Cancer insurance: Help your clients fight financial hardship due to critical illness
Co-authored by Laura Spencer
Last month during Cancer Awareness Month, we heard about wellness programs, early detection measures that are available and many pleas to help find a cure, all of which are extremely valuable. One item we hear too little about is the availability of cancer or critical illness insurance.
Now wait just a minute and do not stop reading this article. Many pundits think this is just fluff insurance and suggest you would be better off putting more money into a stronger health plan rather than purchasing this product. We strongly disagree, but before we go any further we would like to say what a wonderful job organizations do for cancer awareness. We also applaud the efforts of every cancer organization that is working so diligently to find the cure, and we applaud the efforts of groups that provide support for survivors and their families and friends.
Financial burdens of treating cancer
But while all this goes on, do you realize how many people that are diagnosed with cancer end up having financial hardships and filing for bankruptcy? We would bet that each of you reading this article has seen or been to a spaghetti fundraiser dinner that raises funds for a family or a person fighting cancer. We need to bring this critical illness insurance awareness to the community level and help people in need while the fight goes on to find the cure.
We cannot just wait around for the cancer cure. We have to provide solutions to those battling cancer and suffering financially because of it. This is where critical illness insurance comes in. Great strides have taken place in trying to find a cure but mainly what has happened is we are now able to live longer once diagnosed, thereby increasing the chances for financial strife.
Bankruptcies in America
Let’s go back to the pundit that says we are better off buying really good health insurance rather than adding cancer coverage to our portfolio. Bankruptcy records in the United States show that 70 percent of filings were due to medical bills and 78 percent of those who filed had health insurance! If you were diagnosed with cancer, would you rather have a get well card or a check for $30,000?
While advances in medical science have significantly improved our chances of surviving a heart attack, cancer, stroke or other critical illness, the fact remains that 75 percent of healthy individuals over age 40 will become critically ill at some time in the future. Here are a few more facts:
- More than 50 percent of all personal bankruptcies in America are due to critical illness.
- Medical problems contributed to half of all home foreclosure filings in 2006.
- For those suffering a critical illness prior to age 65, the probability of surviving is almost twice that of dying.
Critical illness insurance can cover those out-of-pocket expenses that are not covered under your health insurance plan. This may include: health insurance deductible, co-insurance, extended convalescence, travel expenses for treatments and treatments not covered by traditional health insurance. These costs are generally not even considered and are expected to be covered by one’s health insurance. This is where the awareness factor comes into play. How can we help people if they have no knowledge that a plan like this exists? Income replacement
While a cancer patient is in treatment and recovery, their income stream generally stops. Critical illness insurance can provide a source of income to help pay the monthly bills, such as the mortgage payment, utilities, car payments, etc.
Also, with the cost of health insurance plans today, more people are selecting plans with higher deductibles. The critical illness plan can be used to cover the high deductible along with providing income replacement. This coverage is considered a living benefit because it provides money that can be used to pay the bills and protect your savings account while you are alive.
More importantly, this coverage provides peace of mind. When you receive this benefit, you can focus on recovery, rather than worrying about where the money is going to come from to pay your bills.
Decline of the middle class
Considering the current state of the economy, we believe this insurance product is vital to preventing the decline of the middle class. Are you aware that 71 percent of employees live paycheck to paycheck? This is a staggering figure and one that demands attention. Critical illness insurance will help prevent bankruptcies and financial hardships for those diagnosed with cancer.
Seniors and the threat of bankruptcy
The bankruptcy rates among seniors are growing at an alarming rate. According to the AARP, from 1991 to 2007, the rate of personal bankruptcy filings among those ages 65 and older increased by 150 percent. The largest increase occurred among those ages 75 to 84, soaring at a rate of 433 percent! Why is this, you ask?
Medical bills and prescription costs play a major role, as does credit card debt. Being a senior citizen today is certainly not like it used to be. Seniors used to rely on pensions and Social Security to carry them through their golden years. Today, many pensions have been cut or are no longer being offered to employees. Employees have to save for their retirement years.
Another reason is we live longer today, so seniors are outliving their retirement savings. They rely on credit cards to pay their bills in order to survive. Some seniors struggle with having the funds to buy their medications. Some actually have to choose between buying groceries or their medications, because they do not have the money for both.
A 2010 study by the University of Michigan Law School called “The Rise in Elder Bankruptcy Filings” found that elder debtors carry 50 percent more credit card debt than younger debtors. 50 percentof senior citizens say that credit card interest and fees are the reason for their bankruptcy filings. In this same study, older debtors who filed for bankruptcy owed a median $22,562 to credit card companies.
Critical illness insurance would help prevent these financial troubles and would provide peace of mind so they may live out the rest of their golden years comfortably.
Critical illness insurance awareness
In closing, we feel that cancer awareness should go hand in hand with critical illness insurance awareness. Most people are aware of the great strides organizations have made to get the word out on cancer prevention and wellness, but not enough information has been made available to the public regarding critical illness insurance.