Purchasing critical illness insurance for employees and offering them the option to buy more encourages them to become more educated about their benefits plan and how all the pieces work together to help provide them with a financial safety net.
Critical illness insurance has surged in popularity in the past few years, particularly due to increases in health care deductibles. According to a 2015 report from LIMRA, CI sales increased 26% from the previous year, and critical illness is one of the fastest-growing voluntary benefits along with accident insurance.
Critical Illness coverage can protect the financial gap people face when they encounter a covered health event, such as cancer, stroke, or heart attack. It pays a lump sum benefit to the individual in a time of need. This money can be used to pay expenses and meet deductibles, which means that the individual does not have to draw from other assets (like a health savings accounts, or HSA, and a retirement account) that the individual would rather not tap into.
Employers can purchase group critical illness coverage for all employees, often at a cost lower than what would be available if employees purchased a policy on their own. With this core approach, employers can subsequently offer employees the option to “buy up” coverage to meet their specific needs, at their own cost. Since this coverage is provided at the workplace, enrolling for additional coverage is logistically easier.
According to LIMRA, 30% of employers offering CI are paying at least some if not all of the cost, an increase from only 8% in 2006. Employers are able to offer CI coverage — and accident coverage — as a complement to a high-deductible health plan in order to help alleviate some of the financial stress employees may incur if they are diagnosed with a serious and covered condition.
Quote"According to LIMRA, 30% of employers offering CI are paying at least some if not all of the cost, an increase from 8% in 2006."
Employers who offer a high deductible health plan may also offer the option of a health savings account and will contribute to the HSA as a way to encourage employees to enroll and start their own contributions. As HSAs can grow based on underlying investments, employees may earmark their HSAs for future expenses or even retirement. Growth-minded individuals who have a longer-term view for their HSA may be interested in supplemental health products such as the lump sum CI benefit if they are diagnosed with a covered condition to help defer the need to tap into their HSA.
Critical Illness is becoming mainstream, a trend that is likely to continue with rising out-of-pocket health care costs and employers needing to change benefits plan structures due to ACA regulations and the upcoming 2020 Cadillac tax. As employers look for ways to manage their costs and to help employees manage out-of-pocket exposure, critical illness could become a benefit that is chosen as often as dental or life insurance.
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