Barnard: Its Time To Promote Critical Illness Insurance In The U.S.
“Would you rather have a heart attack and lose your house, or have a heart attack and lose your mortgage?”
Dr. Marius Barnard of South Africa posed the question here while keynoting at the first annual meeting of the National Association for Critical Illness Insurance, Washington, D.C.
His question targeted the key aspect of CI insurance that he believes people in the United States need to know–namely, that CI insurance provides a type of financial safety net following diagnosis of a covered critical illness.
For example, instead of losing the house to creditors, a survivor who owns a policy that covers the persons illness can use the CI policy benefits to pay off the mortgage.
Barnard said he came to the meeting to urge insurers and producers to promote awareness of the coverage and how people can use it to meet their own post-diagnosis financial needs.
Go to the media, he said. Talk about it. Get on the “Larry King Live” television show and other talk shows.
Barnards view is that, without such insurance, survivors risk losing everything they have, including their house. But if they have this coverage and the policy covers their condition, survivors can pay for rehabilitation, housing adaptations, debts and other expenses.
Barnard, who developed the first critical illness policy with Crusader Life in South Africa in 1983, is a surgeon. He served with his brother, Dr. Christian Barnard, on the famous South African medical team that performed the worlds first heart transplant.
His experience with treating patients and seeing their financial problems when they survive is, he says, what motivated him to develop and promote CI insurance.
CI insurance pays the insured a lump sum if he or she is diagnosed with a critical medical condition specified in the policy. Common conditions are heart attack, stroke and cancer, but policies often include many other illnesses. Policyholders can use the benefit any way they choose.
The policies have been sold in the United States since the mid-1990s, and market observers estimate there are now 40 to 45 insurers selling CI insurance–group and individual, as riders or stand-alone contracts. Today, in-force annual premium in the U.S. is about $100 million, according to Dan Pisetsky, president of U.S. Living Benefits, Manchester, Conn.
Now, the new CI association has formed to, among other things, spark greater awareness of need for the product.
“I think youve started an unbelievably important thing here,” Barnard said of the new association. The NACII was started with the goal of educating producers and the public about what CI insurance is and does. Its members include insurers and producers. (See related article.)
CI insurance has taken off in every country where it has been introduced, including South Africa, the United Kingdom, Japan and Canada, Barnard said.
Sales usually start slowly, he conceded, but after a few years, momentum builds and the coverage becomes commonplace.
In the U.K., for example, sales were under 200,000 policies a year in the 1990-1992 period. Today, they are over 1 million a year in the U.K.
The time is right for sales to take off in the United States, too, he said.
Thanks to medical advances, survival rates following diagnosis of critical illnesses are much higher than decades ago, Barnard pointed out. “You have people all over America who have survived these diseases” for several years.
These advances have contributed to expanded life expectancy, he said, noting that it is now 78 years for males and 83 years for females, up from 42 years and 46 years, respectively, in 1900.
But, he said, there are implications for the whole family when people survive a critical illness. “People who survive dont complain about their health,” he observed. “They complain about their money. They lose their financial strength, sometimes their house, and as a result their self-esteem.”
The direct and indirect costs associated with survival are “absolutely significant,” he contended.
Modern medicine has failed these people, he said, “because the quality of life we wanted to give them has turned into quantity of life.”
Everyone knows this, he added. “But if you know it, why dont you do something about it?”
What survivors and their families need is protection insurance that will help them pay post-diagnosis expenses, he contended.
“It is an awesome responsibility you must consider when you talk about protection insurance,” he maintained. “People need it not because they are going to die (following a CI diagnosis), but because they are going to live.”
At another point, he told the audience that, CI insurance does encounter critics when it is first introduced to a market. But he said he does not view that as a problem.
He likens the criticism to that which the South African medical team members received when they performed the first heart transplant. Critics charged the procedure was immoral and illegal, he said. But now it is performed all over the world. “The publicity was incredible,” he recalled.
With CI, not a week goes by that local newspapers in the U.K. and South Africa dont carry articles about CI insurance. Not all articles are favorable, he told National Underwriter, but people are aware of and talking about the coverage, and sales continue to grow.
Health insurance coverages tend to develop in response to disease trends, Barnard noted. Thus, there is a “golden thread” between disease and insurance, he said.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 3, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.