At Royal London we paid out over £156m in critical illness claims last year with an average payout of nearly £83,000*.
Cancer was the most common reason for a claim and made up over 63 per cent of claims we received, followed by heart attack (10 per cent), stroke (6 per cent), multiple sclerosis (4 per cent) and children’s critical illness (3 per cent).
Research** we recently commissioned Opinium to run revealed that on top of coping with being diagnosed with a critical illness, people are faced with additional financial pressure from unexpected bills.
In fact, 3.5m people diagnosed with a critical illness in the past five years were unable to cope financially and a third of people had to take six months or more off work putting more pressure on their finances.
In addition to day-to-day living costs that need to be covered if unable to work, the average additional costs of being ill or caring for someone who is ill can equate to £1,623. For over two-thirds of people, the most common reason for extra expenses was transport to the hospital, doctor or chemist, costing on average £391 over the course of the illness.
People who drove or were driven to hospital appointments paid on average £216 in parking. And a third faced higher utility bills as a result of their illness or the illness of the person they cared for. paying an extra £675 on average.
Although less commonly mentioned, the two things that caused the biggest financial burden were getting outside help in (23 per cent), costing £1,738 on average and making alterations to the home (16 per cent) costing £1,764.
One in seven of those who suffered an illness and faced financial burdens said they had to pay extra expenses relating to their illness for over a year.
Mind the gap
Statutory Sick Pay is currently £89.35 per week for up to 28 weeks. Although people may be entitled to other benefits these might not be enough to cover their normal daily living expenses let alone the extra expenses they could face.
Our research shows that although people expect the illness to have a financial impact, they aren’t prepared. Two thirds of those who faced additional expenses, for their own or a loved one’s critical illness covered their outgoings using their existing day-to-day personal finances (65 per cent) and nearly a third dipped into their savings. The findings also show that a fifth of people have no savings to fall back on if the worst was to happen.
Critical illness doesn’t just affect the person diagnosed; our research shows it can impact their support network too.
Most people expected family and friends to care for them if they were unable to carry out day-to-day tasks while ill. Two-thirds of people were working when they were caring for someone who had been diagnosed with a critical illness and more than half had to take time off or reduce their working hours as a result. A third of people who took time off or reduced their hours estimated that they took up to a month off work.
Although insurance can't protect your clients from facing a diagnosis of a serious illness, a payout can help with the additional expenses that people face when going through treatment and give them one less thing to worry about. And don’t forget, some plans can also provide emotional and practical support through additional services such as Royal London’s Helping Hand.
Coping with a critical illness is a worrying time. There’s no time like the present to check your clients have adequate protection in place to provide a cushion to ease the financial burden of being ill or caring for a loved one.
*Source: Royal London UK protection business claims paid (1 January to 31 December 2016).
**Source: Royal London Commissioned Opinium who surveyed 3,004 UK adults in an online survey from 19 to 23 June 2017. The results have been weighted to nationally representative criteria.
Jennifer Gilchrist is senior product development manager at Royal London
