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New Study Finds Alarming Number Of Middle-Income Americans Inadequately Prepared For A Critical Illness Diagnosis

CARMEL, Ind., May 7, 2013 /PRNewswire/ -- An overwhelming majority (90%) of our nation's 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 1-in-10 feels strongly confident they have enough savings to cover family emergencies and handle the financial implications of a critical illness.

Middle-income Americans today face a significant risk of being diagnosed with one or more critical illnesses—including cancer, heart disease, stroke and Alzheimer's disease.  For the majority, a critical illness diagnosis can be life-changing both financially and personally. 

Level of personal savingsIf 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

Resources used to pay critical illness costsTo 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.

Perception of financial impact of critical illness Americans believe that the financial impact of a critical illness can be lasting.  Thirty-eight percent believe they might never financially recover from a battle with cancer and 45% believe they would never recover financially from an Alzheimer's/dementia diagnosis.

Despite the vulnerability in financial preparedness for critical illness, few middle-income Americans have had meaningful discussions about potential care-giving options or financial planning for critical illness.  Eighty-eight percent have had no conversations with loved ones or advisers about potential care-giving options and 60% have not discussed financial planning for critical illness.  Only 12% have actively explored care-giving options.

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