is determined to be due to a pre-existing condition, benefits may be limited for a period of time. For instance, if a policyholder's coverage has a pre-existing limitation of 12 months, and he has had heart disease prior to the policy date, but has never had a heart attack, he will be eligible for a benefit for heart attack 12 months after his policy date.

When a benefit is guaranteed issue, is it payable on a condition regardless if that condition has had a first diagnosis?

While guaranteed issue provides greater access to purchase critical illness coverage, it does not mean guaranteed payment where a condition has been previously diagnosed. Today's critical illness plans provide a list of eight to 11 covered conditions that are eligible for a benefit. Say a person has had a previous diagnosis for heart attack before the policy date. It is ineligible for a benefit. However, because the policy was guaranteed issue, the remaining conditions are still eligible for benefit. Had the policy been underwritten, the applicant would have been uninsurable.

Sonja Carnaggio, Product Manager Colonial Life
Q: What are the health questions and medical requirements to obtain coverage?

Height and weight, AIDS questions, and questions pertaining to specific conditions the applicant may have been treated for in the past 10 years. These include, but are not limited to, heart attack, diabetes and stroke. Health questions may also vary based on the benefit amount applied for.

Can the spouse and dependent children obtain coverage?

This may vary by carrier, and some carrier's may offer spouse only coverage.

Is there an age reduction in benefit?

Benefits reduce by 50% at age 75.

Can I keep this product if I change jobs or retire?

Yes. This policy is guaranteed renewable and portable with no change in benefits or increase in premium as long as you pay premiums when they are due.

John Resor, Benefit Vision
Q: I have excellent health insurance, why do I need critical illness coverage?

Excellent medical coverage is great, but it is designed to pay the doctors and the hospitals. The American Cancer Society says that up to two-thirds of the cost of fighting cancer is non-medical related, things like copays, deductibles and loss of income. Many people don't feel well enough to work full-time, but are not technically disabled. Also, things like experimental drugs frequently are not covered, travel and lodging to a specialized cancer treatment facility, and time off for a loved one to accompany you during treatment.

Do I have to get treatment for my benefit to pay?

With the new CI products, if you are diagnosed with a covered illness, your lump sum payment is paid regardless of the treatment protocol you decide to follow, and it is typically a one-step claim process.

Once my benefit has paid, is the policy finished?

Not necessarily. Many companies have features that allow the policy to pay for a second critical illness and some for the same illness twice. Some even pay for death, making it similar to a life insurance policy.

Are all policies created equal?

Not at all. While there are many very good insurance carriers and good CI policies, not all have features as mentioned above. Some also have an automatic increase feature, which allows the insured to increase their coverage each year for five or 10 years without having to provide proof of insurability. This is an automatic increase, but the insured can cancel at any time.

I'm still young and healthy, what age is a good age to start coverage?

The best time to enroll for coverage is at the youngest age possible - since these plans typically get more expensive the older you get - and when you are healthy. Some companies will offer a certain amount of guarantee issue coverage for a new client during the initial open enrollment, but that is always a limited amount. After that initial offering, if you have been diagnosed with one of the covered critical illnesses, some companies will allow you to enroll for the other covered illnesses; some will not allow you to enroll for coverage at all.

Barry Petruzzi, 2nd VP, Group Benefits, The Guardian Life Insurance Company of America
Q: How do CI plans work with HDHPs?

Critical illness insurance works particularly well with high-deductible health plans. The discretionary cash payout critical illness plans provide eliminates worries employees might have about having to meet deductible hurdles with their own wallet.

How do you address employee concerns that CI policies only cover certain illnesses?

Our CI product provides comprehensive coverage through the unique pairing of two benefits. In addition to lump-sum benefit payouts (customizable from $1,000 to $50,000) for six serious illnesses (cancer, heart attack, stroke, major organ transplant, kidney failure and coronary artery bypass graft), a hospital admission rider can be added to a plan which provides coverage for hospital stays for all other illnesses and injuries. Members are paid a per-diem amount (customizable up to $500). This extra layer of protection addresses many concerns about older generations of critical illness plans being too restrictive. Members are able to use the critical illness or hospital admission benefit payments any way they choose. We believe that this hospital rider really changes the critical illness landscape and will make the coverage more appealing and useful to a wider audience. An insured receives financial support for illnesses that may not be as prevalent but which present the same financial burdens.

