Critical illness insurance, which first became available in 1996 but never really caught on, is likely to become a more important product going forward, according to Jesse Slome, executive director of the Los Angeles-based American Association of Critical Illness Insurance (AACII), an industry trade group.
The AACII was founded earlier this year at the request of several insurance companies to create awareness of the product among both producers and consumers, many of whom are stuck in their ways of buying and selling insurance coverage. "We want to break people out of their concrete mindset and make them realize it's more likely that someone will have a critical illness than a long-term disability in their lifetime," says Slome, who's also founder and executive director of the American Association of Long-Term Care Insurance. "We want people to realize that they're more likely to have a critical illness than to die before the age of 65, so critical illness insurance is a more valuable product than life insurance."
Slome believes that there will be a significant growth in sales of critical illness insurance by people aged between 40 and 50. According to a recent study of the market carried out by the AACII, nearly half of individuals purchasing critical illness insurance protection were under age 45, and the vast majority of buyers do so prior to turning age 55. Among those purchasing individual critical illness insurance policies, 20% were under age 35; 27% were between ages 35 and 44; and 34% were between 45 and 54.
The AACII will be undertaking an aggressive consumer awareness campaign in 2010 to build an understanding of the benefits of the protection that is popular outside of the United States, Slome says.
"We want people to understand that this is an important form of protection," he says.