Posted on 26 Aug 2010
Two companion studies released by MetLife found that experiencing a critical illness, such as cancer, a heart attack or stroke, can reduce a family's income by more than $12,000 in the first year alone -- even with medical coverage in place -- primarily due to the inability to work. In addition, these families experience out-of-pocket medical costs of about $3,000 in the first year after diagnosis. Yet nearly half (46%) of full-time working Americans have less than $5,000 in savings available to tap to cover expenses in the event that they, their spouse, or significant other was diagnosed with a major illness and more than one-fourth (28%) have less than $500.
"The MetLife studies found that many people are unprepared to cope with the toll of lost income as well the out-of-pocket medical expenses and other illness-related costs," said Clea Barth, vice president, Critical Illness Insurance Products, MetLife. "A critical illness can have a long-term impact -- even three to five years after being diagnosed, 60% of people experiencing these serious medical situations are still incurring out-of-pocket expenses."
While all patients surveyed had medical coverage, only 7% of respondents reported that they had critical illness insurance (CII) and 4% reported having cancer insurance. This isn't surprising given that the MetLife studies also found that only 28% of full-time employees say they have heard of CII. Of these, three in five appear to be confusing it for health insurance, and one in five confuse it with either a government insurance program or disability insurance.
CII can complement existing medical coverage and other financial protection products by providing a lump sum payment to help offset the spike in out-of-pocket expenses resulting from certain critical illnesses, such as cancer, stroke, heart attack, major organ transplant, or kidney failure.
"Receiving a lump sum benefit can make a significant difference to families given that about one in four working Americans simply did not know where they could turn to for financial help if confronted with a critical illness, and 39% cited the need to go into debt -- whether borrowing from a bank, from their home equity, or from friends and family," adds Barth. "These findings underscore the important role that CII, along with other protections such as disability income insurance, can play in strengthening a family's financial safety net."
The MetLife studies found that:
-- 55% of full-time working Americans are somewhat or extremely concerned that a critical medical condition could impact the financial well-being of their families.
-- Only one-third of working men and one-fifth of working women feel very confident that their rainy day fund could handle a financial emergency.
-- About two-thirds of workers say they have less than three months of savings available for a medical emergency.
When the concept of CII was explained, 58% of full-time employees said they would be interested in buying the product through their employer even if they had to pay 100% of the premium themselves.
About the Studies
The MetLife Study of the Financial Impact of Critical Illness was conducted in April 2010 by GfK Custom Research North America, and surveyed 1,002 people, ages 25 to 55, who had experienced one of the critical illnesses of cancer, heart attack or stroke between six months and five years prior to the survey. The respondent or spouse had to be the patient and the patient had to have health insurance at the time of diagnosis. The MetLife Critical Illness Awareness Study was conducted in April 2010 by GfK Custom Research North America, and surveyed 1,000 people, ages 25 to 55, among the general population, including 508 full-time employees. Respondents for both studies included both owners and non-owners of CII.