- Associated Press - Monday, January 4, 2016

ST. PAUL, Minn. (AP) - “Critical illness” insurance is surging in popularity as consumers look for ways to fill holes in their coverage.

The specialized coverage can help people who might struggle to pay out-of-pocket costs because it pays for things that conventional plans don’t. For example, Minnesota Public Radio reported Monday (https://bit.ly/1RbLmlU ), it typically pays a lump sum up front to policy holders hit with specific serious ailments, such as cancer or a stroke. Besides covering the gap left by high-deductible health plans, the money can even help with child care or mortgage payments.

“It’s just a protection while you’re still alive, to kind of relieve some of that financial burden,” said Ashley Ostrowski, a Woodbury insurance agent who sells the policies.

Some of the nation’s biggest insurers are reporting double-digit annual growth for the plans in recent years. Companies embracing them include Minnesota-based UnitedHealth Group, the nation’s largest health insurer, which has been in the critical illness policy market since 2011.

“More employers are moving to high-deductible health plans as a way of reducing their overall employee benefit costs and as a result of that it’s putting more financial burden on employees,” said Gary Harger, UnitedHealth’s vice president for voluntary benefits.

Global insurance giant Gen Re, which started backing the policies more than 30 years ago and tracks the market, says overall critical illness policy sales since 1999 have risen from $8 million to $381 million annually. The company says a typical plan for a 42-year-old nonsmoker with a $20,000 benefit would cost about $300 a year.

University of Minnesota health policy professor Roger Feldman said he tends to be skeptical. But for people with little in savings and big potential out-of-pocket health care costs, he said, critical illness insurance might be a good option, he said. Other consumers may find conventional coverage better for their needs.

“Weigh the advantages and disadvantages of this type of insurance compared with the other types of insurance they might buy such as disability, mortgage insurance, a health savings account or long-term care insurance,” he said.

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Information from: Minnesota Public Radio News, https://www.mprnews.org

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