About :

•	Strategic Health Management
•	InUnison
•	Dan Pisetsky
•	Jim Ylvisaker

Phone:	(860) 434-7227
Fax:	(860) 434-7037

uslb@uslivingbenefits.com

Broker World

Critical Illness Insurance - A Personal Perspective
BY DANIEL R. PISETSKY
July 2005

I would like to state at the very outset that this is not a technical paper. I am not advocating or suggesting that everyone should or should not have critical illness insurance. Individuals considering critical illness insurance can seek advice from a financial planner or other sources to make this decision.

My sole purpose in writing this article is to illustrate how finances play a role in a person’s life when they are coping with a catastrophic illness. A number of people have told me that if they were stricken with a critical illness, finances would be the last thing on their mind. I, too, at one point in time, felt this to be true.

First, let me clarify what is meant by critical illness and insurance coverage for such illness. A critical illness insurance policy pays the policyholder a lump-sum benefit if he/she is diagnosed with life-threatening cancer, cardiac incident or cerebral vascular accidents (strokes). There are a number of other critical illness related procedures that may be included in coverage, such as, organ transplant, renal failure (dialysis), and even partial benefits for angioplasty and coronary bypass surgery. Most importantly, what differentiates a critical illness product from any other product is that it is paid upon diagnosis. It is different from a terminal illness benefit, whereby a doctor will certify that a person has six to twelve months to live and then the insurance company will usually accelerate payment of the principal amount of benefit on a life insurance contract.

I have read numerous articles about the worldwide growth of critical illness, attended seminars, and worked with insurance executives interested in the development of their own particular products. I have had the opportunity to be on the cutting edge of product development with respect to this new growth area for the United States.

The bulk of material that is written about critical illness on a worldwide basis, as well as in the U.S., focuses on the opportunity for insurance companies to develop critical illness products and for the producers to sell such products. Some articles have also addressed the consumer perspective. There are concerns that many people are raising within the U.S. such as: What is the product? Why do we need it? Several insurance executives have suggested that critical illness insurance is a “gimmicky” cancer product and makes no sense for the U.S. marketplace. Insurance departments are also questioning whether this product conforms to health or life regulations, thus delaying the approval process in many states.

Nationally, there are approximately twenty-five companies now offering critical illness products. We know that other companies are beginning to consider entering the marketplace utilizing health and life products. Each of these companies is approaching this issue through various product designs, either offering it as an acceleration benefit, additional rider to a life product, or as a stand-alone health product.

Studies have indicated that critical illness insurance sales are very slow growing. Success in sales depends upon the understanding and awareness of, not only the insurance company and producers but also, and most importantly, the understanding from the consumer.

What I have to say about critical illness is not written to endorse any specific type of critical illness product but more importantly, to address the need for critical illness insurance from the perspective of the consumer.

This is a personal story about three individuals in my life who have given me an intimate understanding of the emotional impact upon a person who is diagnosed with a critical illness. This is not an article detailing product design features, underwriting or claims, since much has already been written. It’s about real people, real problems, and real outcomes. As I said, my story is personal. It involves three women, Martha, Pat, and Pam.

Martha came into my life approximately twenty-five years ago. At one point in time, we considered marriage. Unfortunately, marriage was not to be. However, we continued to maintain a close friendship throughout the years.

In December of 1997, Martha and I were celebrating her birthday over dinner. She did not look particularly well that evening. I felt as though something was not right. Martha was always a very independent person, not one to complain or discuss her ills. She would not have appreciated any questions I would have had concerning her health. We had a great dinner and wished each other happy holidays.

Shortly after New Year’s, I received a call from Martha. She asked me to take her to a doctor’s appointment. Knowing that she did not look well in December, I was very concerned. As we were driving to the doctor, Martha said that she had asked me to accompany her to the doctor because she needed a lung biopsy.

When we arrived, the doctor met with Martha and me to explain the procedure for a lung biopsy. The procedure was done on a Friday and we were informed that we would probably not know the results until Monday. This entire situation seemed inconceivable to me – the ride to the doctor, the lung biopsy, and having to wait for test results until Monday.

Martha and I spent most of the weekend together and I said to her often, “Martha, things are going to work out, don’t worry, just think positive,” words that I still wanted to believe were true. On Monday, we received a phone call from the doctor’s office. The results were back. He wanted to see Martha and me in his office.

Martha’s doctor wasted no time in getting to the point. “Martha, you have cancer – inoperable cancer. It’s in your lung. Martha, you need to stop your job immediately. You need chemo and radiation simultaneously. I will give you a note for your employer, which will enable you to get disability insurance.” I cannot describe the impact of observing someone who has been diagnosed with life-threatening cancer.

I didn’t realize then, though now I know, how much finances were on Martha’s mind. She had just purchased her own home, some six months prior to her diagnosis. She was in the midst of putting her personal touches on her long awaited home. With limited disability coverage, and meager savings, how was she going to continue to pay her mortgage? Where was the money going to come from for all the additional expenses her illness would surely create? This was the beginning of the many financial problems Martha would need to face. Dealing with life-threatening cancer is more than anyone should have to bear, but in addition, Martha had to worry about finances from the very onset.

