Increasingly Americans Are Purchasing Critical Illness Insurance

February 28, 2022

For the past several years, critical illness insurance sales have been growing. It is estimated that over 600,000 Americans now have critical illness protection in excess of $11.5 billion dollars. That trend is in keeping with the high number of adults in the United States living with a chronic disease. The Centers for Disease Control and Prevention (CDC) estimates that 6 in 10 adults in the U.S. have a chronic disease. Statista reported that in 2021, approximately 15% of adults in the U.S. have at least two chronic diseases. Another important statistic is that the number one cause of personal bankruptcies in the U.S. is unpaid medical bills stemming from a critical illness. It is for this reason that more and more Americans are purchasing critical illness insurance. It is the single most important way to protect one’s assets and avoid a bankruptcy and its impact on one’s financial well-being.

What to Look for in a Critical Illness Insurance Policy

Today, more and more employers/plan sponsors are offering critical illness insurance as part of their voluntary product suite. In doing so, they are encouraging their employees/plan members to take control of their financial health. Further, by vetting products so that a high-quality critical illness insurance policy can be provided to their employees, they are eliminating confusion for their employees and the likelihood that individuals overwhelmed about what to seek in a policy will simply avoid buying it.

Among the features that should be sought in a critical illness policy are:

  • A face amount of up to $50,000 for the primary insured and 50% and 25% of the face amount for the primary insured’s spouse and dependent child/ren, respectively
  • Cash benefits paid directly to the primary insured or his/her family
  • Guaranteed renewable feature (the coverage is in force for life as long as the premiums are paid)
  • Portability
  • Recurrence benefit such that if the primary insured or a family member has a recurrence of the same critical illness separated by 12 months, the lump sum benefit is payable again.
  • Additional occurrence benefit (provides a lump sum benefit for different critical illnesses separated by 6 months)
  • Maximum benefit amount of 3x the face amount
  • Level premiums that do not increase with age

Best Lifestyle Measures to Prevent Critical Illness

While critical illnesses can’t always be prevented, there are some sound lifestyle behaviors that can help ward off some medical conditions and/or give one a better chance of surviving critical illnesses such as heart failure, strokes, cancer, diabetes, chronic obstructive pulmonary disease, and kidney disease. Here are tips from the CDC for a healthier lifestyle that can play a vital role in mitigating the risk factors associated with a critical/chronic illness:

  • Quit smoking
  • Exercise regularly and increase aerobic activity
  • Eat healthy, well-balanced meals and eliminate processed foods and those that are high in salt, sugar, or preservatives
  • Keep up with an annual physical and all recommended medical screenings based on age and gender
  • Reduce and manage daily stress and find outlets and activities that bring peace and happiness

Making Progress

According to the CDC, Americans are making progress with lifestyle improvements that help combat critical/chronic illness. For example, from 2012 to 2018, one million smokers quit and there was a 10% increase in the number of adults participating in aerobic activities, going from 44% to 54%. Other positive strides can be seen in the over 570,000 people who participated in the National Diabetes Prevention Program lifestyle changes, as well as the estimated 135,000 cardiac events prevented from 2012 to 2016 through the CDC’s Million Hearts initiative which resulted in averting $5.6 billion in medical costs.