We’ve all heard the expression “serious as a heart attack.” For many people, the one thing that can be even more serious than experiencing that kind of life-changing event is surviving it.
Every 34 seconds, an American will suffer a heart attack. The great news is if those victims arrive at a hospital still alive, almost all of them — 90% — will survive.1 The not-so-great news is the cost of treating and recovering from that heart attack will push many families into financial ruin. Of the 1.5 million Americans who’ll declare bankruptcy this year, nearly two-thirds will do so because of medical bills and lost income.1 Most of these people will have health insurance, but they won’t be prepared for the impact of deductibles, co-payments and noncovered medical and nonmedical expenses.
Critical illness insurance can offer valuable financial protection for these families. It’s designed to supplement major medical coverage by helping employees pay the direct and indirect costs associated with a specified critical illness. Many of today’s plans cover multiple conditions, such as heart attacks, cancer, strokes, coronary artery disease, major organ failure and transplants. The coverage pays a lump sum benefit for these conditions once they’re diagnosed. Insureds receive the benefits regardless of their other health insurance coverage, and they can use the money as needed.
Employees realize a long, costly recovery period after a serious illness could affect their ability to bring home a paycheck, which makes it even harder to pay for needed treatment. With critical illness coverage, employees can use the benefits to help protect their family’s financial health while they concentrate on recovery.
You probably routinely include life and disability insurance in your recommendations to your clients. But if you’re not also considering critical illness coverage, you may be overlooking an opportunity to help clients meet their employees’ needs — and strengthen your portfolio of benefit solutions at the same time.
Looking good, CI!
Brokers already on board with critical illness insurance find it attractive for several reasons:
• Simplicity. Critical illness insurance is an easy product to explain and enroll. Lump sum payments make communication simple. There’s no payment schedule to explain, and it doesn’t require coordination of coverage.
• Flexibility. The benefits paid to insureds with critical illness coverage can be used for medical and nonmedical expenses. Because the benefit is a lump sum, employees have the flexibility to use their payments to meet their particular needs — whether it’s paying for home modifications after a disabling illness, travel to treatment centers or everyday living expenses while they’re unable to work during recovery.
• Group and individual products. Critical illness insurance is available on multiple platforms to meet your and your clients’ needs.
• No cost to employer. This coverage is usually offered as a voluntary benefit to employees. That means employees select and pay for the coverage themselves, with no effect on the employer’s bottom line.
• Simplified underwriting options. In most cases, employees can qualify for coverage by answering a few simple health questions. Many plans can even be offered on a true guaranteed issue basis, requiring no health questions.
• Portfolio differentiation. Critical illness insurance isn’t a commodity product. Adding this plan to your portfolio distinguishes your agency and sets you apart from other brokers.
Choosing the right plan
In the early days of critical illness plan design, most policies paid benefits for a single covered illness, and then the coverage ended. Today’s enhanced plans include coverage for more than one critical illness, which means policyholders get additional value from the plans. Some plans offer a wider range of covered illnesses and pay benefits for recurrences.
One of the most common mistakes you can make is to shop for critical illness plans by price alone. Instead, it’s important to compare plan design. Not all critical illness policies are created equal, so be sure to check the policy language on conditions covered, waiting periods and pre-existing conditions.
Here are some other features to look for:
• Variety of covered illnesses, such as heart attack; stroke; major organ failure; permanent paralysis caused by a covered accident; coma; blindness; occupational infectious HIV; Hepatitis B, C or D; and cancer.
• Percentage of benefit payouts for covered conditions, such as 100% or 25% of the policy’s face amount.
• Additional benefit opportunities for other covered illnesses, such as coronary artery bypass graft surgery, coronary artery disease or carcinoma in situ.
• Subsequent diagnosis benefit that pays additional benefits if an insured is diagnosed with the same or a different covered illness.
• Health screening benefits to help with prevention and early detection of diseases.
• Underwriting options, such as guaranteed issue or simplified underwriting.
Educating employees
Even though critical illness insurance is a relatively simple product, it’s still not widely known or understood. And many people haven’t thought through their family’s financial protection needs in the event a main breadwinner suffers from a major illness such as a heart attack, stroke or cancer. That’s why a strong benefits communication and education program is so important.
The ideal situation is for employees to meet one-to-one with a benefits counselor who will help them understand their entire benefits package, their unique needs, the gaps in their protection and the options available to fill them.
Neither your agency nor your clients are likely to have the resources to handle this kind of personalized benefits communication, and outsourcing it to an enrollment firm will siphon off a sizeable portion of your revenue. Instead, look for a benefits carrier that provides this kind of service as part of its package. The top voluntary benefits companies will offer benefits communication at no additional charge.
Critical illness insurance helps offer important financial protection for some of the most serious health issues any of us will ever face. For many people, this coverage means the difference between focusing on recovery and worrying about how to pay an unending pile of bills. Add critical illness insurance to your portfolio and you’ll offer your clients a product that meets an important financial need in today’s marketplace.
Tim McGill, CLU, CEBS, is vice president of sales for the Midwest region of Colonial Life & Accident Insurance Company, a market leader in providing insurance benefits for employees and their families through the workplace. For more information contact McGill at (402) 951-9600, at tmmcgill@coloniallife.com, or visit www.coloniallife.com.
Footnotes
1. American Association for Critical Illness Insurance website, as viewed on May 21, 2012.
2. Harris Interactive and Colonial Life & Accident Insurance Company survey, June 3-7, 2010.
3. Survey of HR executives, Employee Benefit News, June 17, 2010. Survey of brokers, Employee Benefit Adviser, June 17, 2010.
4. Eastbridge Consulting Group Inc., “MarketVision — The Employer Viewpoint Update,” February 2010.
5. Eastbridge Consulting Group Inc., “U.S. Worksite Sales Report, Carrier Results for 2009,” April 2010.
