Most of us have seen it happen. A co-worker or family member gets sick with cancer or another dread disease or severe injury. The worker has to take time off to recover, or to provide care for a family member. The company medical plan pays the doctor bills – or most of them. An 80-20 plan still leaves 20 percent plus the deductible coming out of the worker's pocket. The Family Care Act doesn't replace lost wages, though – and the financial hardships endured by the families affected are devastating.
At many workplaces, the best they can do is to pass the hat or have a fundraiser. But there is a better solution: Critical illness insurance.
Critical illness insurance – sometimes called a "dread disease" policy, generally pays out a lump sum upon confirmed diagnosis of a specific disease or group of diseases. Another variant is traumatic injury coverage, which pays a specific lump sum benefit in the event of the loss of a limb or limbs, or eyesight. Long popular abroad in Europe and South Africa, critical illness policies are becoming increasingly popular in the United States, in both the individual and group insurance marketplaces.
Critical illness benefits can help fill significant gaps in most people's insurance coverage. For example, major medical plans often don't cover all costs of a severe illness. Disability insurance only covers a fraction of income. And some treatments may not be covered by traditional insurance.
A critical illness policy pays a large cash benefit to give families choices – just when they need them most. These benefits are frequently used for needs like these:
Once employees understand the benefit and how it is used, they tend to value these plans and enroll in them. A recent Colonial Life/Harris Interactive study found that 75 percent of workers surveyed are interested in purchasing this kind of policy – and fully 85 percent are concerned about themselves or a loved one contracting a medical condition covered under a dread disease policy.
Critical illness policies are readily available and affordable for both workplace group plans and individuals and business owners. Underwriting is similar to those for major medical plans, though coverage for pre-existing conditions will be more limited than in major medical group plans when the major provisions of the Affordable Care Act become effective.
Individual applicants may have to consent to a medical records search or provide documentation of good health to get coverage. For those in good health, however, coverage is generally very affordable. Because these critical illnesses are high-expense but low-frequency items, they are ideal insurable events – insurance is most efficient and cost effective when covering risks that are financially devastating but infrequent and unpredictable.
The cheapest critical illness policy isn't always the best. Low-cost policies sometimes contain too many loopholes, hurdles or exclusions. This is important because if a worker in your plan gets denied coverage because of what other workers see as a technicality, this could have an adverse effect on confidence in your benefit plan.
Most companies look for plans that provide coverage under a broader set of circumstances. Also, workers like policies that they can take with them if they leave your employ, so portability is another factor to consider.
The most robust policies will also provide subsequent diagnosis coverage. This is important if your plan participant gets multiple diagnoses, or is rediagnosed after a remission.
When an employee has a significant medical event, such as a cancer diagnosis, his or her coworkers invariably watch the company closely to see how they handle it. Where benefits are non-existent, employers notice this, and goodwill between the employee and employer can be significantly undermined.
A dread disease policy takes care of this issue in advance. It only takes one unlucky employee to significantly impact how employees perceive their employer and how much the company cares about them in a time of crisis.
Get in touch today and find out how we can help you meet your objectives.
