Critical Illness Insurance: A Universal Fix for Coverage Gaps?

Talk of healthcare and auto insurance rates seems to dominate the headlines these days, but in all this push, customers could be missing out on one key product with almost universal appeal: critical illness insurance.

According to Prudential Vice President of Voluntary Benefits Bob Patience, this type of coverage can serve to “fill the gaps” for workers, who may be dealing with serious illnesses.

“Critical illness insurance pays a flat-level benefit for the diagnosis of one of the handful of very serious illnesses or conditions like heart attack, stroke, or cancer,” Patience said. “And what it does, is it helps to fill the growing financial gap as employees are subject to higher and higher out-of-pocket medical costs. Critical illness insurance helps to fill those gaps so people don’t get in to major financial stress as they’re facing a major illness.”

There are currently 3 factors contributing to the need for critical illness insurance:

Low Savings Rates

Wages are stagnant. Full-time employment is down. Costs are up. And as the Affordable Care Act (ACA) faces an uncertain future, the jury is still out as to whether any relief will be coming from the healthcare industry. As a result, families are facing greater and greater medical strain and living paycheck-to-paycheck. This makes it very difficult for these families to ever put away money, and the less they save, the more blindsided they will be in the event of a medical or other emergency.

Rising Healthcare Costs

For many working families, the ACA savings have yet to take hold. Even for those who will benefit under the new law have had to wait four years for implementation, and if the government can’t meet its enrollment minimums, then it’s doubtful any promised subsidies will actually come through. Also, the White House has attempted to push back the announcement of 2015 rates until after the midterm election, causing many speculations from the Right and the Center of the aisle as to whether that means a continuing rise in costs are in store for the US one year from now. The national healthcare costs are among the most expensive in the world, and it doesn’t appear to be improving. This places an even further strain on families without discretionary income.

Shifting of Responsibility for Benefits to the Employee

One major perk of working for someone the last several decades has been the cushy benefits package that many employers provide. However, that could soon be going away. Many employers are expected to drop offered insurance coverage and pay the per-employee penalty rather than paying more. Large and small companies have already started cutting hours and jobs as well. This shakeup will place the burden of costs back on employees, who either have to pay full premiums on their own or have to go without insurance and hope that a major medical event doesn’t occur. ACA seeks to even the playing field, but again, its future — at least in the current form — is not certain.

In Summary

All of these factors are good reasons to sign up for a critical illness insurance plan today. If you’re an employer, who plans to continue providing coverage in the post-ACA marketplace, you may even want to encourage your employees to opt in for this product. By explaining its universality to workers, it can lead them to make the kinds of informed decisions that result in peace of mind. And ultimately, that makes for a more productive citizen, don’t you think?

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