The typical family's income slips by more than $12,000 in the year after a breadwinner suffers a critical illness such as a heart attack, stroke or cancer, according to a study by Metropolitan Life Insurance Company.
This reduction of income isn't primarily due to lack of medical coverage. It is actually attributed to the inability to work and earn an income. The approximate out-of-pocket medical expenses add about $3,000 in extra costs during the first post-diagnosis year.
Despite these side effects, the study revealed that:
With so many Americans unprepared to deal with the short- and long-term loss of income and out-of-pocket expense associated with a critical illness, it may be time to take another look at voluntary benefits. According to MetLife, every surveyed patient had medical insurance, but only 7% had critical illness insurance, and only 4% had cancer coverage.
Critical illness insurance
Critical illness insurance provides a one-time or lump-sum payment to assist in offsetting the out-of-pocket expenses associated with certain critical illnesses.
Applicable critical illnesses may include an organ transplant, heart attack, stroke, cancer, loss of vision, burns, HIV, or kidney failure. This insurance is not a replacement for standard health insurance or disability insurance; rather, it supplements such policies.
Only 28% of the surveyed full-time workers had heard of insurance for critical illness, and some confused it with their standard health insurance policy. Further, one in five confused it with disability insurance or other government programs.
By expanding employee benefits to include voluntary critical illness insurance or raising awareness about existing benefits, employers are offering important financial protection to employees.
In other words, employers can help bridge the gap between the cost of a critical illness and what standard insurance covers, allowing employees dealing with a critical illness to better focus on recovering and possibly returning to the workforce.
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In February 2020, The Friedman Group joined AssuredPartners, the 11th largest insurance brokerage in the U.S. This partnership provides us access to additional capital and a national footprint that enables us to continue to negotiate the most favorable coverage terms and conditions for our clients, and allows us to provide an even broader spectrum of risk management support services.