By Cyril Tuohy
Despite a push by insurers to add cancer and critical care riders to many of their life insurance policies, cancer survivors say they have been underinsured and hit with higher than expected out-of-pocket expenses.
Are insurers to blame? Did policy exclusions buried in the fine print get carriers off the hook? Was the policyholder dropped at the last minute without notice? Were the riders or supplemental policies simply too expensive?
Or are patients to blame? Did they not bother to get coverage, even though they were at high risk of inheriting the disease? Was the issue never brought up in discussions with financial advisors? Or were cancer patients blindsided by their illness so as to be denied medical coverage because of a pre-existing condition?
For most cancer survivors, that kind of second-guessing is too late.
The issue remains: Where was the protection? For most, it wasn’t there, according to findings of a new survey published by the Washington National Institute for Wellness Solutions, a research arm of Washington National Insurance.
“People who are diagnosed with cancer face an all-encompassing battle,” the authors of the report said in the introduction. “And the battle’s scars — physical, emotional and financial — can linger long after treatment ends and life returns to ‘normal.’ ”
Most of the survey’s 400 respondents — 84 percent — said they did not carry supplemental insurance.
Conversely, only 7 percent had critical illness or cancer insurance, and 9 percent had some other form of supplemental insurance to help pay for costs not covered by employer-provided medical insurance.
In the last two years major insurance carriers such as New York Life, Sun Life and Aflac have all introduced critical illness riders to whole life and universal life policies. More employers are offering critical illness policies on a voluntary basis as well.
It’s not hard to see why. The cost of cancer is as erosive to a family’s budget as the illness is to the patient. The average cancer patient incurs $712 in monthly bills for doctors, co-payments, prescription drugs and other expenses related to treatment, the survey found.
The survey, which focused on the emotional and financial impact of cancer on middle-income survivors, revealed that 34 percent of respondents did not get the financial support they needed during treatment.
Of that percentage, 32 percent said they did not get enough monetary support, and 20 percent said they did not get enough support making financial decisions.
Survey respondents had household incomes of between $35,000 and $100,000, had been diagnosed with cancer within the past 10 years, received chemotherapy or radiation treatment, and were between 25 and 65 years old when they were diagnosed.
Out-of-pocket expenses related to treatment — lost income, treatment not covered by insurance, lifestyle changes, professional care services and traveling to a treatment center — were higher than respondents expected, the survey found.
Of the cancer survivors forced to resort to out-of-pocket expenses to pay for treatment, 55 percent used their personal savings or investment accounts, 46 percent relied on credit cards, 41 percent reduced their discretionary spending, 15 percent borrowed from family or friends and 15 percent withdrew money from their retirement accounts.
The survey also found that 65 percent of respondents said they needed to take at least one additional financial action to pay for treatment.
Statements collected by researchers cite patients who wish they had insisted on quicker service for care provided by insurers. Patients also said they would have appreciated more options with regard to treatment.
Cancer used to be a death sentence for people with the disease, but advances in treatment have improved survival rates. Data from the American Cancer Society show that the average five-year survival rate jumped to 68 percent in 2009, an increase from 49 percent in 1977.
While survivors are living longer, it’s clear their budgets are not following suit, and even extending the opportunity for insurance protection isn’t a guarantee that consumers will purchase it.
Cancer patients often go into debt. Of the survey's respondents, 62 percent said they had medical debt after treatment, with 30 percent reporting debt of $10,000 or more and 15 percent reporting debt of $20,000 or more.
The survey also found that 27 percent of survivors age 50 and younger borrowed money from friends and family, and that 24 percent withdrew funds from their 401(k) to pay their medical bills.
By comparison, only 8 percent of survivors ago 50 and older borrowed money from family and friends and 9 percent withdrew funds from their 401(k).
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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