The American Association for Critical Illness Insurance estimates that about one million Americans now have CI insurance protection. It's a good thing too, as nearly two-thirds of U.S. bankruptcies are the result of medical expenses, the association reports.
Even more troubling: 78% of those filing for bankruptcy had health insurance when they were first diagnosed.
The need is clear
Cancer and heart-related events are the leading causes of CI claims for Unum, with cancer prompting about 55% of claims and heart-related claims making up about 28%.
According to the American Heart Association, this year an American will suffer a coronary event every 25 seconds and every 40 seconds someone will have a stroke. And the risk for developing cancer during a lifetime is nearly one in two for men and one in three for women, according to the American Cancer Society.
But the good news about CI is that we're in a better position than ever to successfully overcome these catastrophic medical events. Thanks to today's medical technology, we're living longer, recovering faster and surviving more serious diagnoses. The costs that come with survival, however, can have significant economic consequences for working families.
The average lifetime cost of a stroke is $100,000 for each survivor, according to the American Heart Association. And two-thirds of the total cost of fighting heart disease, cancer and stroke comes directly out of a patient's pocket, according to the American Cancer Society.
Changes proposed by health care reform may help families avoid medical bills that add up to more than $100,000, but the potential for significant financial exposure would still be high. Under the health care exchange model that could take effect in 2014, consumers could be liable for 40% of their health care costs, depending on the level of coverage they select.
Advantages of group CI
While CI coverage has traditionally been offered primarily as an individual voluntary benefit, some insurers have recognized the value of offering this insurance on a group platform. This allows for flexible funding options and simplifies administration and benefit education for employers with sites in multiple states.
Policies typically pay 100% of the benefit amount for conditions including heart attack, stroke, major organ transplant, end-stage renal (kidney) failure, and permanent paralysis due to accident. Additionally, employers should look for group plans that can pay 100% of the benefit for conditions such as coma resulting from brain injury, blindness, benign brain tumor and occupational HIV.
Whether individual or group coverage, CI insurance is easy to understand and use, and its value is clear to employees. Most people know someone who has confronted these conditions and their related costs, or they have dealt with these challenges themselves.
CI coverage has appeal across industry segments, but group coverage provides some additional advantages.
One group option some carriers provide is the multiple payout feature. This means additional benefits are payable when another covered CI is diagnosed if the events are separated by a specified period of time and are medically unrelated.
Group CI can also feature an optional recurrence benefit that provides an additional payout if there is a recurrence of certain conditions separated by a specified period of time. And some policies offer employees the option of taking the coverage with them, even if they leave their employer.
Additionally, the wellness benefit that accompanies some CI coverage is an excellent way to reward people for taking proactive steps toward prevention and early detection. The benefit pays a set payout per calendar year per insured individual if a covered health screening is performed, such as a colonoscopy, mammogram or pap smear.
No matter how it is offered, having CI insurance can help fill gaps in coverage that medical insurance does not address, giving employees and their families peace of mind during a time when the last thing they should have to worry about is how to survive financially.
Durrence is vice president, voluntary benefits at Unum.
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