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Perspective

Critical Illness As a Supplement to Life Insurance

April 15, 2014| By Steve Rowley | Critical Illness, Life | English

Region: U.S.

Dr. Marius Barnard, the father of Critical Illness insurance, is often quoted as having said that people need Critical Illness insurance “Not because you are going to die, but because you are going to survive!” That statement is becoming truer with each passing year and with every development in medical technology.

At the turn of the 20th century, when the average U.S. life expectancy at birth was only 47 years (Source: CDC - all races, both genders) the single greatest financial risk to most Americans was premature death. The financial impact, especially for the family wage earner, was often devastating to the family.

Fast forward 100+ years and we see an entirely different situation. Mortality rates continue to drop and average life expectancy at birth has climbed to 79 years (Source: CDC - all races, both genders). While premature death should still be a concern, the financial impact of surviving a serious illness can be as financially devastating as dying from it. The cost of medical care, lost wages, and life saving pharmaceuticals can quickly consume a family's life savings.

During the 18-year period 1982 – 2010, average U.S. life expectancy increased 5% from 75 years to 79 years. During this same period, the percentage of deaths as a result of cancer, heart attack, and stroke dropped by 31% from 68% to 47% This was due in part to life-saving medical breakthroughs that occurred at an unprecedented pace in recent years and promise to continue into the foreseeable future. We live in an era of unprecedented survival rates for cancer, heart attack, and stroke. Great news? Of course! But it comes at a cost.

Cancer is the most common CI claim and often the highest out-of-pocket cost to patients. The incidence trend of cancer has not necessarily followed survival trend.

For example, colon cancer has seen favorable changes in incidence, while thyroid cancer shows increased incidence. Looking at all forms of cancer during the period 1982 – 2009 (both genders, all races), we see an increase in incidence from 424/100K  to 465/100K. Yet many of these individuals are exposed to distressing financial consequences as a result of survival rather than death.

These gaps, and their associated financial risk, will likely continue at an accelerated rate as life saving technology and treatments help more individuals survive their initial diagnosis - only to be saddled with medical bills that have driven many into bankruptcy. This is why CI insurance is needed.

In view of improved mortality trends and expectations, most insureds pay less for life insurance today than their peers paid 30 years ago. The average 20-Year Term policy rates (age 40, male, preferred non-smoker) dropped roughly 27% between 1997 and 2007. Though the cost of life insurance is more affordable, it does nothing to help insureds who are fighting to stay alive.

Critical Illness insurance is the perfect supplemental sale to Life insurance “Not because you are going to die, but because you are going to survive!” The statistics favor life!

1,660,000 Diagnosis of Cancer
580,000 Deaths from Cancer
1,080,000 CANCER SURVIVORS

915,000 Heart Attacks
386,000 Deaths from Heart Attack
529,000 HEART ATTACK SURVIVORS

795,000 Strokes
129,000 Deaths from Stroke
666,000 STROKE SURVIVORS

From a marketing point of view, the issue is quite simple. If your customers have Life insurance but don't have Critical Illness insurance, they are more prepared for death than for life! With CI insurance, we can help protect these survivors from financial ruin and bankruptcy while they are fighting for their very lives.

 

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