Supplemental Health Insurance Calculator
Three policies, what each pays, and the chance you give it
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Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the monthly premium for each of the three policies you are weighing — critical illness, accident and hospital indemnity. Leave any you are not considering at zero.
- 02
Enter what each one would actually pay: the critical illness lump sum, the accident benefit for the kind of injury you have in mind, and the hospital benefit a day together with the number of days a stay would last.
- 03
Enter your health plan's deductible and out-of-pocket maximum. That maximum, not any of these policies, is what caps a bad medical year.
- 04
Give each event a probability for a single year. These are your own estimates — the page has no table of illness or injury rates and will not invent one — so treat them as assumptions to test rather than facts.
- 05
Read the break-even probability for each policy and compare it with the chance you gave. If the break-even is higher than your own estimate, the policy is expected to cost more than it pays.
Formula
Each policy is priced the same way, one year at a time: Premium a year = monthly premium × 12 Benefit = the lump sum, or the daily benefit × the days a stay would last Expected payout = Benefit × the probability you assign Expected value = Expected payout − Premium a year The cleanest single test is the probability at which the policy is a fair bet: Break-even probability = Premium a year ÷ Benefit If the chance you genuinely believe in is below that figure, the policy is expected to cost more than it pays. Over a holding period: Premiums over the years = Premium a year × years None of these benefits reduces a medical bill. What limits a bad year is your health plan's out-of-pocket maximum, so the benefits are compared against it rather than added to it.
Example
Take three policies: critical illness at $25 a month paying a $15,000 lump sum, accident cover at $15 a month paying $2,500, and hospital indemnity at $20 a month paying $200 a day for a stay you expect would last three days. Set the chances for a single year at 1%, 8% and 6%, against a health plan with a $2,000 deductible and an $8,000 out-of-pocket maximum, held for ten years. The premiums come to $60 a month, or $720 a year, and $7,200 over the ten years. The expected payouts are $150 for critical illness, $200 for accident cover and $36 for hospital indemnity — $386 in all, against $720 of premium, so the three together are expected to cost $334 a year more than they pay. The break-even probabilities make each one legible on its own: critical illness needs a 2.00% chance to be fair, accident cover 7.20%, and hospital indemnity 40.00%, which is far beyond any plausible estimate for a three-day stay. On these numbers accident cover looks best and hospital indemnity worst. The three benefits add to $18,100, or 226% of the $8,000 out-of-pocket maximum — but that maximum is what actually caps a bad year, and it does so whatever goes wrong, while these policies pay only when a listed event occurs and meets the contract's definition.
Definitions
- Critical illness insurance
- A policy paying a lump sum on the diagnosis of a listed condition, such as a heart attack, stroke or certain cancers, provided the diagnosis meets the contract's stated criteria.
- Hospital indemnity insurance
- A policy paying a fixed amount for each day of an inpatient hospital stay, regardless of what the hospital charges. It usually excludes observation stays and emergency visits that do not become admissions.
- Fixed indemnity benefit
- A benefit paid as a set amount rather than as a share of a bill. It does not reduce what the hospital charges or what your health plan applies to your deductible.
- Break-even probability
- The yearly premium divided by the benefit: the chance the event must have for the policy to be a fair bet. Below that probability, the policy is expected to cost more than it pays.
- Out-of-pocket maximum
- The most your health plan will make you pay for covered care in a plan year. It is the real ceiling on a catastrophic year, and it applies whatever the illness or injury turns out to be.
Good to know
What a fixed-benefit policy does, and what it does not
Critical illness, accident and hospital indemnity policies are sold alongside real health insurance, often at open enrolment, and they are easy to misunderstand because they look like more cover. They are not more cover in the sense that matters. They pay a fixed amount when a listed event happens, and that amount has no relationship to the bill. A hospital indemnity policy paying $200 a day sends you $600 for a three-day stay whether the hospital billed $5,000 or $60,000. The hospital bill is settled by your health plan exactly as it would have been if you had no supplemental policy at all: the same deductible, the same coinsurance, the same out-of-pocket maximum. What arrives is a cheque, not a discount. That distinction decides how to think about them. The number that caps a catastrophic medical year is your health plan's out-of-pocket maximum — $8,000 on the page's example — and no supplemental policy changes it. The benefits are cash that can be spent on anything: the deductible, the rent, the weeks of pay lost while recovering, the travel to a treatment centre. Read that way, these products are closer to a small, narrowly-triggered savings account than to insurance against medical costs. They can still be useful. Cash arriving quickly during a crisis has real value, particularly for someone whose deductible is larger than their savings. But the case has to be made on those terms rather than on the idea that the policy will reduce what the hospital charges, and the page puts the point in the output rather than burying it here, because it is the single most common misconception about this class of product.
Why the break-even probability is the only honest test
Judging one of these policies by asking whether the payout sounds large is useless, because every payout sounds large next to a monthly premium. The comparison that works is the break-even probability: divide the yearly premium by what the policy would pay, and you get the chance the event must have for the premium to be a fair price. On the page's example the three come out very differently. Critical illness costs $300 a year for a $15,000 lump sum, so it breaks even at a 2.00% annual chance. Accident cover costs $180 for $2,500, breaking even at 7.20%. Hospital indemnity costs $240 for a benefit of $600, so it needs a 40.00% chance of a three-day admission in a single year — a figure that is obviously implausible for most people, and one that makes the policy's weakness visible instantly. That is the value of the calculation: it converts an unfamiliar product into a single number you can hold an opinion about. Then the question becomes whether you honestly believe the event is likelier than the break-even figure. The page cannot answer that, and it does not pretend to. There is no table of illness or injury rates behind these fields, because the chance that a particular person with a particular history and occupation suffers a particular event in a particular year is not something a calculator can supply responsibly. The probabilities are your estimates, they are labelled as such throughout, and they are doing all the work in the result. If you find yourself entering numbers that make a policy look good, notice that you chose them. The discipline that helps is to read the break-even first and form a view before typing anything.
