By:Bill Coffin of Life Health Pro
An overwhelming majority (90%) of middle-income Americans say they are not financially prepared for a critical illness diagnosis, according to a new study released by Washington National Institute for Wellness Solutions (IWS).
The study, Middle-Income America’s Perspectives on Critical Illness and Financial Security, which surveyed 1,001 Americans ages 30 to 66 with an annual household income of between $35,000 and $99,999, found that only one in 10 feels strongly confident they have enough savings to cover family emergencies and handle the financial implications of a critical illness,such as cancer, heart disease stroke, or Alzheimer’s disease.
If diagnosed with a critical illness, most middle-income Americans say they would be forced to draw on savings to pay for out-of-pocket expenses not covered by insurance. But according to the study, many have little, if any, savings to fall back on:
75% have less than $20,000 in savings
50% have less than $2,000 in savings
25% have no current savings
To pay for critical illness costs, middle-income Americans say they would need to use credit cards (28%) or loans from family/friends (23%) or financial institutions (19%) to offset expenses not covered by health insurance. Another one-fourth (23%) say they simply “don’t know” what resources they would use to help offset their expenses. Millennials and Gen Xers anticipate greater reliance on credit cards and loans to pay for critical illness expenses.
Thirty-eight percent of respondents said they would probably never recover financially from a cancer diagnosis. Forty-five percent said that they would not recover financially from an Alzheimer’s/dementia diagnosis.
Despite this, only 12 percent of respondents said they have explored care-giving options. Sixty percent have not discussed financial planning for critical illness. And eighty-eight percent have not broached the topic with loved ones or a financial advisor.