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Voluntary Critical Illness insurance: Bridging gaps in care, building out your portfolio

by Molly Bernhart Walker

Medical and disability insurance are core offerings that can anchor a benefit package, but that coverage can be cold comfort when clients see the financial strain critical illness puts on their workers. Benefit advisers can offer voluntary Critical Illness insurance to fill the gaps where medical, disability or a health savings account would fall short.

The Guardian Life Insurance Company’s 2010 Benefits and Behavior study found only 42 percent of employees are covered by Critical Illness insurance, but 68 percent said their families would experience financial hardship or stress if faced with a critical illness.

Their worries are warranted. Medical bills are to blame for more than 60 percent of personal bankruptcies, according to a 2009 Harvard Law School, Harvard Medical School and Ohio University study. By offering Critical Illness insurance, brokers can help employers provide their workers with financial confidence.

Now more than ever

Employers will appreciate that they’re able to offer Critical Illness insurance as a voluntary benefit—lowering any barriers they may have to taking on additional benefit costs.

Voluntary benefits are highly-customizable, making them a key instrument for brokers hoping to establish their place as trusted advisers. Thirty percent of U.S. employers are considering adding a voluntary benefit to replace employer-paid and contributory benefits within 2 years, according to a 2011 study by LIMRA.

The voluntary decisions that clients make today should be consistent with the vision of where they want to be in a couple of years. Employers could soon be dropping traditional healthcare coverage once state-run insurance exchanges become a reality in 2014.

"There's some uncertainty surrounding healthcare reform and what it will actually look like in the future," says Michael Martocci, Guardian's second vice president of Worksite Markets.

"But there are indications that Critical Illness and other voluntary benefits will become an important part of a benefits offeringócustom designed for each employer group," says Martocci.

According to the 2011 McKinsey & Co. Employer Survey on U.S. Healthcare Reform, 30 percent of employers covering employer-sponsored health insurance said they would "definitely" or "probably" drop coverage.

"Healthcare reform will cause employers to take a very hard look at what they're offering and their core benefits. They are looking for more affordable ways to handle it."

Voluntary benefits, such as Critical Illness, could become the new normal, as employers seek alternatives to fill the void left by employer-paid and contributory benefits.

"Voluntary offerings round out a broker's portfolio, giving him or her the flexibility to adjust to the rising cost of healthcare, marketplace demand and the need to supplement changes in health insurance plans," says Martocci.

The broker marketplace is changing. And with healthcare reform, a portion of brokers' core business could very well be affected. Guardian is building more than products, its building capabilities to help brokers find new revenue streams and maintain existing client relationships in uncertain times.

Offering solutions

Once employers recognize the gap in coverage and understand the financial protection it provides their workforce, a strong vendor partner will help an adviser provide the right solutions.

In speaking with employers, advisers will want to highlight the way Critical Illness fits into a custom and comprehensive offering. According to the 2010 Guardian Critical Illness Study, employers considered Critical Illness insurance more attractive when offered with other benefits.

“There are schools of thought that say Critical Illness sells very well when packaged with Life Insurance,” says Martocci. “Perhaps most consistently, Critical Illness is packaged very well with Disability Insurance”

"It makes sense because the burden of proof, elimination periods and waiting time before Social Security Disability kicks in can be substantial. Critical Illness pays on diagnosis. So if you have a $20,000 lump sum Critical Illness plan, that money comes in before you can start collecting on your Disability insurance."

"It fills a major gap for employees. It's a natural package," says Martocci.

Because Critical Illness offerings plug into spaces left by other products, it's important for plans to be very simple and cover the most prevalent conditions. Guardian's Critical Illness insurance offers up to $50,000 in a lump sum payment for cancer, stroke, heart attack, major organ transplant, kidney failure or a coronary artery bypass graft. Group CI insurance is available to employers with just two or more covered lives and guarantee issue amounts are available up to $20,000 based on group size.

Group Critical Illness insurance provides a benefit of up to $500 per day for employees admitted to the hospital for something other than a critical illness, as well. The insurance pays $25 to $100 per year to employees who complete certain routine wellness screenings.

Always adapting

Since the debut of Guardian's Critical Illness insurance in 2008, the company has rolled out several enhancements. The company believes strongly that products should adapt along with evolving employer and broker needs and Guardian's voluntary benefit portfolio is one area that continues to develop.

"Guardian is taking very strong, strategic moves to enhance its voluntary benefits product portfolio, our enrollment services capabilities and our back office services to support. Our brokers can expect that same high-quality work and product delivery that they're used to in dealing with Guardian," says Martocci.

Guardian's proven enrollment support and generous guarantee issue amounts help advisers achieve high participation rates at no additional cost.

In this changing marketplace, advisers are looking for ways to be nimble, and broadening the suite of offerings they present to clients is one way to do that. By offering flexible, customizable voluntary benefits, brokers will be prepared to meet the changing needs of employers.

Visit www.aboutemployeebenefits.com for information about how Guardian can help you create a voluntary Critical Illness strategy. Guardian's Critical Illness insurance is not available in all states.

About the author
Molly Bernhart Walker, former managing editor of Employee Benefit Adviser, is a freelance writer based in Washington, D.C.


The Guardian Life Insurance Company of America
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