Critical illness insurance was born in concept due to the soaring medical bills people would find themselves shackled with after surviving a critical health event such as a heart attack or cancer. They may have survived the illness, but their financial well being was destroyed. The need for a product like this made sense. The overall idea made sense. But over time, challenges arose.
First, people don’t consider buying a product like critical illness insurance until they need it. Back in 1997, when critical illness insurance was first introduced in the United States, it typically paid for a standard list of illnesses and policyholders could collect a benefit once, twice, or multiple times. These additional opportunities to collect a benefit offered a sensible way to evolve this product.
But the reality is that it is not common to have a heart attack or cancer diagnosis and then lose hearing or go blind, even though these conditions are subject to receive separate benefits. More common, unfortunately, is recurrent and/or progressing cancer where appropriately recurrent coverage does make sense. However, traditional insurance carriers put limitations on how soon someone can collect a recurrent benefit and these limitations can be unrealistic, meaning there may not be a benefit available to a policyholder as they experience these diseases. A few years ago we conducted focus groups and surveys with consumers who either had a critical illness or cared for someone who experienced a critical illness, and we learned that, in theory, many carriers were missing the mark when it came to critical illness insurance.
One of our biggest aha moments was how people believed the language limitations in contracts didn’t align with their treatment or experience, especially when it came to the three most experienced conditions: Cancer, heart attack, and stroke.1 And that’s significant. I’ll come back to this concept later, but let’s continue on this path of plan evolution.
Expanding the list
Another way carriers would commonly enhance the product would be to add more conditions, such as tuberculosis or rabies, to the base plan. These illnesses would get added to a growing list of covered conditions with the thought that they would expand the usability or value of the product and make it better. However, every condition added to the list also meant an increased cost for the policyholder. And, when you consider your lifetime chance of contracting or being diagnosed with any of those conditions, that likely isn’t really adding value.
On the other hand it’s likely that a family history of cancer or heart disease might be a bit more on a policyholder’s radar. Our research determined that many consumers were concerned about how to get ahead of illness so it didn’t happen in the first place, and how to know and understand their risks so they could take action.
Considerations for the future
Now that you have a solid foundation of the evolution of this product, what can we all do about it—as carriers, as an industry, as communicators—to help critical illness insurance evolve?
What does all of this mean?
First, the language in most critical illness policies is based on the same language that was written 30 years ago. Consider the medical advancements that have happened in 30 years. Do you believe doctors diagnose in the same way? Take carcinoma in-situ as an example. We in the industry may know that term, but for the average policyholder it’s confusing—and a very good reason why many doctors diagnose in stages.
In this industry one third of all critical illness claims are denied, and more than 60 percent of those claims are denied because a condition is not covered or a definition that triggers a benefit is not met.1 To put it plainly, this could very well be because the alignment of a medical diagnosis is different than what would trigger a benefit in a traditional critical illness policy.
And this becomes even more important when you think about how that would affect the three main conditions I mentioned earlier, that comprise 90 percent of all critical illness claims: Cancer, heart attack and stroke.1 Proper benefits and triggers should exist for these illnesses to provide the best value.
Second, in today’s world, given the abundance of early testing, many patients do get diagnosed earlier. And for that person that’s a real experience, whether it’s severe enough or not. However, most traditional plans today would deny that claim. The same would be true for a person who suffered a transient ischemic attack (TIA or “mini-stroke”). They wouldn’t receive a benefit from most plans on the market because it wasn’t a more damaging stroke with permanent impairment. That is a critical health event to someone who experienced it, and it should qualify for a benefit.
Lastly, many consumers want to be healthier. So why haven’t policies seized the opportunity to incorporate genetic testing like BRCA1 or BRCA2? I believe we as an industry can do a better job of incorporating increased benefits for prevention and preventive health measures. Many policies do include a benefit for cancer screenings, but there is more to disease prevention than simply offering a benefit for one screening per year.
In summary, our industry has changed, which is why we put effort into changing our own critical illness product. Early diagnoses, disease prevention, and proper health event triggers should be a common part of any critical illness policy. What one may deem critical is not necessarily the same across the board. I think this industry is in for a new shift, and this product will begin to be used in a broader way; it’s not just for the severely ill anymore.
Gen Re. U.S. Critical Illness Survey 2013/2014.
joined Trustmark in 2009. As senior director of product and innovation for Trustmark's accident and critical illness insurance products, she is responsible for researching marketplace trends and assessing the voice of the customer in order to create new product solutions for customers. She holds a bachelor's degree in communications from Liberty University in Lynchburg, VA. Kuretich can be reached at Trustmark Voluntary Benefit Solutions, 400 N. Field Drive, Lake Forest, IL 60045. Telephone: 847-283-2640. Email: [email protected]