Two MetLife companion studies found many families fall short in their ability to cover the expenses that come with experiencing a critical illness like a heart attack or cancer.
Studies show a critical illness can reduce a family's income by more than $12,000 in the first year alone, even with medical coverage, and out-of-pocket expenses average around $3,000. Yet 46 percent of full-time workers have less than $5,000 in savings available to cover these expenses; nearly 30 percent have less than $500. [See related: Men face higher critical illness risk]
"The MetLife studies found that many people are unprepared to cope with the toll of lost income as well the out-of-pocket medical expenses and other illness-related costs," said Clea Barth, vice president, Critical Illness Insurance Products, MetLife, in a press release. "A critical illness can have a long-term impact - even three to five years after being diagnosed, 60 percent of people experiencing these serious medical situations are still incurring out-of-pocket expenses."
Nearly all patients surveyed had medical coverage, but only 7 percent had critical illness insurance, and 4 percent had cancer insurance.
MetLife reports it's not surprised by the small amount of workers with critical illness insurance, considering only a third of full-time employees have even heard of CII. Of these, three in five appear to be confusing it for health insurance, and one in five confuse it with either a government insurance program or disability insurance.
"Receiving a lump sum benefit can make a significant difference to families given that about one in four working Americans simply did not know where they could turn to for financial help if confronted with a critical illness, and 39 percent cited the need to go into debt - whether borrowing from a bank, from their home equity, or from friends and family," adds Barth. "These findings underscore the important role that CII, along with other protections such as disability income insurance, can play in strengthening a family's financial safety net."
The MetLife studies found that:
- 55 percent of full-time working Americans are somewhat or extremely concerned that a critical medical condition could impact the financial well-being of their families.
- Only one-third of working men and one-fifth of working women feel very confident that their rainy day fund could handle a financial emergency.
- About two-thirds of workers say they have less than three months of savings available for a medical emergency.
- When the concept of CII was explained, 58 percent of full-time employees said they would be interested in buying the product through their employer even if they had to pay 100 percent of the premium themselves.
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