DAVID GREENE, HOST:
All right, let's look now at a relatively new form of health insurance that's gaining in popularity among consumers and also insurance companies. It is called critical illness insurance, and it's catching on as people are paying out more out-of-pocket for their health care. Mark Zdechlik from Minnesota Public Radio explains.
MARK ZDECHLIK, BYLINE: Imagine - you're diagnosed with cancer. Your doctor says your survival chances are good, but getting better will cost months of your time. And because you have high-deductible health insurance, you're going to be responsible for paying thousands of dollars for your care before your insurance kicks in. You'll have many other expenses, too. Maybe you'll need help taking care of your kids or your house, whatever. Such circumstances are the base argument for what's called critical illness insurance. The plans pay a lump sum you can spend however you wish should you become seriously ill. Among companies now embracing critical illness plans is Minnesota-based UnitedHealth Group, the nation's largest health insurer.
GARY HARGER: We've been in this market really since 2011, and we've seen double-digit growth.
ZDECHLIK: That's United's Gary Harger. Harger says big changes in conventional health insurance have been fueling growth of critical illness plans.
HARGER: More employers are moving to high-deductible health plans as a way of reducing their overall employee-benefit costs. And it's putting more financial burden on employees.
ZDECHLIK: Critical illness plans are a good way for insurance companies to make money, says Steve Rowley with Gen Re, a company that helped underwrite some of the first policies more than 30 years ago.
STEVE ROWLEY: The opportunity for insurers to get in and sell a product that's needed by the consumer but is not fiercely competitive with 100, 150 companies competing for the consumer means that companies can price it to a margin that they think is fair for the risk.
ZDECHLIK: That means insurers can make more money selling critical illness plans than conventional policies. But who's benefiting more from critical illness insurance, the companies that sell it or the people who buy it? University of Minnesota health policy professor Roger Feldman says it's complicated.
ROGER FELDMAN: I think my basic perspective is one of being skeptical, but every person should consider their own situation.
ZDECHLIK: Feldman says for people with little savings, big expenses and lots of potential out-of-pocket health care costs, critical illness insurance might be a good choice. But he notes there are many conventional insurance options that cover a lot more than health care costs in the case of serious illness.
FELDMAN: Such as disability, mortgage insurance, health savings account or long-term-care insurance.
ZDECHLIK: And Feldman says conventional options might be less expensive. But the people who sell critical illness insurance are betting on continued strong growth. Gen Re Vice President Steve Rowley says since 1999, critical illness policy sales have risen from $8 million to $381 million a year.
ROWLEY: On average, we're getting annual growth rates expected of 10 to 30 percent in the product line.
ZDECHLIK: According to Gen Re, a typical critical illness plan for a 42-year-old non-smoker with a $20,000 benefit would cost about $300 a year. For NPR News, I'm Mark Zdechlik in St. Paul.
GREENE: That story was part of a reporting partnership with NPR, Minnesota Public Radio and Kaiser Health News. And we're reporting this morning, broadcasting live for a second day in a row, from smoking while a coffeehouse in downtown Des Moines, Iowa, the morning after the caucuses. The snow is just beginning here. We're hoping it won't be too much. You can follow all of this on Twitter, @MorningEdition. Our event here at Smokey Row is hosted by NPR Generation Listen, a movement to find new ways to connect with audiences at NPR. And you can follow them on Twitter - @ NPRGenListen. Transcript provided by NPR, Copyright NPR.