A few weeks ago a column appeared at Forbes.com discussing an innovative form of life insurance that could be a much more affordable substitute for traditional health insurance. For the uninsured who would like to have some way to pay for serious illness or injury but can’t afford or don’t want traditional health insurance, this could be an excellent option.
Merrill Matthews, Forbes.com, June 27, 2013
…just because millions of Americans refuse to get ObamaCare-qualified coverage doesn’t mean they will be uninsured. There are policies available now that would work very well for the ObamaCare avoiders.
Some of these policies are built on a life insurance platform rather than health insurance — which, incidentally, means they are outside ObamaCare’s long arm of regulatory control.
The customer buys a life insurance policy that pays up to $250,000 upon death…Along with life insurance coverage the policy includes what’s called a “critical illness” component. If the policyholder needs, say, surgery, the insurer writes the policyholder a check based on a schedule. Let’s say, for example, it’s $10,000.
The policyholder has $10,000 in hand to pay for the medical care — or, frankly, anything else since the money belongs to the insured — but the value of his life insurance benefit is reduced by the same amount, to $240,000. Thus the critical illness component simply accelerates the benefit payout.
One existing policy pays 100 percent for heart attack, stroke, life-threatening cancer, major organ transplant, kidney failure, Alzheimer’s and paralysis, among other medical conditions…
How much would such a policy cost? For one company, a 30-year-old male would pay $1,438 a year, and for a 50-year-old male it’s $3,234.
Depending on the state you live in, the premiums for a life insurance policy of this type are much less than what traditional health insurance will be. In Rhode Island for example, a 30-year old obtaining a ‘Silver’ health insurance policy with a $2,600 deductible would pay about $3,000, while a 50-year old might pay $4,800 for that same ‘Silver’ policy. Better yet, there’s no deductible to pay for with the cash payout from a life insurance company, and you’re not limited in the providers you can see.
The reason a life insurance company is willing to give policyholders cash to pay for needed medical care is simple – it’s less expensive for them to pay $10,000, or even $100,000, to get life-saving medical care than it is to pay $250,000 if you die.
There are other options out there like this one that aren’t technically health insurance but that can still pay for your expensive medical treatments, many of which cost even less than these innovative life insurance policies. I’ll be blogging about them soon, but until then it’s important to understand that just because you don’t have traditional health insurance doesn’t mean you can’t find alternatives that can work just as well or even better.