CHANGING HOW WE TALK ABOUT CRITICAL ILLNESS INSURANCE

Rethinking policy design and focusing on prevention

By Christin Kuretich

When critical illness insurance was introduced in the United States in 1997, it was envisioned as a solution to the sometimes astronomical medical bills people can be left with after experiencing a serious illness like a heart attack or cancer. They survived the illness, but their financial well-being was destroyed.

At the time the product seemed to make sense; it typically paid for a standard list of illnesses. A drawback was that policyholders could collect the benefit only once. Later policies allowed policyholders to receive benefits multiple times, but many paid only if the policyholder experienced different illnesses. For example, a policy would pay once for a heart attack and pay again if the person subsequently lost his or her hearing. Such a run of bad luck is, to put it mildly, unusual.

An (unfortunately) much more common scenario is recurrence, but carriers often put unrealistic limits on how soon someone could collect a recurrent benefit. This means coverage might not be available when it’s needed most. What’s more, policy language often is less than transparent to the average consumer, who may have trouble understanding exactly how ill he or she must be before a claim will be paid. Also, instead of focusing on the most common diseases, some policies cover a broad range of comparatively rare diseases like tuberculosis or rabies, which can seriously drive up premium costs without necessarily adding real value for the insured.

With help from healthcare professionals, we can …  give (customers) the tools they need to feel financially secure even when faced with dire circumstances.

These issues have led to a situation in which as many as a third of critical illness claims are denied. This presents an important opportunity for the industry as a whole: By aligning more effectively with both consumers and medical professionals, insurers can develop products that are more useful and offer value that addresses real-world needs.

Incentives for prevention

As people begin to participate more in their own healthcare, we can offer incentives for prevention and screenings to help consumers take control of their finances and become more informed healthcare consumers. For example, coverage for genetic tests such as BRCA1 and 2, which can offer a clearer picture of an individual’s risk for breast cancer, may encourage policyholders to know their risk factors and take earlier action. This not only helps people live healthier lives but also allows them to receive ongoing benefits from their policy.

That’s important, especially because with traditional plans it’s sometimes difficult for consumers to see any value from the base benefit itself. More advanced and more frequent tests improve the chances of early diagnosis of cancer, but many traditional plans would deny the claim if the disease was not considered to be sufficiently advanced. Insureds, however, likely experience any cancer diagnosis—even carcinoma in situ—as a life-changing health event. The same is true for people who suffer a transient ischemic attack (TIA, or “mini-stroke”), which may seriously affect quality of life in the short term even if it doesn’t lead to permanent impairment. More efficient plan designs could cover these common conditions and allow for progression rather than simply covering a laundry list of rare but frightening diagnoses.

Consumer-friendly language

Terms like “mini-stroke” should become more common in communicating with policyholders. Along with people’s increased participation in their own care, the medical practice as a whole is moving toward using more layman-friendly language to describe diseases and their treatments. Insurers should do likewise. We can describe our coverage to policyholders in plain language, matching what they would hear from their physicians.

The changing market for critical care insurance represents a huge opportunity for our industry to connect more effectively with our policyholders and offer them products that are designed with their needs in mind. With help from healthcare professionals, we can identify consumers’ real needs and provide the tools they need to feel financially secure even when faced with dire circumstances.

By designing products that empower them to take charge of their care, pay them for conditions they might actually experience, and talking to them like human beings, we can serve their needs and create lifelong satisfied customers.

The author

Christin Kuretich is senior director of product and innovation at Trustmark Voluntary Benefits. She is responsible for researching marketplace trends and assessing the voice of the customer to create new accident and critical illness insurance products. She can be reached at (847) 283-2640 or christin.kuretich@trustmarksolutions.com.