Why Is Critical Illness Insurance So Darn Hot?

Many critical illness policies have a wellness benefit that helps pay for covered health screenings such as a colonoscopy, Pap smear or mammogram. In the past 12 months, Unum has seen an increase of 5% to 10% in use of the wellness benefit. This benefit is an excellent way to encourage employees to take proactive steps toward prevention and early detection. The benefit pays a set payout per calendar year per insured individual if a covered health screening is performed.

Critical Illness Payouts

Critical illness insurance offers a lump sum payment at the diagnosis of a covered illness which can be used for any purpose. Policies typically pay 100% of the benefit amount for heart attack, stroke, major organ failure, permanent paralysis due to accident and end-stage kidney failure and cancer. Some of the newer critical illness plans also can pay abenefit for such conditions as coma as the result of a brain injury, blindness, benign brain tumor, and occupational HIV.  Dependent coverage is typically available. And critical illness policies pay in addition to any existing health, disability or life insurance coverage.

The market seems to have shifted more to group-based critical illness products over the last five years.  Advantages of group critical illness coverage are that it allows for more flexible funding options and it simplifies benefit education and implementation for employers with employees in multiple states.

Group plans may include portability features similar to typical individual plans, so that even if the employer drops the plan, employees can continue their coverage.

Keeping employees engaged

Unum research shows that employees value critical illness and other voluntary coverages. More specifically, it shows an 18-point improvement in employee satisfaction with their benefits package when working for employers that offer voluntary plans compared to employers offering no voluntary benefits – even when employees pay for them. And, according to a 2012 Unum survey on employee education and enrollment, when it comes to comparing employee satisfaction with the employer, there is a nine-point advantage for employers offering voluntary benefits. Studies have also shown that workplace satisfaction is a key driver of employee engagement.

Critical illness insurance is a product designed to meet the needs of employees facing significant out-of-pocket costs due to a serious illness. Further, it blends well with health care plans to provide employees with a more complete benefit package while not adding to employers’ benefit costs.

Critical Illness Insurance: What to look for 

A number of insurance providers offer critical illness plans with an array of features and benefits. Here are some ideas to keep in mind when you’re helping consumers compare plans:

• Select policies that are HSA compatible, which best complements high-deductible health plans.
• Some plans pay on a simplified lump sum basis rather than a more complex expense reimbursement arrangement. This saves consumers from having to collect and maintain receipts for medically-related expenses.
• Seek providers that offer automated guarantee issue enrollment for spouses, which helps to simplify the overall enrollment experience for families.
• To better match health care coverage, look for policies that cover dependent children to age 26.
• To help encourage employees to become smart health care consumers, make sure critical illness plans include a wellness benefit for health screenings.
• Look for a carrier that offers a broad portfolio of coverages that work seamlessly together and offer portability at the same rate if an employer terminates the plan with no replacement coverage offered.