If I asked, “Do you actively market critical illness insurance?” my guess is you’d say, “No.”
If I followed up and asked why you don’t, you’d probably say, “Because life and disability coverage are higher priorities than critical illness insurance.”
However, if I then asked if you have family members or friends who’ve been diagnosed with cancer, had a stroke or suffered a heart attack, I’m sure you’d say yes.
The good news is that with advances in medical treatment, more people with serious diseases are living instead of dying. On the flip side, though, medical bills can be extremely high for survivors. Even with the most generous employer-provided medical and disability insurance plans, employees need additional resources to help meet their financial needs. Lengthy, expensive recovery periods can mean that employees can lose personal wages, making it difficult to pay for care and treatment. That’s why critical illness insurance can be described as “life insurance for the living.”
Let’s talk about why employees need this coverage, what types of plans to consider and how to package critical illness insurance with other employer-provided benefits.
The risk is real
Statistics show there’s a real likelihood that millions of Americans will develop a serious illness:
–About 1.2 million Americans had a first or recurrent coronary attack last year. (American Heart Association, Dallas)
–1 in 3 men and women has some form of cardiovascular disease. (American Heart Association)
–In the United States, men have a one-in-two lifetime risk of developing cancer, and for women, the risk is one in three. (American Cancer Society, Atlanta)
Your clients’ employees see family and friends suffering with serious illnesses, and many may be unclear about what their health insurance covers should they face the same situation. Employees covered by major medical insurance may not be prepared for the financial strain a critical illness can bring, such as deductibles and coinsurance, as well as related expenses for caregivers, special medical equipment, household renovations, loss of income and extra living expenses.
In fact, according to a recent Harris Interactive survey conducted on behalf of Colonial Life, a large majority of working Americans covered by insurance say they’re concerned about cancer, heart disease or other serious illnesses, and they’re interested in buying a voluntary insurance policy to help with the expenses resulting from a critical illness:
–84% of employees surveyed say they’re concerned they or someone in their family will be diagnosed with cancer, heart disease or another serious illness in the future.
–71% of employees surveyed say they’re interested in buying personal insurance products at work, in addition to their current health insurance policy, to help cover expenses for cancer or other serious illnesses.
–Women (89%) are more concerned than men (79%). This bears out in our own experience at Colonial Life where we see more women than men buying a voluntary critical illness plan.
Although the percentage of U.S. businesses offering critical illness insurance has increased in the last few years, it’s still not one of the top-offered voluntary products. According to LIMRA International, Windsor, Conn.:
–19% of businesses offer CI plans, and nearly all of those businesses offer voluntary, employee-paid plans.
–Of companies offering CI plans, 15% of employees purchased it.
–In small and midsize companies, CI plan sales grew by the widest margin.
In short, there’s a real need for critical illness insurance, and employees are interested in finding out more about it.
Types of CI plans to consider
Most CI plans are voluntary, and they provide a lump-sum benefit when an insured is diagnosed with a covered critical illness. Covered illnesses generally consist of heart attack (myocardial infarction), stroke, major organ transplant, end stage renal failure, cancer, carcinoma in situ and coronary artery bypass surgery.
In addition, you can find both individual and group plans. Which is better? It depends. Individual products tend to offer more benefit choices for employees. Group products may be more streamlined, which means the employer usually chooses one plan to offer all employees. You can find both offered simplified issue and guaranteed issue. Keep in mind that group products have very limited or no portability, and individual products are portable. You may also find some group/individual hybrid plans that have conversion options.
Especially for those employees with a family history of heart disease, strokes or cancer, CI plans can be a good solution.
Consider making CI insurance part of your offering to clients. Employees are concerned about the expenses from serious illnesses, and they’re interested in additional coverage to help them manage their financial risk. And by adding a voluntary critical illness plan to your portfolio, you can offer clients a way to expand their benefits program at no direct expense. Say “yes” to life insurance for the living.
Justin Laughlin is assistant vice president of health products at Colonial Life & Accident Insurance Company, Columbia, S.C., a subsidiary of Unum Group. He can be reached at [email protected]