As shown in a recent Telos blog, the market for ancillary health products continues to grow. Critical Illness insurance currently contributes a billion dollars in earned premium each year! With a continually-growing senior population, fairly frequent diagnoses of cancer among adults (particularly seniors), and non-medical treatment costs that are not covered by Medicare plans, there is a need for additional coverage.
But first, a step back – what is Critical Illness insurance? Generally, it provides benefits under one of two structures:
1. Lump-sum coverage provides a single payment upon diagnosis of a specific condition. Cancer, Heart Attacks, and Strokes are examples of some of the most common covered conditions.
2. Scheduled benefit coverage pays specific benefit amounts for specific treatments or services. Examples of such treatments/services include experimental medications not covered by primary health coverage, transportation, lodging, deductibles, and loss of income related to treatment.
Critical Illness products are most often sold either through group/worksite channels, or to individuals. Individual sales often come alongside broader medical coverage, usually Medicare Supplement or Medicare Advantage in the case of seniors.
Once distributors have established an understanding of the need and the benefits provided, premium is the next question that comes up. For products sold to individuals, annual premiums near $600 are most common, though premium levels can easily be tailored for an individual by scaling benefit levels, and sometimes including or excluding coverage for covered conditions.
Cancer is the condition most often covered, but Critical Illness policies may include coverage or offer riders to cover additional conditionsGrowth in individual Critical Illness products has been measured and steady in recent years, averaging just over 3% per year since 2018. We project that this growth will continue, especially with continued advances in medical technology and treatments among an aging population.