Why advisers should be offering critical illness policies

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Heads up advisers: Critical illness insurance is turning 35 this year and sales are booming.

This voluntary benefit has seen double-digit growth each year from 2010 to 2016, according to the Eastbridge U.S. Voluntary Worksite Sales Report. Overall, sales for that period grew approximately 175 percent, to more than $550 million, and now exceed sales of long-term disability, universal/ whole life and cancer policies, per Eastbridge.

A big reason for the growth is that the product continues to change to meet demands. For a benefits broker there are numerous reasons to offer critical illness insurance to your clients:

Critical illness insurance is an easy product to explain and enroll. Lump sum payments make communication simple, since there’s no payment schedule to explain. And no coverage coordination is required.

The lump-sum benefits paid by these policies to insureds can be used for both medical and nonmedical expenses. Employees to use their payments however they see fit—whether it’s paying for a procedure, making home modifications to accommodate a disability or buying gas to travel to doctor appointments.

Simplified underwriting
The product’s simplified underwriting options make it easy for employees to qualify for coverage by answering a few simple health questions. Many plans can even be offered on a guaranteed-issue basis with no health questions required.

Portfolio differentiation
Critical illness insurance isn’t a commodity product. Adding this plan to your portfolio distinguishes an agency and sets it apart from other brokers.

Meets an important need
Major medical insurance doesn’t cover all the expenses associated with a serious illness, and most health plans require employees to pay deductibles, co-pays or a percentage of their medical expenses, in addition to numerous nonmedical expenses. Critical illness plans close these gaps in coverage.

With better treatment and care, survival rates for critical illnesses, such as cardiovascular disease and cancer, have leapt up. With the better treatment, however, the price tag for care is often higher, creating more demand for critical illness coverage.

Another reason for the growth in this category is the increased range of illnesses and diseases that can be covered. Also, reoccurrence benefits are standard now and provide protection should the insured suffer a relapse.

There are several emerging trends in the critical illness insurance space:
· Options for second opinions, transportation and lodging benefits are increasing and are no longer limited to cancer plans.
· Plans have become more flexible and can now be custom designed to meet the needs of an adviser’s clients and their employees.
· Coverage is now available for occupational diseases, such HIV/AIDS and hepatitis for medical workers, and plans can be tailored per the needs of a specific industry.
· Some insurers are encouraging healthy behaviors by offering additional benefits if the insured participates in sports competitions, walking challenges, alcohol or tobacco cessation programs, stress or weight management programs and similar activities.

Critical illness insurance has become a mainstream benefit, providing relief for out-of-pocket expenses that aren’t covered by an employee’s major medical plan. As more employers shift to high-deductible plans, providing critical illness, accident and hospital indemnity coverage can help round out their benefits offerings.

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