Kfs critical illness


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Kfs critical illness

  1. 1. © 2013 VSA, LP Valid only if used prior toJanuary 1, 2014. The information, generalprinciples and conclusions presented in thisreport are subject to local, state and federallaws and regulations, court cases and anyrevisions of same. While every care has beentaken in the preparation of this report, neitherVSA, L.P. nor The National Underwriter isengaged in providing legal, accounting, financialor other professional services. This reportshould not be used as a substitute for theprofessional advice of anattorney, accountant, or other qualifiedprofessional.Protecting Your Assets and LifestyleA Critical IllnessInsurance Review1a2-11
  2. 2. Your Earning Power2Protecting Your Assets and Lifestyle: A Critical Illness Insurance Review$ 50,000 $ 100,000 $ 250,000 $ 500,000$ 2,000,000 $ 4,000,000 $ 10,000,000 $ 20,000,000$ 1,500,000 $ 3,000,000 $ 7,500,000 $ 15,000,000$ 1,000,000 $ 2,000,000 $ 5,000,000 $ 10,000,000$ 500,000 $ 1,000,000 $ 2,500,000 $ 5,000,000$ 250,000 $ 500,000 $ 1,250,000 $ 2,500,000Your Future Earning PowerIf Your Family Income Averages:Years toAge 65:403020105If a serious illness strikes,however, how will youprotect your assets andlifestyle from financialhardship?Few people realize that a 30-year-old couplewill earn 3.5 million dollars by age 65 if theirtotal family income averages $100,000 fortheir entire careers, without any raises.Your IncomeSpouse’s IncomeOther IncomeInvestment IncomeYour ability to earn an income is your most valuable asset.You’ve worked hard andused your earning powerto provide for yourselfand your loved ones.
  3. 3. Did You Know…3Protecting Your Assets and Lifestyle: A Critical Illness Insurance Review?With advances in medical treatment and technology, many people nowsurvive critical illnesses that would have been fatal in the past.In the U.S., men have a slightly less than 1 in 2 lifetime risk of developing some form of cancer. Forwomen, the lifetime risk is a little more than 1 in 3.Between 2001 and 2007, the 5-year relative survival rate for all cancers was 67%, up from 49% in1975-1977.It is estimated that over 1.6 million new cancer cases were diagnosed in 2012.The National Institutes of Health estimates overall costs of cancer in 2010 at $263.8 billion.Source: Cancer Facts and Figures 2012; American Cancer Societycontinued on next slideCancer
  4. 4. Did You Know…4Protecting Your Assets and Lifestyle: A Critical Illness Insurance Review?An estimated 83,000,000 American adults (more than one in three) currently lives with one ormore types of cardiovascular disease.Each year, an American will suffer a heart attack about every 34 seconds.The lifetime risk for cardiovascular disease at age 40 is two in three for men and more than one intwo for women.It is estimated that the total costs of cardiovascular diseases in the U.S. was $444 billion in 2010.Source: Heart Disease and Stroke Statistics - 2012 Update, American Heart AssociationHeart DiseaseOn average, every 40 seconds someone in the United States has a stroke.Stroke is a leading cause of serious, long-term disability in the U.S.It is estimated that Americans paid about $73.7 billion in 2010 for stroke-related medical costs and lost productivity.StrokeSource: Heart Disease and Stroke Statistics - 2012 Update, American Heart Association
  5. 5. Ask Yourself…5Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewIf a life-threatening illness strikes you:How long can you survive financially without a regular paycheck?How will your regular bills be paid?Will you have sufficient funds available to pay for:Any insurance co-payments and deductibles;Alterations to your home and/or automobile to meet any special needs;Out-of-town transportation and lodging for medical treatment;Additional household and child care expenses;Treatments not covered by traditional health insurance; and/orShorter-term home health care during your recuperation?
