Critical Illness Insurance, while regarded by many as a very useful and necessary service has not come close at all to the popularity of other types of insurance. It continues to remain below health, disability and life insurance in terms of policies sold. However, it is a growing product, and the outlook for Critical Illness Insurance is good. One of the biggest reasons for this is the growing (and usually accurate) perception of the general public that catastrophic illnesses, due to medical and non-medical problems cause bankruptcy regardless of health insurance coverage. The costs that go with a critical illness too often include things not covered by most health insurance policies, such as prescriptions, job loss and maximum benefit caps.
Major insurance companies have taken notice of trends like this. Companies such as MetLife and Mutual of Omaha began offering Critical Illness Insurance policies. And they aren’t alone: In the past three years, the number of major policy providers of individual CI plans more than doubled from 13 to 27. Perhaps even more importantly, 9 companies are putting employee plans into the works, greatly expanding the actual number of people covered by CI Insurance.
Currently, the most popular form of Critical Illness Insurance by a significant margin is the stand-alone plan. However, insurance companies are making inroads with other product designs. One of the most common is an accelerated product that places CI Insurance as a rider onto a life insurance policy. If a $100,000 policy is purchased and the client later contracts a critical illness, the policy will pay out. However, if no diagnosis is ever made, $100,000 is paid to the beneficiaries of the life insurance policy upon the client’s death. Some other features in development include:
First Occurrence
For those wary that they might not survive the period between diagnosis and payment, First Occurrence would pay benefits upon the diagnosis of the illness.
Recurrence
Traditional CI Insurance policies only pay out once, after diagnosis. However, a Recurrence policy would make a payment to the client if a relapse or recurrence occurred.
Additional Occurrence
If multiple illnesses are covered by a CI plan, only the first one to be diagnosed will pay out benefits. Under an Additional Occurrence plan, each time a covered illness was contracted, benefits would be paid.
Spouse and Child Coverage
This form of policy simply extends coverage past one individual that is purchasing it to multiple family members.
Covered Conditions
Changes are being made to the policies that are covered in basic and comprehensive plans. Multiple Sclerosis and Alzheimer’s, because they are difficult to diagnose and define are being dropped by some companies.
Wellness Benefit
Aimed at being used as preventative care, it is meant for health screening and tests with an average annual benefit of $50-$75.
Return of Premium
New and relatively radical, some policies in the future might return a percentage of premiums paid if individuals never receive benefit payments.
Critical Illness Insurance is relatively new to this country, and as a result it is refining its practices and improving upon its quality. Many CI Insurance providers now use extensive medical records and examinations to identify those at risk for certain illnesses as well as once a client is diagnosed. The body of references that most insurance companies have to evaluate claims is usually extensive, but in its infancy Critical Illness Insurance companies had no such resource. Only now that more and more people are buying CI Insurance and making claims for benefits do most CI companies have enough evidence to correctly confirm or deny payment to clients. Definitions that deal with the exact symptoms of illnesses as well as their extent are being standardized, both by general consensus within the industry and by using the Joint Committee on Cancer for a guideline.
Experience for companies that sell Critical Illness Insurance is important in increasing the quality and prevalence of coverage, but individual salesman and representatives are also building their knowledge of their product. Much more informed are those people that you will be in contact with, and your experience with the entire process will potentially be much better. What is important to realize about Critical Illness Insurance is that it is intended to protect individuals against catastrophic medical problems. It may have had some success acting as a buttress to health insurance, but it cannot remain viable if it continues to depend on the number of people with health insurance.
Make sure a critical illness insurance plan is right for you.
