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In 1998, Dr Marius Barnard was diagnosed with prostate cancer and given 2 years to live. Today, 7 years later, Dr Barnard continues to develop insurance policies to better serve patients surviving serious illnesses. He achieved his own recognition after his brother, Christiaan Barnard, became famous for performing the world’s first heart transplant in December 1967.
Considered by many as the creator of critical illness cover, whenever he breaks the news to any of his patients about their critical medical condition, there is an initial shock, followed by questions. Can they be treated? Will they be cured? What is the cost of treatment?
Dr Marius Barnard created critical illness products after being shocked by the personal and financial suffering of people who had been successfully treated after life-threatening diseases. The South African surgeon who made critical illness cover a part of everyday life has won accolades from health authorities and governments around the world. To find out more about his story,
Unfortunately, at least 70 per cent of people will one day be told by their doctor that they have had a heart attack, a stroke or indeed cancer. The good news is that many will survive, as a result of highly skilled physicians, modern medical equipment, procedures and facilities, but at a cost. One-third of the cost is direct medical and the rest indirect, in the form of early retirement, home nursing, building alterations, etc.
Doctor Barnard relates to one particular patient – “Our eighth heart transplant was in total heart failure. Most of his heart muscle had been destroyed due to four heart attacks over a period of seven years. He could not walk, his breathing was laboured, he was bedridden and in fact he was only a few weeks, if not days, from death. He received a new heart, and survived for 23 years. However, he developed gangrene of both legs and had to have both amputated, seven years before he died. During this time his financial health became critical. He had to retire a few years after his first heart attack and had to survive on a small pension.
While his medical expenses increased, his ability to generate sufficient income deteriorated. He complained about only one thing — money, or rather the lack of it. He had to sell his house, his business went bankrupt and he lost his self-esteem — and when he died his insurance policy paid out nothing. He had to let it lapse many years before, as he could not continue paying the premiums”.
He goes on to say “This case, as with many others, became unacceptable to me. After giving this transplant patient the best and most updated treatment available, and after increasing the quantity of his life, we had failed him miserably in that the quality of life had deteriorated — and there was just nothing we as doctors could do about it. So I started a new campaign. Why I thought of insurance I’ll never know, except that I perceived it to be something that provided money when it was needed most. As I saw it, my patients needed money when critical illness was diagnosed to give them immediate financial health when their physical health deteriorated. Such patients need insurance not only because they are going to die, but also because they are going to live.
My long search for re insurers and for an insurance company prepared to launch such a product was fraught with frustration, disappointment — and failure. After striving for three years we were able in 1983 to launch the world’s first critical illness policy. This covered only four conditions: heart attack, stroke, cancer and coronary bypass surgery. Initially, there were many doubts and much criticism. There were no proper statistics, the premiums would be too high, and the definitions would not pay out. But, as financial advisors came to understand the product better, their confidence grew and sales increased yearly.
Critical illness insurance is now recognised as the risk product for the new millennium it is the fastest growing healthcare product line around the world as shown by the rapid growth in new policies taken out in several main markets such as in the UK, the US and Asia. Based on these sales figure and as sales continue to grow, it has real potential to corner the protection market. Its appeal has derived from a combination of simplicity, the ‘windfall’ nature of benefit and its perception as a necessary protection product. Economic hardships after the diagnosis and treatment of critical illness will disappear; so many dreams will still become reality
A life-threatening disease destroys the existing quality of life. It can even be seen as starting a new life. One of the strongest arguments for critical illness cover is not the financial impact, but the psychological. Just as regaining dignity after a serious illness is as important as the physical recovery, the assurance that a dramatic and unforeseeable change in the quality of life is covered brings the security and peace of mind that people need. The client probably has insurance for the house, car or summer holiday, but the effect on his/her living standard is on the low side. On the other hand the effect of critical illness is undoubtedly high, and yet there may be no cover at all beyond the direct medical costs covered by health insurance.
The number of diseases covered varies considerably depending on the market and provider concerned. There are currently 58 conditions covered under critical illness products worldwide. In the individual market, it provides a lump sum payment at a time when finances may be strained. The benefits may be used to meet expenses, which are not covered under personal or state disability cover, such as experimental or special medical treatment, home health care, loss of income, home modifications In the business market, the policy is often used in relation to buy-sell agreements in partnerships to enable the remaining partners to buy out a partner suffering from a critical illness, or bridging finance for a business. Critical illness can be classified as a “living” benefit. It is either linked to life cover or is a stand-alone benefit. In combination with life cover, it is usually referred to as an “accelerated” or “pre-payment” benefit, meaning the payment of all or part of the life cover prior to death. “Stand-alone” indicates that critical illness is a benefit in its own right with no link to life cover. It only provides cover in the event of critical illness. Once a critical illness claim is accepted, the policy will cease. Stand-alone covers act as a cheaper alternative for people who already have adequate life cover or for those who wish to maintain a significant level of life cover irrespective of serious illness.
Critical illness was imported into the UK in the mid 1980s. Lloyd’s life introduced the first product. (now part of Royal & Sun Alliance) in 1985. In the UK market, critical illness sales have far outstripped sales of income protection policies. Critical illness cover has grown phenomenally over recent years. Sales have risen by 50 per cent in the past five years. It’s estimated that 6.5 million Britons have the cover, paying annual premiums of £2.4 billion.
The female distribution of critical illness sales is larger than for males. Typical female distribution for life policies is approximately 30 per cent to 40 per cent as for female critical illness policyholders. One theory is that there are an increasing number of female business owners and this product has appeal to professionals and the business market”.
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Thanks to POLICY magazine for providing this article |
