Good News…Bad News…

In years past, being diagnosed with a critical illness might as well have been a death sentence! Very few people suffering heart attacks, cancer, or strokes survived for very long. Today, with the advancements in modern science and medicine, treatments are now available that have literally turned the old statistics upside down.

Deaths due to serious illnesses continue to decline. The average life expectancy in the United States has risen to 77.3 years. However, disabilities, due to these very same illnesses, continue to climb! Ironically, the same techniques that may save people’s physical lives–may also destroy their financial lives!

A Unique Beginning…The Concept

On December 3, 1967, the world’s first human heart transplant was performed in Cape Town, South Africa, by Dr. Christiaan Barnard and his “right hand man,” his brother, Dr. Marius Barnard. This significant achievement in medical history became the impetus for many more to come. Today, well over 2,000 heart transplants are performed each year in the United States alone!

At that time, the world became aware of a man named Christiaan. But, THIS story revolves around his brother, Marius!

It was not until he began his private practice in 1980 that he became acutely aware of the problems people face both BEFORE and AFTER being hospitalized.

“All of a sudden, I realized that illnesses also had FINANCIAL SIDE EFFECTS because everybody we operated on did not just get up and start going again. A lot of people had to change their lifestyles, and some of them even had to stop working,” he says.

As he began to grasp the seriousness of the problem, he visualized the concept of an insurance plan that could help people AFTER they had a critical illness.

“I realized that while life assurance is great for insuring lives, the majority of people need insurance because they are going to LIVE, not because they are going to DIE!” he says.

It was not until 1983 that he found an insurance company in South Africa to take him seriously and put his theory into practice—and the FIRST CRITICAL ILLNESS INSURANCE POLICY WAS BORN!

(You will be able the SEE and HEAR Dr. Barnard tell his own story at the end of this article.)

This new concept was positively received in South Africa and then spread to the United Kingdom, Japan, Australia, New Zealand, Canada, and most recently, the United States–thanks to his efforts!

The rest, as they say, is history!

The Side Effects…A Person’s Survival can come at a Cost!

Current employer-based healthcare coverage does not alleviate the financial burden of a critical illness. Health insurance pays healthcare providers, not the insured. In fact, the financial strain of EXPENSES NOT COVERED by medical insurance can be CRUSHING.

Loss of income is an obvious cost, not to mention loss of savings, which for some may even mean the invasion of their retirement plans. Costs begin to add up, like child care or unexpected household expenses. Mortgage or rent payments still continue. Some victims will need experimental treatment or a private duty nurse. Let us not forget the expenses associated with traveling to and from treatment centers. Others may have more extravagant needs like a special vehicle for transportation or a special home renovation to accommodate wheelchairs or electric scooters. The list goes on!

A gentleman I know, who is confined to an electric wheelchair, recently renovated his entire townhouse to include ramps, wider entrances, lower counters, and even the bath so he can take care of his personal hygiene without the help of others. He drives himself in his personally appointed van that includes a lift and hand controls. His desire for independence is totally understandable.

Consider:

A person in the U.S. is two and one half times MORE LIKELY to suffer a critical illness THAN DIE before age 65!

Over 50% of all bankruptcies in the U.S. are caused by serious medical problems and their accompanying bills that are NOT covered by health insurance!

What Is a Critical Illness after all?

Most available plans in the U.S. cover the five most serious conditions:

Cancer: One in two men and one in three women will develop some form of cancer in their lifetime.Heart Attack: In a given year, an estimated 1,200,000 Americans will have a coronary attack. About every 26 seconds an American will suffer a coronary event and about every minute someone will die from it.

Stroke: On average, someone in the United States suffers a stroke every 45 seconds, and there are more than 700,000 stroke victims in the U.S. every year.

End-Stage Renal Failure: About 4 out of 10,000 people have end-stage renal disease. In the United States almost 100,000 people are on chronic dialysis. In 2000, 96,000 new cases were diagnosed.

Major Organ Transplant: Kidneys are the most commonly transplanted organ. The operation is performed more than 13,500 times each year in the United States.

Each year about 16,000 Americans, age 55 or younger, could benefit from heart transplants, and this figure rises to about 40,000 for people age 65 or younger. 2,154 heart transplants were performed in the U.S. in 2002.

