Why Critical Illness Insurance Should Be Part of Your Agency’s Portfolio
by Jason Mollo

Raise your hand if you, a family member or someone you know has had a heart attack or stroke or has been diagnosed with cancer. I imagine that if we were in a room together, nearly all of you would have your hand raised.

Now, raise your hand if you actively sell critical illness insurance. I’m guessing most of you would have lowered your hand. According to a new report from Eastbridge Consulting Group, you’d be representative of the industry numbers. In fact, the Eastbridge study says cancer plans outsell critical illness plans four-to-one, despite recent publicity around critical illness plans.
Health, disability, and life insurance may be the top benefits of choice for most insurance agents, but there’s a real need for additional coverage to help employees minimize the financial risk from a serious illness. A comprehensive cancer plan is a good solution. However, a critical illness plan is too because it covers a wider range of illnesses.

What types of critical illness plans should you offer? How can you package critical illness insurance with other employer-provided benefits to provide employees stronger, more comprehensive coverage options? These are good questions. But before we answer them, let’s talk about why employees need critical illness coverage.

Employees Need Critical Illness Insurance

There’s a good chance that millions of Americans will contract a serious illness:

• One in three men and women has some form of cardiovascular disease, according to a 2007 report from the American Heart Association and American Stroke Association.
• In addition, about 1.2 million Americans had a first or recurrent coronary attack last year.
• In the United States, men have a one-in-two lifetime risk of developing cancer, and for women, the risk is one in three, according to the American Cancer Society.

With the strides in medical treatment for serious illnesses, people who have heart attacks, strokes and cancer are surviving. On the other hand, after they recover, they’re often left to deal with a pile of medical bills. Some of these expenses may not be covered by health insurance, such as home health care, and rehabilitation.

Add in the fact that people may not be able to work while they’re recovering and you have a whole other category of expenses. How can these people pay the bills that aren’t related to treatment but are just as important, such as the mortgage, childcare, transportation to treatment centers and groceries? Although medical treatment has helped increase survival rates, it has also created longer recovery periods, which opens patients and family members to more expenses. Imagine having to go on disability while you’re recovering and watch the expenses pile up even though your income may have been cut by a third or more.

There’s a real need for critical illness insurance. The people employed by your clients have family and friends suffering with serious illnesses and they may have heard stories about how expensive the treatment is and what health insurance didn’t cover. A serious illness can put a serious strain on a family’s finances in the form of high health insurance deductibles and coinsurance, plus living expenses, income loss and special medical equipment.

In a recent Harris Interactive survey, conducted on behalf of Colonial Life, most working Americans who have health insurance admit they’re concerned about cancer, heart disease, or other serious illnesses. They’re also interested in buying personal insurance to help with the expenses resulting from a serious illness. The Harris survey reports the following:

• 84% of employees surveyed say they’re concerned that 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 slightly more concerned about contracting a serious illness than men (79%).
In general, more American companies are starting to offer critical illness insurance to their employees, but critical illness plans still lag behind disability, life and cancer plans. According to LIMRA International:
• 19% of companies offer critical illness plans. Nearly all of them offer voluntary, employee-paid plans.
• In large companies that offered voluntary benefits between 2002 and 2006, critical illness plan sales grew by the widest margin of all voluntary benefits.
• Of companies offering a critical illness plan, 15 % of employees purchased it.
To summarize, employees have a real need to protect themselves from the financial risks associated with a serious illness, and they want to learn more about insurance that can help them cover those risks.

What Should You Look for in a Voluntary Critical Illness Plan?

Look for flexibility and a range of coverage options, such as group and individual plans and a good selection in covered illnesses.

Group and individual platforms
The newer plans are available on group and individual platforms. In my experience, employers like to offer a group voluntary critical illness plan and pay the premiums because it makes the company’s benefit program look richer to employees. Plus, employees appreciate being able to choose the coverage if they need it.
Which is better, group or individual? It depends. With group products, the employer can choose one plan to offer all employees. With individual products, employees have the opportunity to choose from a range of benefit choices. Some group products will convert to individual coverage if the employee leaves the job. Individual products are owned by the employee and are portable. Some hybrid group/individual plans also have conversion options.

Coverage Options
Most voluntary critical illness plans pay a lump-sum benefit when a covered person is diagnosed with a covered critical illness, such as:

• Heart attack
• Stroke
• Major organ transplant
• Kidney failure
• Cancer
• Carcinoma in situ
• Coronary artery bypass surgery

Benefits can range from $5,000 to $50,000 or more. Some plans provide wellness benefits to encourage early detection of an illness and some provide optional benefits if an insured has the same serious illness a second time.
Having a critical illness plan in your agency’s portfolio of voluntary benefits solutions can help your clients strengthen their benefits program and help their employees get coverage choices to meet their needs.

Positioning Critical Illness Plans With Other Benefits
A critical illness plan complements many of the benefits your clients offer employees. By positioning critical illness with other benefits, you can give employees options for filling coverage gaps:
Employee demographics can make a difference in how you position critical illness plans. Critical illness plans can be a good solution, especially for employees with a family history of heart disease, strokes, or cancer. We’ve found that younger employees like to purchase critical illness plans because these plans are relatively inexpensive and they cover a wider range of illnesses, especially when cancer coverage is an option in the plan. On the flip side, we’ve seen older employees who like to buy critical illness coverage without the cancer option and pair it with a separate, more comprehensive cancer plan.

There’s a very real need to make critical illness insurance part of your agency’s offerings. Employees say they’re concerned about the expenses they may incur from a serious illness and they’re willing to look at buying extra coverage. Employers want to make their benefits programs more comprehensive by giving employees choices to meet their needs. Having a voluntary critical illness plan in your portfolio of voluntary benefits solutions can help your clients expand their benefits program at no direct expense. Call a voluntary benefits provider to find out how you can add critical illness insurance to your agency.

Jason Mollo is territory sales manager for Colonial Life in northern California. Colonial Life & Accident Insurance provides insurance benefits for employees and their families through their workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group.
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For more information, contact Mollo at 916-478-4065, e-mail him at JMollo@coloniallife.com or visit www.coloniallife.com.