Critical Illness Insurance: A Win-Win Solution

For some clients, preparing for the future seems only natural. Others will buy insurance for their cell phones and never think to purchase protection against the financial havoc that critical illness can wreak.

This is a risk we simply can’t afford to take. Unfortunately, many of us will be diagnosed at some point with a critical illness, such as a heart attack, stroke or invasive cancer. While our chances of survival are fairly high, such incidents or illnesses can trigger significant unexpected expenses, from medical bills to home modifications to lost wages and more.

In fact, according to the American Association for Critical Illness Insurance, nearly two-thirds of U.S. bankruptcies are the result of medical expenses, and 78 percent of persons filing for bankruptcy had health insurance when first diagnosed. Unless clients are prepared, their financial health can be dramatically impacted, adding to their stresses and potentially impacting their healing processes.

Critical illness insurance can help protect against the financial burden of life’s uncertainties. Further, sales of CI policies can help agents recoup income lost due to the recent restructuring of commissions on major medical plans from most carriers.

CI for Individuals

A CI policy can provide a lump sum payment in the event that the client develops a covered critical illness during the life of the policy. Given the likelihood of that happening, agents can feel confident in presenting CI coverage as more of a necessity than an optional addition to clients’ portfolios. Consider that:

• Approximately 90 percent of disabilities are caused by illnesses, not accidents, according to the Council for Disability Awareness’ 2010 Long-Term Disability Claims Review
• Each year, an estimated 1.25 million Americans suffer a heart attack and approximately 66 percent of them survive, according to the American Heart Association’s Heart Disease and Stroke Statistics report, updated 2011
• In the most recent three-year period for which data is available, 7 million Americans age 20 or older suffered from a stroke, and many survivors had permanent, stroke-related functional disabilities, according to the AHA report
• An estimated 1.5 million Americans were diagnosed with cancer that year, according to the American Cancer Society — and the average five-year survival rate for cancer is 68 percent, per the most recent figures available from the National Cancer Institute.
• Yet, 67 percent of workers in the private section have no long-term disability insurance, according to the Social Security Administration’s Fact Sheet of March 18, 2011.

A CI policy, paid out at the time of diagnosis, provides funds that can help cover costs such as replacing some of the patient’s or spouse’s income, choosing preferred hospitals and physicians, receiving treatments (including experimental drugs or therapies) or specialist services not covered by traditional health insurance plans, mortgage payments or outstanding bills, and/or expenses for modifying a home or vehicle for special needs.

CI in the Workplace