First-Year Income Loss for a Critical Illness Tops $12,000

Nearly half of working Americans have less than $5,000 in savings to tap in the event of a major illness

By SHRM Online Staff September 1, 2010

Experiencing a critical illness, such as cancer, a heart attack or stroke, can reduce a U.S. family’s income by m​ore than $12,000 in the first year alone—even with medical coverage in place—primarily attributable to the inability to work. In addition, these families experience out-of-pocket medical costs of about $3,000 in the first year after diagnosis. Yet nearly half (46 percent) of full-time working Americans have less than $5,000 in savings available to cover expenses in the event that they, their spouse or their significant other is diagnosed with a major illness. More than one-fourth (28 percent) have less than $500, according to insurer MetLife.

“The MetLife studies found that many people are unprepared to cope with the toll of lost income as well as the out-of-pocket medical expenses and other illness-related costs,” said Clea Barth, vice president, critical illness insurance products at MetLife. “A critical illness can have a long-term impact. Even three to five years after being diagnosed, 60 percent of people experiencing these serious medical situations are still incurring out-of-pocket expenses.”

Frayed Safety Net

All patients surveyed had medical coverage, but only 7 percent of respondents reported that they had critical illness insurance and only 4 percent reported having cancer insurance.

Overall, MetLife found that only 28 percent of full-time employees say they have heard of critical illness insurance. Of these, three in five appeared to be confusing it with standard health insurance, and one in five confuses it with a government insurance program or disability insurance.

Critical illness insurance is intended to complement medical coverage and other financial protection products by providing a lump sum payment to help offset the spike in out-of-pocket expenses resulting from certain critical illnesses, such as cancer, stroke, heart attack, major organ transplant and kidney failure.

The MetLife studies found that:

• 55 percent of full-time working Americans are somewhat or extremely concerned that a critical medical condition could impact the financial well-being of their families.

• Only one-third of working men and one-fifth of working women feel very confident that their rainy day fund could handle a financial emergency.

• About two-thirds of workers say they have less than three months of savings available for a medical emergency.

The MetLife Study of the Financial Impact of Critical Illness was conducted in April 2010 and surveyed 1,002 Americans, ages 25 to 55, who had experienced one of the critical illnesses of cancer, heart attack and stroke between six months and five years prior to the survey. The respondent or spouse had to be the patient, and the patient had to have health insurance at the time of diagnosis. The MetLife Critical Illness Awareness Study was conducted in April 2010 and surveyed 1,000 people, ages 25 to 55, among the general U.S. population, including 508 full-time employees. Respondents for the studies included owners and non-owners of critical illness insurance.



Hire the best HR talent or advance your own career.


Find your peers in SHRM's online community.

Find your peers in SHRM's online community.

Join SHRM Connect


HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.