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Where should critical illness insurance stand in the corporate benefit package?

As a core benefit.

First, lets remember why companies provide benefits. Benefits provide a way for the employer to take care of workers so the workers can take care of their work. A benefit-rich program is a good-will gesture, an attracter and retainer, and a universally known necessity for competitive U.S. employers.

According to the most recently published “Principal Financial Well-Being Index,” released by the Principal Financial Group, employees feel their most important benefit is health insurance (see www.principal.com). No surprise there.

The index further revealed that, in the wake of September 11 and the whispered recession, employees are placing far more value on traditional core benefits. They rank health insurance, retirement plans, and life insurance as the top benefits.

Therefore, it is todays high stress and financially volatile climate that begs for CI insurance as a core benefit.

Employees are looking for security in an increasingly insecure world. Yet because of company downsizing and economic slowdowns, one in three employees expect their benefit packages to decline over the next year (Principal Financial Well-Being Index).

However, now is not the time for employers to let benefit programs decline. Rather, it is a time to restructure the benefits package to fit todays benefit needs. They can do this by placing more emphasis on financial protection benefits such as disability, life insurance, and, yes, critical illness insurance.

Compare CI insurance to other typical employer-sponsored core benefits. Employees are becoming increasingly more concerned with their long-term financial stability, yet corporations continue to place emphasis on benefits that, however useful, are not made to protect the number one concern for employees today–their assets.

In companies with over 2500 employees, 99.5% offer company-sponsored dental plans (see “ECS Survey Report on Employee Benefits 2001/2002,” by Watson Wyatt Data Services). And the average employer-paid premium for dental insurance is $470 per employee, according to the National Survey of ER Sponsored Health Plans 2000 by Mercer/Foster Higgins.

Also, 67% of employers already provide Employee Assistance Plans, according to the 2001 Benefits Survey published by the Society of Human Resource Management. Vision insurance is just as widely offered.

Existing benefits are important and it is almost impossible and certainly inadvisable to completely cut them, once offered. But there is clearly room to maneuver.

Corporate sponsorship is key in communicating the importance of CI insurance.

Case study. In October 2000, one Fortune 1000 company that I know offered CI insurance to its 5000 domestic employees as a voluntary benefit. It was communicated in the annual re-enrollment meetings, including print literature and was even the focus of a video shown at employee meetings. Participation was less than 1%.

In September 2001, the same company again offered CI to its employees. This time, the company paid for a base $10,000 benefit and offered the employees a buy-up option for themselves and their spouses. Again the benefit was included in the annual re-enrollment meetings. Participation grew to over 30%! No doubt, this participation will increase even more as others see CI benefits being paid.

What will the employer gain from this strong participation? Employers want their employees to recover from their illnesses and resume their place of employment. But employees who are forced to return to work prematurely and who are burdened with financial pressures are not very productive. The CI benefit helps remove some of the pressure, increasing chances for greater productivity.

CI is a core benefit in the corporate benefit package for the same reason it is growing as an individual product. It is needed. Now its time to communicate that to your employer clients.

, CLU, is managing director of Xcorp in Tulsa, Okla. His email is jbashaw@xcorp.org.


Reproduced from National Underwriter Life & Health/Financial Services Edition, March 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.