CI Insurance Has A Place On The Worksite Benefit Menu
By Jeffrey J. Morgan Sr.
Those resistant to change might be wondering how critical illness insurance is going to shake out in our industry.
Many colleagues already have debated the pros and cons of the product within these pages. My own view is that this product is only going to grow, not fade away, and especially in the worksite market.
As medical technologies improve, more people are able to survive critical illnesses. Yet the rate of consumer debt has risen. When someone is hit with unexpected expenses due to such an illness, money received from CI insurance plans will help avoid scenarios like home foreclosures or bankruptcy.
But to get into this segment of the worksite market, producers need to know who will be their ideal prospects? In addition, how does the product benefit those in the worksite market? And how does it fit in with other insurance products that employees may have? Lets take a look.
Who are your prospects? More people are surviving critical illnesses like cancer, strokes and heart disease now than ever before. As a result, the bigger battle is often meeting the mounting debts experienced during and after the illness.
What if an experimental treatment is not covered by their health insurance plan? What if there is not enough money left to pay the mortgage? What if the patient has to modify the home and car to adjust to new physical impairments? And, how will the patient pay for the travel and lodging needed in order to receive medical treatments?
If the employees you meet with are like most Americans, they dont have enough in savings to cover these items.
Other prospects include individuals who are not covered adequately under their employers current health insurance plan. Consider: If individuals have a traditional insurance plan, chances are the plan will not cover most of the monetary concerns listed above (see chart for comparisons).
Still other candidates for a voluntary CI insurance product include:
Professionals in industries where disability coverage is unavailable, unaffordable or uninsurable.
Families caring for children and aging parents.
Couples in their late 40s or 50s who are not ready to purchase long term care insurance.
In other words, almost anyone can benefit from this type of insurance.
How does worksite CI insurance benefit employees? The plans allow for lump-sum benefits to be paid directly to the employee upon diagnosis to help cover the costs of medical treatment, recovery and everyday expenses like mortgage payments. Like other supplemental insurance options, the policies are often portable and can continue even if the employee is no longer working at the company. Another possible advantage is premium deduction directly from payroll, which reduces cost.
How does offering worksite CI insurance benefit the employer? It provides broader coverage than disease-specific plans. It complements existing coverage. And, since employees pay the premiums, it can be provided at no cost to the employer (welcome news to employers faced with increasing health care costs).
Finally, how does CI insurance fit into the worksite product portfolio? This coverage easily can be packaged with life or disability insurance for an extra layer of protection. Receptivity to this product is typically high, as employers and employees see the coverage as a valuable financial tool. This is especially so if the product has these characteristics:
No survivorship period.
No reduction of benefits after employee reaches a certain age, such as 69 or 70.
Equal benefit amounts for each family member when the employee buys family coverage.
Guaranteed renewability for life.
No termination after only one CI diagnosis is met and paid out to the insured.
As is the case with all other types of insurance, individual employees may voice concern about having to contribute to the plan from their already squeezed budgets to protect for the unknown. But also as with other products you sell, when the unthinkable happens, your clients will be glad they made the investment.
Jeffrey J. Morgan Sr. is field vice president in the Allstate Workplace Division of Allstate Insurance Company, Northbrook, Ill. He also serves on the board of directors of the National Association of Professional Enrollment Specialists. His e-mail address is: Jeff.Morgan@ahlcorp.com.
Reproduced from National Underwriter Edition, June 16, 2003. Copyright 2003 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.