How do these plans work? There are Two Types of Plans…Plan Type One:

Most plans are of this variety. They pay a “lump sum” upon the diagnosis of a critical illness. Plans that are available as an employee benefit, through payroll deduction, generally offer benefit amounts ranging from $5,000 to $100,000 and can be purchased in $5,000 increments, allowing employees to choose a plan that best fits their needs and their budget.

Generally speaking, most of these plans “terminate” after the initial diagnosis of a critical illness, and therefore has no more coverage going forward. Even so, the original concept put forward by Dr. Barnard has been achieved.

Some companies go a step farther with plans that allow for TWO full payouts for critical illness. For example, one plan allows a SECOND payout, equal to the first, for a diagnosis of a DIFFERENT critical illness, providing the second diagnosis occurs more than 60 days after the first diagnosis! Remarkable!

These can be offered as a “stand alone” plan OR as a RIDER to a life insurance policy. The critical illness “rider” can cost substantially less then the “stand alone” version because it is attached to the life plan. This idea is very attractive to those employees who know they need more life insurance anyway, and can “couple” the two, to create a very affordable option. In this scenario, a benefit is paid whether the insured lives OR dies!

Plan Type Two:

There is yet ANOTHER type of critical illness plan on the market. It is an indemnity type plan that does NOT terminate with the first OR second critical illness, but “resets” every six months.

The initial “payout” is not as large as the original version, but can provide significant benefits for the future. It generally pays out a $5,000 “first occurrence” benefit for the initial diagnosis, and can GROW by $500 per year for each year in which no diagnosis occurs, dramatically increasing the benefit over time. The reset can allow subsequent, or “re-occurrence,” benefits of $2,500, separated by at least 180 days.

In addition to the “diagnosis payouts,” this version also pays daily hospitalization benefits, such as $300 per day with no limit to the number of days confined. They usually include many other benefits also, like continuing care for physician visits, various therapies, nursing and home health care. One plan has a separate Major Human Organ Transplant benefit of up to$25,000.

Cancer coverage is generally not covered in this type of plan, as it is usually sold separately. However, it may have broader coverage like benefits for Coma, Paralysis, Major Third-Degree Burns, Persistent Vegetative State (remember Terri Schiavo?), and Coronary Artery Bypass Surgery.

Regardless of which type of critical illness plan you choose, it can be a very welcome addition to your benefit program. As always, we recommend that employers should do their homework, seek out an advisor they can trust, and make their decision based on their company’s philosophy, employee’s budget, and what is best for all concerned.

Critical Illness…the Conclusion Critical illnesses are not only life threatening, they can be life ALTERING.

The emotional and financial impact of a serious illness–is indeed CRITICAL!

When it comes to employee benefit plans, there IS a place for this unique and necessary coverage. It will speak to those who want to maintain their financial independence.

As Dr. Marius Barnard said, “You see, it’s really a marriage between medicine and insurance. I always say, we, as doctors, are the ‘physical doctors,’ the protection insurance is the ‘financial doctor.’ “

“If you are ill, the first person you’ll go to, if you have a heart attack, will be your ‘physical doctor’ but I hope at that stage you’ve already made provisions so that your financial health is in place. So, when your ‘physical’ goes, you have financial protection to provide you with that money which is the promise of insurance, and the definition of insurance is to give you money when you need it most.”

In His Own Words… I welcome you to watch a short video of Dr. Barnard. It briefly covers his story from that first historical heart transplant through the event that compelled him to create the first critical illness policy. Compelling, indeed!

It runs about three and one half minutes

The following is a link to Scottish Widows, an insurance and financial services company in Edinburgh, Scotland. Once there, you can view the video and print the audio transcript, if you wish.

It should start up immediately. However, depending on your computer and your connection, it may take a little while to “buffer” properly for continuous viewing. If so, it will be worth the wait!

For your edification…please click the following link:

Dr. Barnard Video

James A. Croy began his Life and Health Insurance career in 1974. With 30+ years of total experience and 21+ years experience in the Employee Benefits arena, he is Co-Founder of Life Solutions, U.S., located in the Metropolitan Atlanta, GA area. For more ideas, and contact information, he invites you to visit his website at: http://lifesolutions.us/

Copyright 2007 – James A. Croy. All Rights Reserved Worldwide. Reprint Rights: You may reprint this article as long as you leave all of the links active, do not edit the article in any way, give author name and follow all of the EzineArticles http://EzineArticles.com/ terms of service for Publishers.