Employee Benefits | FJG/FYI
I
ndustry SpotlIght: Voluntary Benefits - Critical Illness
Over the past 5 years, critical illness insurance sales have increased from an estimated $20 - $25 Million in 2000 to about $159 Million in 2006. This growth can be explained in part by the general realization that the odds of surviving a critical illness today are quite high and growing. However, there is still a widespread lack of understanding and appreciation of just how much value these products provide and how they might fit into a benefits package.
People often make the mistake of
assuming critical illness is simply a modern
alternative to traditional indemnity cancer
insurance. While critical illness products
typically do protect against the financial
hardships associated with surviving a
cancer diagnosis, they also cover illnesses
such as heart attack, stroke, kidney failure,
paralysis, and major organ transplant.
Policies can be purchased alone or as a
rider on a life policy. For example, it is
quite common to see a critical illness rider
attached to 10-year or 20-year term life
policies. As a stand alone health policy it
may be sold as an individual contract or on
a group platform.
While critical illness insurance is still new to the U.S., it has been sold and received very well in many countries for some time, In this Issue November - December 2007 most notably in Europe. The basic logic behind the product is that even employees with robust employer-provided medical and disability coverage will be forced to absorb additional un-reimbursable costs. In addition to offsetting actual expenses, critical illness is designed to mitigate everything from illness-related costs like home health care providers, lodging, and travel, to general financial needs such as lost income, mortgage payments, childcare, or tuition.
Perhaps the primary reason these products are so well established worldwide and are growing in popularity in the U.S. is because they do such a good job of addressing the peripheral financial implications of surviving a serious illness, allowing the insured to focus on what’s most important– getting well.