NEW YORK – Two companion studies from MetLife have found that a critical illness – such as cancer, a heart attack or stroke – can reduce a family’s income by more than $12,000 in the first year.

This can occur even with medical coverage in place, primarily due to the inability to work.

“The MetLife studies found that many people are unprepared to cope with the toll of lost income as well the out-of-pocket medical expenses and other illness-related costs,” said Clea Barth, vice president of critical illness insurance products for the New York-based insurer. “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.”

According to MetLife, families incur out-of-pocket medical costs of about $3,000 in the first year after diagnosis. 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 significant other is diagnosed with a major illness, the studies found, and 28 percent have less than $500.

While all patients surveyed had medical coverage, only 7 percent reported they had critical illness insurance and 4 percent reported having cancer insurance. The MetLife studies also found that only 28 percent of full-time employees say they have heard of CII. Of these, three in five appear to be confusing it with health insurance, and one in five confuse it with either a government insurance program or disability insurance.

CII can complement existing 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 or kidney failure.

“Receiving a lump sum benefit can make a significant difference to families given that about one in four working Americans simply did not know where they could turn to for financial help if confronted with a critical illness, and 39 percent cited the need to go into debt – whether borrowing from a bank, from their home equity or from friends and family,” Barth said. “These findings underscore the important role that CII, along with other protections such as disability income insurance, can play in strengthening a family’s financial safety net.”

Other findings:

• 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.
• 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.
• When the concept of CII was explained, 58 percent of full-time employees said they would be interested in buying the product through their employer even if they had to pay 100 percent of the premium themselves.