Friedman Group

Critical Illness Insurance provides vital protection to employees

May 20, 2019

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:

  • In the event of a medical emergency, two-thirds of American workers had three months or less in available savings.
  • Only one-fifth of women and one-third of men were "very confident" that a financial emergency could be handled with their rainy-day fund.
  • A little more than half of those with a full-time job were extremely or somewhat concerned about the possibility of a critical illness impacting the financial stability of their family.
  • More than 28% did not have at least $500 in savings 

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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