When small employers offer their employees protection against the costs of serious illnesses, they’re usually doing it with a medical plan that provides income to cover doctor’s fees, hospital stays and some rehabilitation services. Offering coverage for non-medical expenses like lost wages of a spouse or caregiver, or travel to a treatment facility hasn’t been widely available.

But that’s about to change.

For years, critical illness insurance has paid a fixed-dollar benefit upon diagnosis of specified illnesses such as cancer, heart disease, stroke and organ-transplant surgery. This type of coverage is usually exclusively available to larger employers. But as of this month, Guardian has made it available to smaller companies, even those with only two employees.

“It became clear to us that this financial benefit is just as important to employers with as few as two employees, as it is for larger employers,” says Clancy Merrill, executive director of small group sales for The Guardian Life Insurance Company. “Brokers have been asking us to extend this product to their small group clients, and we have done so.”

Why critical illness insurance is so important

During a health crisis, families can incur enormous costs that have nothing to do with the actual medical care their loved one is receiving – a spouse’s lost wages due to caretaking, high commuting costs to and from doctor’s offices, and an increased need for child care. When you consider that two-thirds of cancer costs are non-medical¹ and almost 60% of consumers would have to turn to savings to fund these costs,² critical illness coverage may be worth evaluating.

Additionally, providing critical illness coverage may not be as expensive as people think. In fact, about $12.50 per month can pay for a $10,000 benefit for a 42-year-old. This may even be less if critical illness is offered on an employer-paid basis.

“In these times, employees in small companies appreciate anything their employer can do to improve their benefits coverage, or offset the ongoing adjustments in benefit levels and plan designs,” says Merrill. “Critical illness coverage can serve this purpose.”

Higher survival rates can increase financial needs

Advances in medical technology have dramatically increased survival rates for critical illness patients. For example, in 1950, the one-year survival rate for heart attack sufferers was 45%. Today, it’s 67%.³ For stroke victims, progress has been even more dramatic – from 24% in 1950 to 77% today.³ “People must understand the financial implications of medical advancements and improved health outcomes,” Merrill says. “Surviving a stroke or heart attack doesn’t mean an immediate return to work. Recuperation and subsequent lifestyle changes can be costly.”

Of course, people typically don’t think about paying for a critical illness until they are confronted with it, so there may not be a strong understanding among employees as to the non-medical costs and need for protection. But the advantages are obvious once the topic is discussed.

“It’s easy for employees to understand how the coverage works when you explain it,” Merrill says. “Simply asking them how they would pay for the extra expenses incurred during recovery from a major illness gets the ball rolling.” Guardian’s enrollment team educates employees about critical illness as needed.

The chance that an employee’s family will be affected by cancer, stroke or heart disease is significant. Consider the following facts:

• More than 1.4 million new cancer cases were expected to be diagnosed as recently as 2008.⁴
• About 700,000 people in the U.S. suffer from a new or recurrent stroke annually.⁵
• About 1.2 million Americans had a first or recurrent heart attack in 2007.⁵

Big-business coverage for small businesses

Recent surveys by The Guardian Life Small Business Research Institute asked small-business owners to rate their goals/beliefs by intensity level (i.e. how passionately they felt about them). They rated “taking care of employees” to be more critical than “being able to make my own decisions,” “setting my business apart from our competitors” and “figuring out ways to take advantage of any economic condition.”

Clearly, small-business owners understand the essential link between the welfare of their employees and the success of their businesses. And insurers like Guardian see value in giving those companies the same benefits advantages as larger companies.

“Small employers, by virtue of their size, are close to their employees,” Merrill says. “Enabling them to offer critical illness insurance and other forms of valuable financial protection to workers on an affordable basis has been our mission for as long as we’ve been around.”

¹ American Cancer Society, 2008
² Guardian Study, 2008
³ American Heart Association, 2008
⁴ American Cancer Society, 2008
⁵ American Heart Association/American Stroke Association, 2007

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