Who needs critical illness insurance the most?

Prevalent illnesses like cancer, heart attack and stroke affect everyone and in this age of low savings rates and high credit card debt, the financial repercussions from serious illnesses can also be felt by everyone. It only takes one serious illness to cripple your financial standing.

Janet Buzil, Second Vice President Marketing & Product Management, Trustmark Voluntary Benefit Solutions
Q: What should be on employers' checklist when shopping for a group critical illness vendor?

When introducing a critical illness plan to your employees, nothing is more important that choosing the right carrier. Experience is key. It is also important to find a carrier with experience paying critical illness claims. CI claims are unique and require a skilled representative who can pay benefits swiftly and appropriately. Finally, with any type of voluntary benefits, excellence in billing is essential. Look for a partner who has state-of-the-art billing technology designed specifically for payroll deduction of premiums so that your voluntary billing can be customized to match what you already have in place for your 401(k) program.

Once you and your broker have reviewed potential carriers and are ready to consider plan designs for your employees, look for a design that pays full benefits for life. Many policies limit benefits when insureds reach age 65 or 70. The financial burden of a heart attack or cancer can be overwhelming at all ages. Also consider policies that offer full benefits to family members. Taking care of a sick child can be even more costly than an adult.

Are there adjustments/modifications employers might want to consider making to their health plan to make critical illness a good/better fit? What?

Many employers have found it necessary to raise the employee deductible on their health plans. In these instances, some employers have found it economical to fund a $5,000 CI base benefit. It is relatively inexpensive compared to the cost differential between high and low deductibles. The CI benefit can help make a higher employee deductible more palatable. Another idea we have seen is for employers to build in a $50 or $100 health screening benefit to a CI plan to help promote and fund wellness.

Scott Brown, Director, product and market development, Unum; Ron Agypt, vice president of broker sales, Aflac
Q: How should critical illness coverage be communicated to employees so they understand the benefit and its value?

Brown: If you look at the odds of the "big three" - heart attack, stroke and cancer - the odds of cancer are 1:2 for men and 1:3 for women. With the obesity epidemic, heart attacks and strokes are on the rise. Everybody knows somebody who's been affected by one of those. There's the value.

Agypt: During these tough economic times, it is important for employees to understand that insurance is an essential part of financial planning. Although, adequate insurance coverage is a critical aspect of financial health, it is often among the first budget items to be sacrificed when times get lean.

Employees should be encouraged to take a regular assessment of their current insurance coverage, customize insurance purchases based on individual/family needs and look for insurance products that provide some type of income replacement in the case of a disabling injury or illness.

In the current economic climate, is critical illness insurance still something for employers and employees to be considering, or is it more of a benefit for "fatter" times?

Agypt: As employers shift more costs to employees, policyholders may need a source of general income if they or a family member experience a critical health event that involves time away from work. It is not necessarily the health expenses alone that create the financial burden - everyday life expenses can become a significant burden especially when the patient or caregiver is away from work. In the event of a layoff or job change, the policyholder with a critical illness plan is the owner of that policy as long as the premiums are paid. This is added security for any family or individual.

During the current economy, many employers are looking for a cost-efficient way to bolster their benefits package and recruit and retain employees in a highly competitive marketplace. Adding quality products, including voluntary insurance plans, to their existing benefits package allows employers to make additional benefits available at no direct cost.

Brown: The case gets even better during bad economic times, since employers may be making job reductions or cutting back on benefits. If the economists are right, and the downturn should last about 18 months, we're right in the middle of it now.

Americans have limited savings and high credit card debt. The average person is stretched to make ends meet, and if you have no savings and an illness strikes, where will you turn?

The average [CI policy] costs, on average, $300 per year, for $20,000 coverage. If you put $300 into a savings account for a year, you wouldn't get one-quarter of what you could have bought.