Martha died approximately three and one-half months from the date of diagnosis. A critical illness policy would not have prolonged Martha’s life, but it would have given her relief from the many financial burdens she dealt with on a daily basis. What is the price tag for peace of mind, integrity, independence, and self worth? A critical illness policy.

Martha was age 52, a non-smoker, in excellent health, and would have qualified from an underwriting perspective for a critical illness policy.
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Pat was my assistant when we both worked for CIGNA Corporation. When I started my own firm, some six years ago, Pat joined me. Pat was truly a genuine person in every sense of the word. Her honesty, sincerity, candor and caring were her trademarks.

Pat had emphysema, but continued to smoke. Her emphysema caused her to have difficulty breathing and also, frequent coughing spells. I continually urged her to quit smoking, but to no avail. In November of 1998, a growth was spotted in her throat. She told me that she had made a pact with the Lord and that if the biopsy were benign, she would stop smoking. The biopsy was benign and Pat, as she had promised, stopped smoking.

Pat was suffering from back and leg pain. Physical therapy treatments were giving her little or no relief. When she returned to her primary physician, more extensive tests were done. In November of 1999, Pat was diagnosed with lung cancer. Pat came into the office to tell me about her diagnosis and shortly thereafter was hospitalized. Pat had very little in liquid assets. She did own some property but selling it would take time. The day after being hospitalized, Pat called the office. She asked if we would help her apply for Social Security Disability Benefits. When we checked with Social Security, we were told that there is a six-month waiting period from the date of filing. When we told Pat about the waiting period, she became very anxious and concerned.

I spoke with Pat on a daily basis. She continued to tell me about her financial responsibilities and her inability to meet her obligations without a weekly paycheck. I wanted Pat to focus entirely on her health and do whatever was necessary to prolong her life.

We were approaching the Christmas season, when I visited Pat in the hospital and handed her my Christmas gift, a lump sum of money. She looked at me and said, “You’re my Santa Claus.” A rush of words followed, “I want to buy a camcorder and take my family on vacation. I had just given my friend the best gift one can give, peace of mind.

Unfortunately, Pat’s plans for the money never materialized. The cancer moved very quickly and weeks later she passed away. There was no camcorder and no vacation; however, there was a sense of tranquility for Pat in knowing that she could have fulfilled her dreams, and had some peace of mind - at least financially

Pat was age 59, a smoker, in poor health, and would not have qualified from an underwriting perspective for a critical illness policy.
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Pam is my next-door neighbor, a respiratory therapist and single mother with a fifteen-year old daughter. Pam was diagnosed with breast cancer four years ago. Her doctors told her that she had approximately three-months to live. With radiation, chemotherapy, drugs, and, most importantly, perseverance, Pam is a cancer survivor and a living example that people can live with cancer and sustain their lives.

Pam has been unable to work for the last two years. Social Security Disability is her sole income. Pam did have some savings at the onset of her illness, but within a short time, this money was depleted.

With the help of her family, Pam recently purchased new living room furniture and re-carpeted her home. I asked Pam the question, if she would have had a critical illness insurance policy that paid her a lump sum, would it have made any difference in the way that she is presently living? With a grin and a sigh, she started talking about the difficulties she has had in meeting her monthly bills. She also said that she clips coupons to save whatever she can on clothing and food. Her health insurance company recently notified her that they would no longer pay for an expensive prescription, which is critical to her continued survival.

I truly admire Pam for continuing to fight her disease. Her strength is in her faith and optimism.

I think it is important to note that Pam does have life insurance. If she were to have access to this money NOW, her financial worries would diminish, maybe even be entirely eliminated.

Pam is age 48, a non-smoker, was in excellent health until diagnosed with cancer, and would have qualified from an underwriting perspective for a critical illness policy.

Martha, Pat and Pam are very much a part of my life. I felt compelled to tell their stories for, in my opinion, these stories illustrate the “grass roots level” of critical illness insurance.

I realize that both Martha and Pat, after being diagnosed with life-threatening cancer, had very short life spans. What I find interesting is, that within only a few days, both were consumed with their respective financial obligations. I would not have thought that these issues would have come to the forefront as quickly as they did. Dealing with the shock of their diagnoses was difficult enough for each of them, without the additional burden of worrying about finances.

Pam is doing quite well. She’s a true fighter. I know Pam continues to have financial concerns, especially being the single mother of a teenager, but with the help of her family, she seems to be coping well with the problems that were heaped upon her.

There’s a common thread connecting Martha, Pat and Pam. All three, after being diagnosed with cancer and were consumed with financial worries, almost immediately.

My passion for critical illness insurance continues to increase each and every day. I truly believe that critical illness insurance can make a difference and does. Critical illness insurance gives policyholders the comfort of knowing that they have some power and control in an upside-down world, whether it relates to experimental drugs, bills, vacations, etc.

We all have dreams, plans, and hopes for a better tomorrow. Unfortunately, a critical illness can reduce those dreams, plans, and hopes to ashes. If we have products that help us cope with the unpredictability of life’s events, perhaps this can give us the comfort level that we all need to deal with life on life’s terms.

If I could predict the future, it would be my fervent hope that Critical Illness Insurance will be associated with Life, as Life Insurance has been associated with Death.

In addition to serving as managing director of US Living Benefits, Dan Pisetsky is president of Insurance Consultative Services. Dan can be reached at 860-434-7227 or uslb@uslivingbenefits.com.

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