Critical-illness insurance finding a receptive public
May 31, 2007
From The Chicago Tribune:
SUPPLEMENTAL POLICIES
By Terri Yablonsky Stat, Special to the Tribune
May 29, 2007
Anyone who has survived a critical illness knows firsthand the physical and emotional toll of treatment and recovery. Many people are further challenged by the financial drain. Daily living expenses such as the mortgage and college tuition continue to mount. About half of personal bankruptcies are directly linked to a serious illness.
As more people survive such illness, thanks to medical breakthroughs, critical-illness insurance is gaining ground in the United States. This supplemental insurance, common in Canada and Europe, pays a lump sum to survivors of a critical illness to compensate for lost income and other expenses.
“Critical-illness insurance gives people flexibility so that if they’re hit with a serious illness, they don’t have to dip into their life savings for expenses not covered by health insurance or disability,” said Lew Whalen, vice president of marketing for Stonebridge Life Insurance Co. Stonebridge Life offers a one-time payment if you’re diagnosed with a covered cancer, heart attack, stroke or paralysis.
The trick is you have to get coverage while you’re young and healthy. Underwriters determine premiums based on age, health history, gender, smoking status and other factors.
“With critical-illness insurance, the devil is often in the details,” said Dr. Caleb Alexander, assistant professor in the department of medicine and affiliate faculty of the MacLean Center for Clinical Medical Ethics at the University of Chicago. “Despite many people’s expectations that they will receive a payout if they suffer a serious illness, up to one quarter of claims in the U.K. are ultimately denied, often because the critical illness doesn’t qualify or because beneficiaries failed to disclose a previously existing condition.”
Stonebridge Life offers a return-of-premium option in which those who apply before age 50 will get all their paid premiums back if they don’t make a claim by age 65. Return of premium is a one-time payment equaling all the money paid in premiums over the years.
“It’s all about planning ahead,” said skater Peggy Fleming, spokeswoman for Stonebridge Life and a breast cancer survivor. “This is another way to safeguard your family and protect yourself. Health insurance only covers part of medical expenses, and if you’re out of work, the situation is even worse.”
UnitedHealthcare, the second-largest insurer in Illinois, offers a critical-illness plan that provides a lump-sum benefit for a first diagnosis of cancer, chronic renal failure, heart attack, major organ transplant, paralysis, stroke, coma, severe brain damage, severe burns, or ruptured cerebral, carotid or aortic aneurysm. Once a benefit has been paid, the policy terminates.
Fort Dearborn Life Insurance Co., in conjunction with Blue Cross and Blue Shield, offers a one-time lump sum benefit if you are first diagnosed with a heart attack, stroke, life-threatening cancer, kidney failure or undergo an organ transplant covered by the plan. Benefits range from $5,000 to $50,000, in $5,000 increments.
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