Critical Illness Insurance Living Benefits Center
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Current Insurance Revolution
FACTS!
Approximately 1.5 million Americans suffer a heart attack each year. Of these, 1.1 million survive at least three years.
Over 40% of the population will develop breast, prostrate, or some other form of cancer as some point in their lives.
The probability of surviving a critical illness before age 65 is almost twice as great as dying.
CRITICAL ILLNESS COVERAGE
TO REVOLUTIONIZE THE INSURANCE INDUSTRY
IN THE UNITED STATES
By Michael K. Carroll
Almost everyone knows someone who has had a heart attack, cancer, or stroke. Unfortunately, those of us in the benefits industry see it far too often. As industry experts, we also know all too well the effects that these illnesses can have on surviving members of the family. After all, isn't this why we all have life insurance? Worse still, we see far too many friends and clients who survive critical illnesses, only to lose their homes or jobs, or to suffer a decline in their quality of life. Unfortunately, traditional life insurance coverage does not help in these circumstances.
Critical illness coverage does. Critical illness coverage provides benefits that are paid upon the diagnosis of a critical illness such as cancer, heart attack, stroke, Alzheimer's Disease, and others. In other words, critical illness coverage provides a living benefit that pays cash---directly to the sick person---when they have a critical illness.
For example, if someone with $100,000 of critical illness coverage were stricken with malignant cancer, he or she would receive a $100,000 cash payment.
It is important to note that critical illness benefits are not tied to other insurance plans. Benefits are fully paid even if the critical illness survivor has insurance that covers all or a portion of the treatment expenses.
This is a powerful statement when you realize that many of the expenses associated with critical illnesses are normally not covered by traditional insurance. For example, according to American Cancer Society's 1995 "Cancer Facts and Figures", $69 billion, or fully two-thirds of all cancer-related costs were indirect, non-medical, non-covered expenses such as:
Home health care needs
Lost income and work time for spouse or care givers
Housekeeping or child care expenses
Non-covered "Experimental" treatments
Expenses not covered by insurance, including co-pays and deductibles
Home or car modifications
Lost income for the critical illness survivor
Thus, many people are greatly concerned about how they would survive financially
if a critical illness were to strike them or a family member. Particularly,
could the critical illness survivor afford the medical treatment and other
expenses not covered by his or her medical plan? Would the critical illness
affect his or her earnings? Could they afford to pay the mortgage or other
bills if they were to go without income for any length of time? What if
the homemaker suffered a critical illness? Who would care for the homemaker
or children? If the wager-earner must take time off work, how would the
lost income be replaced?
Critical illness coverage effectively addresses these concerns!
Critical Illness coverage was developed by Dr. Marius Barnard (the brother of the doctor who performed the first open heart surgery) in South Africa in 1983. Dr. Barnard saw an overwhelming need for insurance that paid a "living benefit". It is quite emotional and inspiring to hear him tell stories such as unveiling a critical illness benefit check to a wife of a farmer who had a heart attack (and who would have lost their farm without the critical illness benefit payment), or to a young single mother who had breast cancer (and couldn't afford the treatment and after-expenses without the benefits paid from her critical illness policy).
Although Critical Illness Insurance is relatively new to the United States, it has an established track record in South Africa, Japan, Australia, and the U.K. Because of its broad appeal, Critical Illness coverage has been received with tremendous success wherever it has been introduced.
In 1987, Critical Illness plans were successfully launched in England. Today, more than 70 U.K. insurance companies sell a Critical Illness pOlicy. Total Critical Illness business was over $32 billion in 1995!
In 1990, Critical Illness plans were introduced in Australia. 31 out of 33 Australian life insurance companies now offer a Critical Illness policy.
In Japan, a Critical Illness policy that only covered heart attack, stroke, and cancer was recently introduced, and over 500,000 policies were sold in just 10 months. Before the end of its second year in Japan, there were over 2 million policies sold!
Due to the size of our country (i.e., seven times more people than the U.K.) and the medical advances here, the market potential for Critical Illness insurance in the United States is enormous.
Coupled with the fact that people are living longer, medical technology now allows someone who would have died from a critical illness a scant 30 years ago to survive. However, because many of the expenses associated with critical illnesses are not covered by traditional insurance, the medical technology that can save a life can kill it financially! Thus, while needs may vary, virtually everyone needs critical illness coverage. For example, a married couple with children may want critical illness protection that also accumulates cash values and includes a death benefit; whereas, a single homemaker who is fighting to make ends meet may only want the critical illness benefit without cash values or a death benefit.
Likewise, business owners and those who are self-employed will have various critical illness coverage needs, including cash to help keep the business running, to pay for a replacement worker, or to buy out a partner.
To meet these diverse needs, the U.S. marketplace is expected to offer critical illness coverage in several forms, including with universal life, with term insurance, on a stand-alone basis (without a death benefit or cash values), and as a payroll deduction product.
Michael K. Carroll is Chairman and Chief Executive Officer of Briarwood International, Inc. He has an extensive background in the legal, actuarial, and policy design areas of Critical Diagnosis insurance coverage. Michael designs, develops, and markets various versions of this coverage for insurance companies throughout the United States. He can be reached at (540) 856-3222, Fax (540) 856-2110, or by E-Mail His offices are located at 217 Pheasant Drive, Basye, Virginia 22810-0367