The advantages of supplemental health insurance policies has never been more than it is today in 2012. Over the past 20 years working Americans have seen the costs for medical coverage skyrocket. Even in cases in which the employer pays 100% of the employee-only premium for medical insurance, the cost with regard to dependents has increased significantly. To fight these increases most working People in america have seen their financial exposure boost through higher deductibles and coinsurance as well as the elimination of co-payments. Today it is not unusual to see individual out-of-pocket exposure as high as $5000 or more and in many cases it is as much as $10, 000.
Whilst a potential out-of-pocket exposure of $5, 000 may not appear to be financially disastrous, the facts tell a very different story. According to a Cambridge Hospital and Harvard University 2007 study sixty two. 1% of all bankruptcies were directly related to a medical event. Which is up by 50% since the same study was done in 2001. What exactly is striking is that 75% of these bankruptcies were individuals that were college well-informed and had medical insurance. And despite what many insurance agents and financial may think disability income would not happen to be much help. Very often the problem is the medical condition of a spouse or child that results in the primary breadwinner missing work. But this only clarifies why a critical illness policy might have value.
The Statistics about Essential Illnesses
In order to justify the sale of critical illness insurance most agencies use these statistics:
1 out of 2 people will be diagnosed with cancer
5 million people will suffer a heart attack each year
Every 20 mere seconds someone has a heart attack
But these stats belie a more important truth, most people will not be diagnosed with cancer than can. For people under 35 years of age the risk of cancer is 1out of 69. Consider this fact from the Heart Basis: there are 8 million women coping with heart disease but only 35, 1000 are under age 55.
Those statistics do not mean that an individual must not buy critical illness insurance, because they most definitely should since there is no way to know whether you are that 1 in 69 that will be diagnosed with cancer this year or even that you are in the 35, 000 females that will be diagnosed with heart disease. And that is precisely why return of premium policies are so important!
ROP – A Great Buy
As I stated earlier, the position of most financial advisors is that the return of premium rider does not make good financial sense. I will tell you that they are deceased wrong! Working Americans would be hard pressed to find a better use of their insurance coverage dollars. It is true that the driver generally increases the base premium for every supplemental health policy by forty percent to 50%. But that ignores the fact that is the individual does not get diagnosed with a qualifying medical condition he can receive a check for 100% of the monthly premiums paid, less any claims. Along with one of my carriers that check out is paid every twenty years as well as the insured still retains the plan at the initial premium. Here is an example from one insurance company:
A male non-smoker under age 39 can purchase the $10, 000 Critical Illness plan for a low $76. 80 each year. That same policy with come back of premium would be $121. twenty, a difference of $44 annually. At the end of twenty years assuming no claims that each would receive a check for $2424.
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When the insured had invested that $44 annually he would have had to have earned more than 10% on that money to generate the same $2424 he will receive. Since the average Working American can be living paycheck to paycheck, return of premium insurance provides the on top of that possible outcomes.