  6. 6. Costs of Serious Illness6Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewHeart Disease and StrokeHeart disease and stroke are the first and third leading causes of death for both men and womenin the United States. On average, more than 2,200 Americans die of cardiovascular disease eachday, an average of one death every 39 seconds, while every four minutes on average someonedies of a stroke.Our Nations Leading Killers:More than 82 million Americans live with a cardiovascular disease. Heart disease and stroke areleading causes of premature, permanent disability in the U.S. workforce, with nearly 4 millionpeople reporting disability from these causes.Disabling:Heart disease and stroke were estimated to cost our nation $444 billion in2010, including health care expenditures and lost productivity from death anddisability.Costly:Sources: Heart Disease & Stroke Statistics, 2011 Update; American Heart Association and Heart Disease and StrokePrevention, 2011 Update; Centers for Disease Control and Preventioncontinued on next slide
  7. 7. Costs of Serious Illness7Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewCancerThe financial costs of cancer are great, both for the individual and for society as a whole. For theyear 2010, the National Institutes of Health estimated overall annual costs for cancer as follows:Source: Cancer Facts & Figures 2011; American Cancer SocietyTotal Cost: $263.8 billion.Direct Medical Costs: $102.8 billion (total of all health care expenditures).Indirect Morbidity Costs: $20.9 billion (cost of lost productivity due to illness).Indirect Mortality Costs: $140.1 billion (cost of lost productivity due to premature death).
  8. 8. Sources of Funds to Help Financially Survive a Critical Illness8Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewWhat Sources of Funds May Be Available to Help You Financially Survive a Critical Illness?continued on next slideSource EvaluationSocial SecurityBenefitsAssuming that you qualify, Social Security disability benefits do not begin until thesixth full month of disability and are generally not adequate to replace your earningpower. In fact, the average monthly Social Security disability benefit received in2011 was $1,111.*Health CareInsuranceWhile health care insurance will cover a portion of the direct costs associated with acritical illness, these plans typically require payment of deductibles, coinsuranceand/or co-pays, which can range from $2,000 to $10,000 or more in out-of-pocketcosts to you before the plan provides 100% coverage.If you elect out-of-network care from a specialist or nationally-recognized hospital,you may face significant additional expense, plus the cost of travel and lodging. Inaddition, indirect expenses associated with recuperating from a critical illness, suchas modifications to a home or vehicle, child care expenses and convalescent care,may not be covered. It is important for you to know what your health care plan willand will not cover before a critical illness strikes.* Source: Annual Statistical Report on the Social Security Disability Program, 2011; released July 2012
  9. 9. Sources of Funds to Help Financially Survive a Critical Illness9Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewSource EvaluationDisabilityIncomeInsuranceDisability income insurance benefits typically replace a portion of your income if youare sick or hurt and unable to work. If you are covered by disability incomeinsurance, you need to know the answers to questions such as these:- How long must you be disabled before benefits begin?- How much is the benefit you will receive?- For how long will the benefit be payable?Savings andInvestmentsA single critical illness could consume the assets you’ve worked a lifetime toaccumulate.Ask yourself…if you suffered a critical illness and were outof commission for three to six months, would you be ableto survive financially?If the answer is no, there is apotential remedy...
  10. 10. A Potential Solution Using Critical Illness Insurance10Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewCritical illness insurance is a source of funds you can use to help cover the indirect costs that arisewhen a serious illness strikes. By providing money when you need it most, upon diagnosis of aserious illness (as defined in the policy), critical illness insurance can help relieve worry about yourfinances so that you can focus on getting well.Critical illness insurance pays you a lump sum of money upon diagnosis of a covered condition.This money is yours to use for any purpose, with no restrictions.Since the premiums paid for critical illness insurance are not tax deductible, the benefits are notconsidered as income and are received 100% free of income tax.continued on next slide
  11. 11. A Potential Solution Using Critical Illness Insurance11Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewFor example, critical illness insurance proceeds can be used to pay:Critical illness insurance helps you to survive financially whilephysically recovering from a serious illness!Mortgage or rent payments, as well as any other bills you may have;Health insurance deductibles, coinsurance and/or co-payments;The costs of receiving out-of-network medical treatment, including possible travel andlodging expenses;Treatments not covered by traditional health insurance;Child care expenses during treatment or hospitalization;Modifications to your home or vehicle; and/orShorter-term home health care.
