First Look at Individual Critical Illness Coverage
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.
Cancer is the condition most often covered, but Critical Illness policies may include coverage or offer riders to cover additional conditions such as those shown in the table below.
Source Data: Publicly available Critical Illness product filings and marketing materials
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.
Source Data: NAIC Accident & Health Experience Exhibits, Regulatory Filings, Telos Actuarial Estimates
Growth 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.
Would you like to learn more? Our Critical Illness Market Opportunity Report can help. It provides a big picture view of the market showing main competitors, profit margins, market projections, and more. The report is designed to quickly get you up to speed on the opportunity and the market.
Contact us to find out more!
