A lackadaisical economy. Ever-rising healthcare costs. Health care reform … maybe.
These and other factors are contributing to a sense of financial unease for businesses. Higher-deductible health plans can help employers control costs, but they leave employees at increased financial risk.
Most Americans don’t have much in savings to help cushion their wallets from the impact of a major health issue. And nearly two-thirds of U.S. bankruptcies are the result of medical expenses, according to the American Association for Critical Illness Insurance (AACII), Westlake Village, Calif.
Combining voluntary benefits with high-deductible health plans is an effective way for employers to provide employees more coverage. Brokers and employers recognize that critical illness coverage, in particular, is the perfect complement to high deductible health plans, higher co-pays and Health Savings Accounts (HSAs).
The market for critical illness insurance is showing consistent, significant growth. In 2010 Eastbridge Consulting reported that sales of critical illness have doubled since 2007. And as a leading provider of critical illness insurance, Unum has experienced 20% growth each of the past four years. AACII estimates that about 1 million Americans are covered by a critical illness policy.
Sales and claims information from my company, Unum, can help shed light on the product’s growth and how consumers are using critical illness insurance.
Understanding the need and the coverage
Even with medical coverage, out-of-pocket costs for serious health conditions can be high. In a study by Duke University Medical Center and Dana-Farber Cancer Institute of cancer patients, 30% of respondents said their expenses were a “significant burden” and 11% described them as a “catastrophic problem.” These are the kinds of concerns critical illness coverage is designed to mitigate.
In the past five years, Unum has approved more than 6,000 critical illness claims and paid about $70 million in critical illness benefits.
Cancer is the top condition cited, affecting 55% of Unum’s critical illness claims. Heart-related claims are second, involving 28% of claims. Yet, the leading condition differs by gender. Women are more likely to file cancer claims, while men are more likely to file heart-related claims.