Advances in medicine mean people today live longer lives, even if they suffer from critical illnesses. Naturally, living longer with a critical illness means paying more treatment-related costs—a possibility that has many Americans concerned. In a recent Sun Life Financial study, 47 percent of participants aged 40 to 50 said finances would be their top worry if faced with a critical illness, far more than the 29 percent who named dying as their primary fear.1
What is critical illness insurance?
As a benefits decision-maker, you understand the importance of critical illness coverage. And while most workers are well-versed about the need for major medical, home and vehicle insurance, many don’t know that critical illness coverage exists.
Critical illness insurance is a way for employees to help themselves stay ahead of the medical and out-of-pocket expenses that can accompany certain medical events. For example, many lump-sum critical illness policies pay benefits when an individual experiences a covered event such as:
- Heart attack
- Major human organ transplant
- End-stage renal failure
Why consider critical illness insurance?
Critical illness coverage helps provide protection from the financial liability of certain catastrophic health events. Receiving a lump-sum benefits payment helps policyholders worry less about how to pay illness-related expenses and concentrate more on recovery.
With new statistics and projections about the likelihood of suffering from a critical illness, there has never been a better time to offer supplemental voluntary insurance at the work site. As employers evaluate, choose and communicate their benefits offerings to employees, it is important that they convey the potential financial impact of being diagnosed with a critical illness.
The 2015 Aflac WorkForces Report survey revealed that health care costs have a long-lasting effect on American workers’ creditworthiness. Participating employees said medical costs are affecting their credit scores, keeping them from paying other bills and thwarting their efforts to save for retirement or a rainy day. In fact, 52 percent had less than $1,000 on hand to pay out-of-pocket medical expenses.2
The Aflac report’s findings are echoed by those of the Consumer Protection Financial Bureau, which found that nearly 20 percent of U.S. consumers—or almost 43 million people—have unpaid medical debts. The study also found that more than half of all debt listed on credit reports stems from medical expenses and that the average person with overdue medical debt owes $1,766.3
How can critical illness insurance benefit employers?
In addition to playing havoc with employees’ finances, the high price tag associated with critical illness also affects companies’ bottom lines. The financial distress suffered by workers can lead to absenteeism, on-the-job distraction and a general sense of anxiety that is difficult to leave at the door.
When working with a broker or insurance adviser to strengthen their benefits offerings, human resources experts should ask for information about how critical illness insurance fits into the picture. In general, critical illness policies work side by side with major medical plans by offering cash benefits that can be used to pay deductibles, copayments and other out-of-pocket medical costs. Because cash benefits can be used as a policyholder sees fit, they can also be used to pay household expenses, including the rent or mortgage, utilities, credit card debt and any other bill threatening the policyholder’s financial security.
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1 Sun Life Financial, “Well-placed fears: Workers perceptions of critical illness,” accessed Sept. 18, 2015.
2 The 2015 Aflac WorkForces Report was conducted in January 2015 by Research Now and includes responses from 1,977 benefits decision-makers and 5,337 employees from across the United States. To learn more about the Aflac WorkForces Report, visit workforces.aflac.com.
3 Consumer Financial Protection Bureau, “CPFB spotlights concerns with medical debt and reporting,” accessed Sept. 18, 2015.