Critical Illness Insurance Provides Vital Protection to Employees

The typical family’s income slips by more than $12,000 in the year after a breadwinner suffers a critical illness such as a heart attack, stroke or cancer, according to a study by Metropolitan Life Insurance Company.

This reduction of income isn’t primarily due to lack of medical coverage. It is actually attributed to the inability to work and earn an income. The approximate out-of-pocket medical expenses add about $3,000 dollars of extra costs during the first post-diagnosis year.

Despite these side effects, MetLife found that almost half of Americans with full-time jobs did not even have $5,000 dollars’ worth of accessible savings to cover a major illness diagnosis. More than 28% did not have at least $500 dollars in savings.

The MetLife study also showed that:

• In the event of a medical emergency, two-thirds of American workers had three months or less in available savings.
• Only one-fifth of women and one-third of men were “very confident” that a financial emergency could be handled with their rainy-day fund.
• A little more than half of those with a full-time job were extremely or somewhat concerned about the possibility of a critical illness impacting the financial stability of their family.

The study concluded that many Americans are unprepared to deal with the short- and long-term loss of income and out-of-pocket expense that is all too often associated with critical illness. Another aspect of the study may reveal the reason so many are unprepared: every surveyed patient had medical insurance, but only 7% had critical illness insurance and only 4% had cancer coverage.

Critical illness insurance

The purpose of critical illness insurance is to provide a one-time or lump-sum payment to assist in offsetting the out-of-pocket expenses associated with certain critical illnesses.

Applicable critical illnesses may include an organ transplant, heart attack, stroke, cancer, loss of vision, burns, HIV, or kidney failure. The critical illness insurance is not a replacement for standard health insurance or disability insurance. The design is purely to supplement such policies.

Only 28% of the surveyed full-time workers had heard of insurance for critical illness. However, from further questioning about critical illness insurance, the number might be even lower, as three out of every five patients seemed to confuse it with their standard health insurance policy – and one in five confused it with disability insurance or other government programs.

Voluntary employer-sponsored critical Illness insurance

While the study showed a clear theme that many Americans are monetarily unprepared for a critical illness, it also provided evidence that many workers are concerned about their lack of preparation.

By expanding employee benefits to include voluntary critical illness insurance or raising awareness about existing benefits, you are offering important financial protection to employees.

In other words, you can help bridge the gap between the cost of a critical illness and what standard insurance covers, which allows the employee to better focus on recovering and possibly returning to the workforce.

If you want to know more about voluntary critical illness coverage, give us a call.