According to a June 2009 CNN report, 62% of all bankruptcies are related to medical bills. The American Journal of Medicine reports that half of those filings were middle-class, well educated, homeowners. The CNN report goes on to say that three-quarters of the medically bankrupt had health insurance at least for part of the time they had their illness.
What causes medical bankruptcy, if you have medical insurance? There are several factors that play into this situation. The first factor is if you have employer-sponsored health insurance, and you get sick and cannot work, you lose your job. If you lose your job, you lose your health insurance. This seems to be one of the fundamental flaws with our health care system is that we are dependent on our jobs for our health insurance.
Another factor, which might be even a bigger problem, is that if you cannot work, how do you generate your income? You still have to pay your mortgage, your car payment, and utilities. Even if your insurance paid 100% of your claim (and you always have deductibles and co-insurance), you still have bills that require payment.
Often times, a spouse has to take time off of work to take the ill family member to doctor visits or therapy. This yields an additional loss of income.
The answer might lie in one of these products. Critical Illness, which pays the insured directly up to a flat amount (usually $10,000-$50,000) of money if you were to have a specified illness such as cancer, heart attack, stroke, severe burns or loss of a limb. Critical illness is to be used in conjunction with a major medical plan.
Another solution which is becoming very popular is life insurance with living benefits. These policies will allow you to use part of the death benefit (again for specified conditions) while you are alive to pay for the cost of care and replace income.
Eric Wilson is President of I Sell Health Inc., a Chicago area full service insurance agency. He can be reached toll free at 888-448-5370 or online at www.isellhealth.com
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