The Timing Is Right For Critical Illness Insurance In The U.S.
Any study of critical illness insurance on a global basis provides compelling evidence that it is and has been a leading seller in other countries, among them South Africa, Australia, England and Canada.
What are its sales prospects in the United States? Favorable. In fact, given that over 40 individual, worksite and group insurers are already selling CI insurance in the U.S., the product is positioned to be a big seller here.
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Before seeing why, lets review what CI insurance is. This is an insurance product that pays a lump-sum benefit upon the diagnosis of a critical illness such as life-threatening cancer, heart disease and stroke. Other covered conditions often include organ transplant and partial payments for angioplasty and bypass surgery.
A compelling reason or event usually precedes a purchase and, in turn, motivates the consumer to buy.
For instance, in the United Kingdom, cutbacks in government unemployment programs and socialized medicine became catalysts for increased mortgage-related sales of CI insurance. (The majority of CI policies sold there are mortgage-related and accounted for 53% of new CI sales in 2000.)
In Canada, socialized medicine seems to be the driver for CI insurance sales growth. The coverage debuted in that country in 1995, and now approximately 28 Canadian companies are offering it.
We have already said that the product is starting to make inroads in the U.S. market. But what compelling reasons are driving this trend? The two major drivers are health care and financial liquidity.
Regarding health care, here are factors that are coming into play: People here are living longer. New pharmaceuticals and medical ingenuity have increased life spans, to the point that the typical 65-year-old woman can now expect to live to age 87 and her male counterpart can expect to live to age 83. As a result, the baby boom generation has become very concerned about the financial aspects of living longer.
Further, in this era of consumer empowerment and choice, consumers are fending for themselves in such areas as managed health care, financial planning and retirement. A key impetus for this is the cost-control efforts of employers, who are now shifting more of the cost burden for health insurance to employees through higher deductibles, co-payments and other arrangements.