As the health care landscape continues to evolve, Americans are
grappling with ensuring their families are financially protected from a
medical crisis, according to a white paper released today by Prudential
Financial, Inc. (NYSE: PRU). The report, Critical
Illness Protection: On the Road to Financial Wellness, explores
the role critical illness insurance can play in closing health care
coverage gaps.
Critical illness coverage provides a lump sum payment upon diagnosis for
a predetermined set of critical illnesses to help cover medical and
non-medical expenses.
“There are three significant factors pressuring financial wellness and
widening coverage gaps,” notes Bob Patience, vice president of voluntary
benefits, Prudential Group Insurance. “Many families don’t have savings
sufficient to cover the out-of-pocket expenses associated with a
critical illness, health care costs are projected to continue to rise
faster than inflation, and many employers continue to shift more
healthcare costs to employees.”
About half of U.S. households have savings less than $10,000. Nearly
half of households reported they would not be able to come up with
$2,000 in cash within 30 days, if needed. Inadequate saving, increasing
health care costs, and shifting of responsibility for health care costs
to employees have led to financial distress and bankruptcies for many
households. Sixty-two percent of all bankruptcies are based on a medical
event, and the share of bankruptcies due to medical problems rose by 50%
between 2001 and 2007. Surprisingly, 78% of those individuals in
bankruptcy due to medical costs had health insurance, yet their average
out-of-pocket medical expenses were nearly $18,000.
“Critical illness insurance can help a family maintain its financial
wellness by providing funds to pay any expenses, whether they are
medically related or not,” Patience added. “The majority of
out-of-pocket expenses incurred during a serious illness are
non-medical, including transportation for treatment, and medically
necessary renovations to a home.”
Critical illness insurance is not a substitute for health or disability
insurance; however, it can help address the financial risks individuals
face when struck by a serious illness. These may include lost wages of
the patient and/or a family member acting as care giver, medical
expenses such as deductibles and co-pays, and non-medical expenses such
as family lodging or meals purchased during an individual’s hospital
stay.
In 2010, 22% of U.S. employers offered critical illness insurance plans,
up from 12% in 2002. “We expect this trend to continue. Critical illness
insurance offers advantages to employers and employees alike, allowing
employers to increase the attractiveness of their benefits programs, and
offering employees an affordable way to minimize the financial risk
associated with a critical illness so that they can have financial peace
of mind while they focus on recovery and physical wellness,” noted
Patience.
Prudential Group Insurance manufactures and distributes a full range of
group life, long-term and short-term disability, and corporate and
trust-owned life insurance in the U.S. to institutional clients
primarily in connection with employee and membership benefits plans. The
business also sells critical illness insurance, accidental death and
dismemberment, and other ancillary coverages and provides plan
administrative services in connection with its insurance coverages.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has
operations in the United States, Asia, Europe, and Latin America.
Prudential’s diverse and talented employees are committed to helping
individual and institutional customers grow and protect their wealth
through a variety of products and services, including life insurance,
annuities, retirement-related services, mutual funds and investment
management. In the U.S., Prudential’s iconic Rock symbol has stood for
strength, stability, expertise and innovation for more than a century.
For more information, please visit http://www.news.prudential.com/
The Prudential Insurance Company of America, 751 Broad Street,
Newark, NJ 07102.
0246508-00001-00
Copyright Business Wire 2013