Within the course of a career, many individuals may have to confront a personal health crisis that, even with adequate health insurance in place, can jeopardize their financial security. Health insurance is designed to help pay the cost for treating an ailment. But if someone is too sick to work, it will not help replace the income needed to continue to pay bills like food, rent or mortgage. Nor does it address the multitude of out-of-pocket costs that can accumulate as a result of being ill – from medical deductibles and co-insurance, to caregiver costs and travel expenses to treatment centers. Unfortunately, unless there are significant savings and investment resources to draw upon, a family’s finances could be devastated.

Gap between awareness and action

A troubling discrepancy exists between knowing one may be vulnerable and proactively taking steps to reduce exposure to such risks. That is one of the key findings contained in a recent research study, Benefits & Behavior: Spotlight on Group Disability and Critical Illness – Awareness & Opportunity, sponsored by The Guardian Life Insurance Company of America. The full report from Guardian, a leading provider of employee benefit products for midsize and small companies, can be found at the insurer’s dedicated employee benefits Web site at www.aboutemployeebenefits.com.

The report highlights the surprising disparity between the 68% of employees who are aware of the potential toll a critical illness or disability can take, and the 42% or less who have enrolled in products protecting against such situations. Even though two-thirds of full-time employees have experienced or have had friends or relatives affected by a disability or critical illness, 77% of respondents have no critical illness insurance, and 58% do not have disability insurance.

Confusion about costs and coverage

There are a number of reasons behind individuals’ reluctance, ranging from the rationalization that “it can’t happen to me” to misperceptions about the cost of adding coverage.

“In today’s world where budgets are tight, people tend to concentrate on dealing with the bills sitting in front of them – but many times they don’t even realize these coverages would typically amount to just a few dollars a week,” says Barry Petruzzi, second vice president, group life and disability at Guardian. “Most everyone insures their home, yet the financial impact of a serious illness or disability could actually lead to foreclosure on the very home they were trying to protect.”

There is an upside: 41% of full-time employees said they are willing to consider buying relevant insurance products, and even paying out of their own pocket, if their company offered them on a voluntary basis. However, to maximize the value of these options, employees need a clearer understanding of what the products offer and how they differ from each other. Point in fact: one-third (38%) of employees surveyed said they didn’t understand the difference between critical illness and disability insurance.

“When it comes to employee communications, the tenet we follow is to simplify the messages and make it easy to understand the benefits provided,” says Petruzzi.

Guardian has tackled the need for improved education and better information on several fronts. One of the most important is the availability of experienced benefit advisers. They travel to the employers’ workplace to review the benefit options and answer any questions employees may have about the coverages. There is also an employee benefits hotline for further inquiries when employees are likely to be reviewing the benefits choices at home with their family.

Making products more flexible and affordable

Guardian has taken steps to enhance the features of its disability and critical illness policies in order to better meet employees’ and employers’ needs. The company recently announced changes to bolster its voluntary disability insurance and also lowered the cost of coverage to make the plans more accessible.

Guardian’s Disability Choice product is different from traditional disability income plans in that employees choose the flat benefit amount that meets their needs and their budget versus just a fixed percentage of salary. Guardian’s Critical Illness product was also recently made available to small businesses (with 2 to 15 employees) with exclusions for pre-existing conditions eliminated and portability added to age 70.

To make it easier for an employee to buy multiple forms of coverage, Guardian provides a discount if several types of insurance are purchased simultaneously. A single multi-coverage package can greatly simplify the decision process. “The bundle is nice because it involves one election and people know exactly what they are paying,” notes Petruzzi. “And it’s a good way to introduce them to our products while providing a wide range of protection.”

The Guardian Life Insurance Company of America 7 Hanover Square H-26-E New York, NY 10004 212/598-8000 www.guardianlife.com