Does PPACA open the door to Critical Illness?
In 2014 with the implementation of the health insurance exchanges, critical illness coverage can provide a supplement to consumers who are insured under the health insurance exchange’s basicBronze level planwhich will cover the essential health benefits at 60%. Individuals on the bronze plan may consider supplemental critical illness plans as an inexpensive opportunity to fill gaps in their coverage.
Critical Illness is an insurance product that originated in South Africa in the early 1980s. It provides for a lump sum benefit on the diagnosis of a contractually specified insured condition. The premium and benefit structure resembles life insurance. The insured uses the money any way they want to solve their own problem. Typical insured conditions include but are not limited to cancer, paralysis, kidney failure, coronary artery bypass surgery, major organ transplant, multiple sclerosis, blindness, deafness and the loss of one or more extremities.
Popular optional benefits include return of premium and recurrence benefits on a full or partial basis. Recurrence benefits are usually structured to allow for 50%-100% of the original coverage to be paid for a recurrence of a covered benefit trigger. A distinction is usually made between the same diagnosis or a different diagnosis and the length of time between occurrences. Also, some benefits such as Cancer In Situ may be excluded or limited to one occurrence under the policy. According to a 2012 Buyer & Claimant Study conducted by the American Association for Critical Illness (AACII), 47% of new critical illness insurance claims in 2011 began prior to age 55.
Critical Illness insurance addresses economic loss or expense insured’s and their family experience as a result of suffering and/or surviving a critical illness that other insurance does not address. Economic loss or expense primarily consists of loss of income, insufficient income, uncertainty of income.
6 ways CI helps insureds
So when an insured is diagnosed with cancer or multiple sclerosis, suffers a heart attack or stroke, critical illness helps the insured in the following ways:
- While critical illness insurance is not a good solution for the loss of partial or total income for the insured it can address the lost income for the family when the insured is recovering or the insured’s spouse needs to help care for the insured during a recovery period.
- Additional expenses related to drugs and therapies not covered by medical insurance.
- Additional expense related to the modification of an insured’s home and lifestyle enabling them to cope with their condition. Critical Illness provides the funds to modify their home and car to make the quality of life more comfortable.
- Additional expenses related with paying for things the insured may not be able to do any longer such as child care or home health care assistance not covered by insurance.
- Being diagnosed with a critical illness often results in fear, anxiety, and insecurity related to a shortened life expectancy, and its impact on the insured’s family. Critical illness insurance provides the cash that can relieve some stresses related to the suffering of a diagnosed condition. Lump sum benefits paid out from a critical illness insurance plan can pay the insured’s mortgage or business debits while recovering.
- Finally critical illness benefits could provide the funds to address the issue of opportunity loss for the insured. Surviving a critical illness often leaves the insured reluctant to return 100% to their career or business. Critical illness insurance is the only insurance that can provide this benefit.
Next page: 7 markets for CI
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