Expected value, and why a profitable-looking policy is a warning
Once the probabilities are set, the expected value follows: multiply each benefit by its chance and compare the total with the premiums. On the page's example the three policies cost $720 a year and are expected to pay $386 — $150 from critical illness, $200 from accident cover and $36 from hospital indemnity — so they are expected to cost $334 a year more than they return. Over the ten years the visitor would hold them, the premiums come to $7,200. That negative result is not a sign that these particular policies are bad. It is the normal and expected outcome for almost all insurance, and it follows from how insurance works. An insurer must collect more in premiums than it pays in claims, because it also pays commissions, administration, regulatory costs and a return to capital. Across the whole pool of policyholders the expected value has to be negative, and the customer buys something else in exchange: protection against an outcome they could not absorb. This gives a useful diagnostic that the page states in its output. If your numbers show a policy expected to pay more than it costs, the likeliest explanation is not that you have found a mispriced product but that the probability you entered is higher than the insurer's own — and the insurer has actuaries and claims data. On the example the accident policy shows $200 of expected payout against $180 of premium, which mostly tells you the 8% chance entered is generous rather than that accident cover is a bargain. Treat an attractive expected value as a prompt to re-examine your assumption rather than as a buy signal. The genuine reasons to buy sit outside expected value: an event you truly could not absorb, or an employer paying most of the premium, which changes the arithmetic completely.
The alternative, and the definitions that decide a claim
The honest comparison for any of these policies is not against another policy but against keeping the money. On the example, $7,200 of premiums over ten years is a substantial sum, and savings of that size have a property no supplemental policy has: they pay out for anything. A deductible, a car that fails, a month without work, a family emergency in another state — the money is available for all of it, and whatever you do not spend is still yours at the end. A critical illness policy pays only if you are diagnosed with a listed condition meeting the contract's criteria; a hospital indemnity policy pays only for a qualifying inpatient admission. That narrowness is the real cost, and it is why the emergency fund is the first recommendation on the page. Supplemental cover earns its place in narrower circumstances. An employer paying most or all of the premium changes the expected value decisively, and a policy someone else largely funds is usually worth taking. A deductible substantially larger than your accessible savings is a genuine gap, and cash arriving within days of an admission can matter more than its actuarial value suggests. A specific family history that makes one particular risk real for you is a legitimate reason to weight a probability above the population average. Finally, read the definitions before relying on any of it. Critical illness policies list the conditions they cover and define each one precisely, and a diagnosis that sounds qualifying to a patient may not meet the wording — some cancers at an early stage are a common exclusion or a reduced payout. Hospital indemnity policies generally require an inpatient admission, so an emergency visit or an overnight observation stay may pay nothing. The policy document is the authority, not this page.
Frequently asked questions
Is critical illness insurance worth it?
Work out the break-even probability and compare it with what you actually believe. At the page's example, $25 a month buys a $15,000 lump sum, so the premium is $300 a year and the policy breaks even if the chance of a qualifying illness in a year is 2.00%. The visitor put the chance at 1%, so the expected payout is $150 against $300 of premium — the policy is expected to cost $150 a year more than it pays. That is the normal result, because insurers price policies to collect more than they pay out.
Do these policies reduce my medical bills?
No, and this is the most important thing to understand about them. They pay a fixed amount whatever the bill. A hospital indemnity policy paying $200 a day sends you $600 for a three-day stay whether the hospital billed $5,000 or $60,000, and the bill itself is settled by your health plan exactly as it would have been. The cash is useful — it can cover a deductible, or rent — but it arrives as a cheque rather than as a smaller bill.
What caps my costs in a bad year?
Your health plan's out-of-pocket maximum, which on the example is $8,000. That is the real ceiling on a catastrophic year, and it is set by the plan rather than by any supplemental policy. The three benefits on the example add to $18,100, or 226% of that exposure, which sounds generous until you remember they only pay if the specific listed event happens. The out-of-pocket maximum protects you whatever goes wrong.
Where do the probabilities come from?
From you. The site has no source for the chance that a particular person suffers a heart attack, breaks a wrist or spends three nights in hospital in a given year, and inventing one would be worse than asking. That means the answer is only as good as your estimates, and they are doing all the work in the result. The useful discipline is to read the break-even probability first and then ask whether you honestly believe the event is likelier than that.
Why does the page warn me when a policy looks profitable?
Because an insurer sets a price to collect more than it pays out across everyone it covers, after its costs. If your numbers show a policy paying more than it costs, the likeliest explanation is that the probability you typed is higher than the insurer's own, not that you have found a bargain. On the example the accident policy looks best, with $200 of expected payout against $180 of premium — which mostly tells you the 8% chance entered is generous.
What is the alternative to buying these?
Keeping the money. On the example the three policies cost $720 a year, or $7,200 over the ten years the visitor would hold them. Savings of that size cover any emergency — a deductible, a car, a month without work — rather than only the events a policy lists, and what you do not spend stays yours. Supplemental cover earns its place in narrower cases: a deductible you could not find in a hurry, an employer paying most of the premium, or a family history that makes one specific risk real for you.
Will the policy definitely pay if I get ill?
Only if the condition is listed and meets the policy's own criteria. Critical illness policies pay on named conditions with stated definitions, and a diagnosis that sounds qualifying to a patient may not meet the contract's wording. Hospital indemnity policies usually require an inpatient admission, not an observation stay or an emergency visit. Read the definitions before you rely on a payout, because they decide everything, and the policy document is the authority rather than this page.