Offer CI Insurance At The Workplace As A Supplemental Benefit

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The risk of becoming disabled or suffering a critical illness is all too real. Couple that with the accompanying financial strain, and suddenly you can see there is a compelling need for CI insurance.

This is the message you can take to employers today, for they are listening. This is a coverage that fits in well with the modern voluntary insurance program. To see why, and view some strategies for presenting this coverage, let’s review the basics.

CI pays benefits that can help insureds pay for direct and indirect costs associated with conditions such as heart attack, cancer, stroke, major organ transplant, and coronary artery bypass surgery.

Why is it on the radar screen today? We all know that medical advances are allowing people to live longer. But they are also creating a situation where illness or injury is more and more likely to disable than to cause death.

For example, heart disease is the leading cause of death for women, and one in three men can expect to develop a major cardiovascular disease before age 60 (American Heart Association, “1998 Heart and Stroke Statistical Update”). But a diagnosis no longer has to result in death. Statistics show the odds of surviving heart disease are good (see chart for an example).

As a result, more and more Americans are dealing with the costs of surviving a critical illness. Medical insurance only covers a portion of the treatment costs; and current managed care trends often mean CI patients face large out-of-pocket expenses.

Many people are unprepared to meet this financial burden. In fact, a leading cause of bankruptcy is the lack of adequate health insurance (M. Jacoby, T. Sullivan and E. Warren, “Medical Problems and Bankruptcy Filings,” Norton Bankruptcy Law Advisor, May 2000). Often, individuals find out too late that their needs exceed the terms of their standard medical plan.

Employers, too, face a cost dilemma. A 2001 Watson Wyatt survey reports that employers are shifting benefits costs to employees to offset accelerating health care costs. Of those surveyed, 56% said they will raise employee contributions by as much as or more than their expected cost increases (“Employers Shifting More Health Care Costs to Employees,” Oct. 15, 2001 press release, issued by Watson Wyatt Worldwide).

The solution? To boost employee morale and enhance their benefit offerings, an increasing number of employers are expected to offer supplemental voluntary coverages. These supplemental solutions include CI products as well as disability income insurance.

The rationale is simple. DI insurance does replace a portion of salary for a worker who is disabled, but the policies may not cover the additional expenses incurred due to a critical condition. Thats what the CI policy is for.

What should the employer (and employees) look for in a CI policy?

For one thing, the contract should be simple in design. This ensures convenience for those facing the trauma of a significant health challenge.

Also, check out the options. One common option is a lump sum payment structure. This allows benefits to be paid immediately to insureds who are diagnosed with a covered CI. Typically, the funds can be used in any manner, from covering co-payments and other medical costs to financing home/auto adaptation and so on. (This contrasts with the more traditional indemnity benefit structure, which pays for the hospitalized days or for the cost of treatment.)

Some contracts are stand-alone plans, while others offer CI coverage via policy rider. The stand-alone structure can ensure that benefits are paid regardless of any other types of coverage in force, and they are not terminated once the policyholder reaches a certain age. (Most such policies provide level premiums that do not increase with age, and are guaranteed renewable for life as long as premiums are paid and benefits have not already been paid out.)

Other options to look for: no family history questionnaire, reduction of face amount at age 70 instead of 65, and no survival requirements (a stipulation that you must live a certain number of days after diagnosis before benefits are paid).

Remember, in voluntary CI sales, as with other voluntary market sales, employee education is key.

For instance, point out the differences between CI and traditional income protection coverages. Note that:

–While both coverages provide important supplemental protection, a lump sum CI provides financial protection immediately rather than in scheduled amounts.

–The CI benefit is paid regardless of whether the employee is out of work long enough to collect disability.

Also note that, when employees have CI insurance, they can be on solid financial footing when they recover. Perhaps most importantly, this increased level of financial comfort enables them to focus on care and getting well.

is vice president-product and market development for the Voluntary Workplace Benefits organization of UnumProvident Corporation, Chattanooga, Tenn. Her e-mail is neiciee_durrence@providentcompanies.com.


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.