Most critical illness insurance policyholders are 55 or older; men buy higher coverage amounts than women; and claimants overwhelmingly seek benefits for cancer over all other conditions, suggests a new comprehensive study of more than 20,500 individual policies purchased last year.
Two-thirds of CI claims were filed by people age 55 or older, with the remainder found to be men who were younger than that age group, according to data analyzed by the American Association for Critical Illness Insurance and Gen Re, a Berkshire Hathaway Company.
The “2011 Buyer & Claimant Study” also found that cancer accounted for 61% of new benefit payouts, with heart attacks a distant second at 14% and stroke in third place at 5% (the remainder, 20%, was attributed to “other” conditions). CI’s lump-sum cash benefit is generally paid upon diagnosis of a covered critical illness.
In addition, 71% of new claims by female policyholders were opened after age 55, while 4% of claims started between 35 and 44, regardless of gender. Slightly more men than women purchased coverage equal to $50,001 or greater than that amount (13% versus 11%), while women edged out men when opting for coverage that was equal to $20,000 or less (53% versus 49%). Interestingly enough, gender wasn’t a factor among policyholders who purchased between $20,001 and $30,000 worth of protection (22% apiece for men and women).
“With a record one million Americans now owning critical illness insurance protection, we sought to look more closely at when claims begin as well as the causes for new claims,” explains AACII Executive Director Jesse Slome, who also heads up the American Association for Long-Term Care Insurance. He believes that policyholders who are in search of affordable protection “recognize the value of buying enough protection to pay for one or two years’ worth of mortgage or rent payments, or to pay costs not covered by their health insurance.”
Barry Eagle, vice president of marketing for Gen Re LifeHealth, notes that CI is now marketed in 54 countries and gaining acceptance in the U.S., where the current version of these policies became available in the mid 1990s.
Earlier in the year, the AACII published the first National Critical Illness Risk Assessment Study prepared by Milliman, which concluded that a 25-year-old male smoker is more than twice as likely to develop a critical illness before age 65 than a non-smoker of the same age (49% versus 24%). That study also found women face less risk than men, regardless of their age and especially if they do not smoke.
“Cancer, heart attacks and strokes happen at all ages and most people are not prepared for either the emotional or financial cost,” Slome explained at that time. “Nearly two-thirds of U.S. bankruptcies are the result of medical expenses and 78% of those filing for bankruptcy had health insurance when they were first diagnosed.”
— Bruce Shutan is a freelance writer based in Los Angeles.
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