Most Don't Have It, But Here's Why You Should
The 2021 benefits open enrollment season recently wrapped up, and each year, families assume their health insurance will cover the majority of their illness/injury-related expenses, after they fulfill their deductible and co-pay requirements.
Unfortunately, this is far from a complete picture.
While health insurance pays many physician’s bills and hospital charges, a family’s out of pocket expenses not covered by health insurance are often much greater than those covered by their insurance. According to the American Cancer Society, the cost of cancer is more than $226 billion each year, and over half of this is indirect (not covered by health insurance).
If an individual is unable to work for several months to a few years due to cancer, a heart attack or an injury, their loss of income, combined with a barrage of unexpected expenses, creates a financial “perfect storm” that most families’ finances are not prepared to weather.
According to CNBC, “Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.” (This Is The Real Reason Most Americans File For Bankruptcy, 2/11/19)
A case in point:
The wife of a close friend was diagnosed with inoperable brain cancer in 2013. While Paul’s employer-provided insurance required only a $1000 deductible and covered over $2 million in medical expenses, his family’s out of pocket expenses forced them to drain their savings and retirement accounts, and max out their credit cards. Even now, five years after Liz’s passing, Paul is still recovering from the financial storm the family never saw coming.
This is where supplemental insurance, like those offered by my company, plays a valuable role. While health insurance pays for doctors, medical charges and hospital bills, supplemental plans pay families directly, to help them cover their bills if they’re sick or injured and unable to work. Supplemental insurance benefits are paid in addition to any other insurance an individual or family may have, and can be used however the policyholder desires.
Most supplemental insurance underwriters offer policies for cancer, heart attacks/strokes, accidents and injuries, and critical care, accommodating a range of budgets with affordable premiums. These plans typically have no deductibles or co-pays, and some are guaranteed renewable for life, as long as premiums are paid on time. Some policies are “lump sum” plans that max out payments at a specified dollar amount, while others have no lifetime limits on the number of claims submitted.
While these policies have been designed to protect families from significant financial hardship, they’re not well-known; 93% of Americans do not have any type of supplemental insurance coverage. Of those that add these plans to their portfolio, individuals and families make up the largest market, but businesses increasingly fund them as employee recruiting and retention tools, or make them available to their employees on a voluntary, employee-funded basis.
Questions? Comments? I can be reached at bobrodenFHL@gmail.com