Critical illnesses: Family health insurance, Part 3

Insurance Helpline with Cedric Stephens

Question: Your two-part article did not make any reference to critical-illness insurance. Why? Isn't this type of coverage one of the ways in which a family can also protect itself against some of the expenses that are associated with the treatment of major illnesses or diseases, in addition to buying the more traditional forms of health insurance?

- B.S., Kingston 7

Answer: After I completed the second part of this article, I believed that it was the end of that conversation on health insurance, at least for the time being. I was mistaken.

If I were to follow the example of some of our leaders, I would try to find excuses for my failure to discuss critical-illness insurance in the context of what I wrote on this subject for two successive weeks. Frankly, it is far simpler to say that I made a mistake. Thanks for giving me the chance to try to correct that error.

First, a few definitions of the word 'critical' are necessary. The thesaurus, which is embedded in the version of Microsoft Word that I use, defines it to mean: "dangerous, serious, grave, life-threatening and acute ... ." A critical-illness insurance contract is, therefore, one that applies solely and exclusively to life-threatening illnesses as opposed to the traditional plans that cater mostly for everyday ailments and disorders.

Lump-sum payment

Critical-illnessinsurance co-exists with the more traditional types of health plans that employers, other groups, families and other persons buy in the insurance marketplace. It tops up the benefits provided under the latter. This type of coverage provides a lump sum payment should the policyholder become seriously ill. The arguments for it are very simple.

People are living longer. The survival rates are on the rise for many medical conditions. A serious illness and the costs associated with loss of income can lead to huge financial problems. For example, I know of the case of one family that was hit with a bill of J$7 million after their mother died in a local hospital.

A 2008 American study found that 20 per cent of people with health insurance cannot afford cancer therapy. A year of treatment for blood cancers such as leukaemia reached US$1 million in 2008.

Those costs would max out the limits of most US health plans, not to mention our local plans, with major medical limits as low as J$200,000.

The bottom line: If you are diagnosed with a life-threatening illness and have ordinary health insurance, there is a possibility that you would not be able to afford the treatments recommended and needed.

COVERAGE AND CLAIMS

The market for critical-illness insurance in Jamaica is bigger than that for basic health insurance. I have seen advertisements in the print media and on billboards but, so far, have been unable to get my hands on copies of the contracts. My guess is that the illnesses and diseases that are covered vary between insurers. The main ones would include some or all of the following: cancer, heart attack, stroke, blindness, Alzheimer's, multiple sclerosis, organ transplants, kidney failure, and paralysis.

Coverage can also vary according to the degree of severity of, or conditions associated with, an illness or disease. For example, if you are diagnosed with a type of cancer that is treatable and results in minimal 'down time', you may not be eligible to make a claim.

Coverage cannot be purchased for a pre-existing condition or illness. As with all insurance contracts, it is most important that you carefully read and understand the fine print or get explanations from the sales agent before making a buying decision.

As is to be expected, the younger and healthier you are, the lower the premium. Factors such as age, medical conditions, the amount of coverage, the number of illnesses covered by the policy, and the insurance company, affect the cost.

You can make a claim if a physician, licensed to practise medicine in Jamaica and specialising in your particular illness, diagnoses you with a critical illness or disease covered by your policy.

There are no restrictions on how you can use the money. Once your claim is paid, your critical-illness insurance policy ceases. If you die for a reason not covered by the critical-illness policy, the premiums you paid may be refunded to your named beneficiary.

Some plans will return the premium or a portion of the premiums paid during the life of the policy if the policy matures and no claim has been paid. You are entitled to collect the entire benefit even if you make a full recovery.

Critical-illness insurance in Jamaica is a recent import. My suspicions are that what is available in our marketplace represents a mix of the products that are sold in the United States, Canada and the United Kingdom.

Because I have not seen the actual contracts being marketed locally, I have used general information largely from US and Canadian sources in my attempt to give you information.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.com;SMS/text message to 812-7233.