With rising health care costs leading to higher health plan premiums and deductibles and reduced coverage, employees are digging deeper into their wallets to pay medical expenses–especially for the higher price tags associated with heart attacks, strokes, kidney failure, paralysis, cancer and other serious illnesses.
Everyone knows someone who has experienced a catastrophic illness as well as the lingering medical bills. When this hits close to home, employees realize they may need more than health insurance.
That’s why voluntary critical illness products are enjoying a boost in demand, especially at larger firms with 500-plus employees. Market-savvy brokers can stay ahead of the trend by having a strong voluntary CI product in their portfolio.
The question is, what kind of product should it be? The new-generation CI products definitely should be considered, because they provide benefits for several illnesses and offer a variety of product features. In fact, the newer CI policies have expanded their coverage in response to the growing finacial demands associated with catastrophic coverage.
Traditional single-payout CI policies aim to provide benefits when the insured experiences one of the specified illnesses–benefits that can be used to pay for medical bills or other nonmedical expenses related to the illness, such as lost income or mortgage payments. Once the full benefit has been paid out, the policy terminates.
The newer designs go further. They recognize that medical advances have made it so that more people are surviving catastrophic illnesses–and consequences. Someone who has a heart attack, for instance, may later have a recurrence or experience another critical illness.
Creative product designs are responding. For instance, because people want to be able to use a CI policy more than once, some new-generation products offer multiple independent benefit payouts if a policy owner is diagnosed with a specified critical illness. These “independent payouts” give the policy better value and a longer life. For example, a product may have three different “categories” of illnesses with each category paying a benefit–some as high as $50,000. The policy owner could receive three payouts if diagnosed with a covered illness in each category.
Some CIs also offer a “recurrence benefit” that can pay a percentage of the benefit if, after a certain period, the insured suffers again from the same illness.
With these newer CI products, the policy owner pays a reasonable premium and gets broader coverage.
In the workplace, CI increasingly serves as a nice complement to the benefits program, especially when the policy has a variety of product options and features that enable the employer to choose what integrates well with the benefits strategy.
Look for key features like these:
o Group platform. Medium to large employers are demanding voluntary group CI products with reasonable participation requirements. They want guaranteed issue, which assures that employees can get coverage regardless of their health.
Suggestion: Make sure the group product has options for converting to an individual plan so employees can keep the coverage if they leave the job. Some new group CI products also have plan design choices that make the product feel like a feature-rich individual product.
o Individual platform. Individual voluntary CI products have advantages, too. Not only does the employee own the policy, but there’s also a range of plan designs employees can choose from.
Suggestion. These may be a better bid for very small employers who might have difficulty meeting group participation requirements.
o Easy enrollment options. Group voluntary CI products are simple and can be enrolled easily on a paper application or electronically.
o Coverage options. Employees can choose employee, employee and dependent children, or employee plus family coverage.
o Level premiums. The premiums don’t change as the policy owner ages. This is a nice feature in a world of inflationary medical expenses.
In sum, employers today need help managing benefits costs. CI products can help brokers bring solutions to the table.
If a benefits program has a higher deductible health plan, for instance, the broker can position voluntary CI insurance as additional coverage that can help pay for the high-dollar expenses associated with catastrophic illnesses. Similarly, employers that are increasing deductibles or reducing coverage in their health plans can soften the blow to employees by funding all or some of the CI product. Offering the new-generation CI products will put brokers in the forefront of responding to such health care cost issues by delivering much-needed solutions to clients.