As the burden of health care and benefit expenses shift, employers can play a key role in helping their workforce understand both the scope of current coverage and opportunities for additional protection options, such as critical illness insurance.
Understanding employees’ concerns can help employers position new solutions to respond to their needs. For example, nearly half (47 percent) of workers feel more concerned with the financial impact of a critical illness than dying from one (29 percent), according to a recent Sun Life Financial survey.
The high out-of-pocket costs of a critical illness explain why many people are so concerned about its potential financial impact. Despite medical and disability insurance, a typical critical illness can cost a $40,000-a-year wage earner nearly one-third of a year’s salary, according to Sun Life Research.
Yet despite their sensitivity to such financial risks, many workers overestimate their own insurance protection: Over a third of surveyed workers (36 percent) thought they had critical illness coverage, when only a fraction of workers actually do, according to industry estimates. Such a discrepancy may reflect complacency by many workers about the scope of their medical insurance coverage. By educating employees about how critical illness insurance can supplement medical insurance, employers can provide their workforce a valuable service.
Source: Sun Life Financial U.S.
Here are some tips for a successful “know-your-benefits” communications campaign introducing the option of critical illness insurance as a supplemental benefit.
1. Offer group voluntary insurance to complement the rising cost of medical insurance.
A group voluntary critical illness benefit represents an attractive value proposition for many employees. Although participants pay the premiums, group coverage typically costs less than nongroup critical illness insurance and often guarantees participants a certain level of coverage without health underwriting requirements, assuming enough employees participate. Many workers will consider such an option: Two-thirds of non-smokers under age 50 expressed interest in buying group voluntary critical illness insurance, according to the Sun Life survey.
The level of participation needed in order to obtain guaranteed issue coverage depends on the insurance carrier. But even if an employee base does not meet the guaranteed issue participation requirement, many carriers will still offer participants a simplified, less restrictive underwriting process compared to the requirements for buying coverage direct from a carrier.
2. Help employees evaluate the scope and limitations of their current insurance plans to clearly understand coverage gaps.
Communicate to employees assuming that many:
- Haven’t thought about being diagnosed with a critical illness.
- Don’t want to think about it.
- May not realize the risk and potential out-of-pocket costs.
To determine whether a level of critical illness insurance meets their needs, employees must understand the limitations of their health insurance plans. For instance, a worker may have opted for a high-deductible health insurance plan in exchange for paying a lower annual health insurance premium. However, even if a worker has paid the deductible, the insurance will not necessarily cover all other medical costs. A plan may only cover part of the cost of major medical procedures, out-of-network specialists or experimental treatment.
3. The demographics of an employee base can help inform plan design and communications strategies.
Employers may want to tailor messaging to specific groups that demonstrate concern for financial protection against critical illness, including workers age 40 to 50, singles and women. When Sun Life’s survey polled respondents on how they viewed a potential critical illness, it found that:
- Twice as many middle-aged workers age 40 to 50 expressed more concern with the financial implications of a critical illness than with dying from one.
- Single women age 40 to 50 earning under $50,000 stood at the top of the critical illness “financial concern pyramid,” with four times as many of them expressing more concern with the financial ramifications of a critical illness than with dying from one.
- Single and female workers age 22 to 39 also expressed strong financial concerns.
- Over half of all women (56 percent) express concern with experiencing invasive cancer, versus under half (42 percent) of men.
Deciding whether to opt for critical illness insurance depends on each worker’s financial situation, family responsibilities and personal interest in paying for an additional level of financial protection. Appealing to employees who may sleep better at night by purchasing critical illness insurance can allow employers to control costs while helping meet the diverse financial needs of their workforce.
Bob Klein is senior vice president responsible for the strategy, development and management of Sun Life’s multiline and voluntary product lines. © 2013 Sun Life Financial U.S. All rights reserved. Republished with permission.
Getting Results from Voluntary Benefits, SHRM Online Benefits, August 2013
Achieving New Goals with Alternative Benefits, SHRM Online Benefits, July 2013
Filling the Gaps with Critical Illness Insurance, SHRM Online Benefits, June 2011
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