  12. 12. What Critical Illness Insurance Is NOT12Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewCritical Illness Insurance Is NOT:continued on next slideHealth CareInsuranceHealth care insurance is designed to pay the direct costs of an accident or illnessrequiring medical care. In addition to your responsibility to pay requireddeductibles, coinsurance and/or co-payments, health care insurance is notintended to cover the indirect, non-medical expenses that can arise when a criticalillness strikes…a role that critical illness insurance can play. Critical illnessinsurance is not a replacement for health care insurance.DisabilityIncomeInsuranceThe purpose of disability income insurance is to replace a stated percentage ofmonthly income lost from being unable to work as the result of an accident orillness. Monthly disability payments, however, may not be sufficient to pay yourregular bills plus the additional expenses of a serious illness.Life insuranceWhile certain life insurance benefits may be available during life, such as policycash values or accelerated death benefits, the primary purpose of life insurance isto provide financial security for your loved ones upon your death.
  13. 13. What Critical Illness Insurance Is NOT13Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewLong-TermCareInsuranceLong-term care insurance pays a stated daily benefit amount to cover the costs ofnursing home care. Some policies also pay assisted living and home health carebenefits for an insured who is impaired and needs assistance with the activities ofdaily living (eating, bathing, etc.).CancerInsuranceCancer insurance plans pay only for the expenses related to cancer, typicallyreimbursing expenses incurred for cancer treatment received.If an evaluation of your current insurance coverage and financial resources indicates that youwould have difficulty surviving financially if a serious illness strikes, critical illness insurancemay provide a remedy.It is, however, important to understand how this insurance coverage works…
  14. 14. How Critical Illness Insurance Works14Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewIn evaluating a critical illness insurance policy, you need answers to these questions:What Is Covered??Critical illness insurance pays benefits upon the diagnosis of specified illnesses. A basic policyshould cover at least heart attack, stroke and life-threatening cancer. A more comprehensivepolicy should also include other serious conditions, such as renal failure, multiple sclerosis,coronary artery disease, advanced Alzheimers Disease and major organ transplant.What Is the Benefit Amount??The benefit amount is selected at the time the policy is purchased and, generally speaking, canrange from $10,000 to $100,000 or more. The benefit amount is paid in a lump sum upondiagnosis of a critical illness covered by the policy. Since the premium paid increases as thebenefit amount increases, it is important to evaluate your other sources of funds available in theevent of a serious illness in order to more accurately determine the critical illness insurancebenefit amount that is right for you.continued on next slide
  15. 15. How Critical Illness Insurance Works15Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewWhen Is the Benefit Paid??The critical illness insurance benefit is paid to you in a lump sum upon diagnosis of a critical illnesscovered by the policy. Some critical illness insurance policies pay a partial benefit, such as 25% ofthe maximum benefit, on the occurrence of certain specified treatments, such as coronaryangioplasty or coronary artery bypass surgery. The policy usually terminates upon payment of100% of the benefit.Does the Policy Have an Elimination or Qualification Period??Some policies require that for benefits to be payable, the policy must be in effect for a statedperiod of time, such as 90 days, before diagnosis of a covered critical illness is made.The Checklist that follows is intended to assist you inevaluating critical illness insurance coverage and selecting aplan that is right for you.
  16. 16. Critical Illness Insurance Checklist16Protecting Your Assets and Lifestyle: A Critical Illness Insurance ReviewIn purchasing critical illness insurance, it is important to select coverage that matches your needs andpreferences. As you evaluate various policy features and benefits, however, keep in mind that thechoices you make can affect the premiums you pay and the benefits you are entitled to receive.Covered Illnesses What serious illnesses are covered by the policy?Benefit AmountWhat is the lump sum amount payable upon diagnosis of a covered critical illness?Is the benefit amount payable in a single lump sum, or in specified percentages oramounts? If the benefit is payable in specified percentages or amounts, does thepremium decrease accordingly?Elimination PeriodIs the benefit payable immediately after diagnosis of a covered critical illness? Ifnot, how long must the policy be in effect before benefits become available?Guaranteed Renewable Can you renew the coverage for life, so long as you pay the premiums when due?Premium Increases Under what circumstances can the insurance company increase the premiums?Death BenefitDoes the policy provide any kind of death benefit if you die without receiving anybenefits?Optional CoveragesAre there any optional coverages available, such as inflation protection or anaccidental death benefit? Since optional coverages generally require payment ofan additional premium, carefully evaluate the value of any optional coverages toyou and your personal situation.