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