Why Critical Illness Insurance Is Now a Must-have

Critical illness insurance can no longer be a supplemental insurance product. Offering it to your employees can help create better, stronger, longer relationships between them and your company.

Key takeaways:

  • Critical illness insurance protects against the financial fallout of suffering from a disease covered under the terms of the insurance plan. 
  • It encompasses a lump sum payment. 
  • Critical illness insurance covers direct and indirect costs incurred after critical illness diagnoses. 
  • Severe diseases translate to drastic financial implications, so critical illness insurance should no longer be supplemental. 
  • Businesses that include it in their employee insurance packages can reap many benefits. 

Offering your employees the right insurance plan is pivotal in a company’s human resource strategy. The employee benefits package should be carefully tailored. It should give the employees financial security against any untoward events — including critical illnesses. 

Critical illness insurance is a type of insurance that pays out a one-time, lump sum cash benefit to the insured if they suffer from a condition covered under the terms of the policy. The illnesses covered are typically quite severe and often render the patient unable to work. Critical illness insurance is also known as “critical care insurance.”

There are many things companies and employees should know about critical illness insurance. This guide covers what it is, what it covers, and why it should no longer be considered a supplemental offering. 

The importance of critical care insurance policies

The financial implications of suffering from severe diseases attach extra significance to critical illness insurance. Here’s what you need to know about such policies:

  • The purpose of this insurance is to help people cope with the costs of expensive treatments, pay the mortgage, and cater to other unexpected medical expenses. 
  • The benefits received from critical illness insurance can be used with complete freedom. 
  • Critical illness insurance covers heart attack, stroke, and cancer, among other illnesses. 
  • It may also cover conditions such as coma, paralysis, Alzheimer’s, transplants, and kidney failure. 
  • Critical illness insurance comes in two forms: group and Individual contracts.

The vast majority of employers are now offering group critical illness insurance to their employees to safeguard them against the financial impact of expensive illnesses. Group critical insurance can be formulated according to the particular needs of a workforce. With group plans there is typically no medical exam required to sign up, and enrolled employees automatically get the coverage. 

Why include critical illness insurance in benefits offerings

Health insurance and disability insurance cater to most financial needs from a medical problem, but it is often not enough. Some stats to keep in mind:

  • The American Cancer Society has found there is a 33 percent chance for men and women to develop cancer during their lifetimes. 
  • Similarly, the American Heart Association has found that someone in the U.S. suffers from a heart attack every 40 seconds.
  • The AHA also noted that 720,000 Americans suffer a heart attack each year. 
  • Out-of-pocket costs for individuals or families impacted by a catastrophic disease almost always exceed their financial resources and create extremely negative consequences.

Unexpected medical conditions can translate to considerable, unaffordable costs. Thus the need for benefits offerings that  enable employees to deal with such adverse possibilities. 

Critical illness insurance can provide employees the financial backup to confront challenging medical conditions and diseases. Companies that offer critical illness insurance ensure their employees have a stronger financial safety net to support them should the worst happen. These lump sum payments can make a much-needed difference during a time that can take a huge financial toll on any patient. 

Why critical illness insurance is no longer supplemental 

Critical illness insurance is typically categorized as supplemental, meaning it’s an extra, pay-for-it-if-you-want-it layer of insurance. The uncertainties of life demand critical illness insurance to be a part and parcel of any benefits program, however. 

A worrisome stat shows medical bills are the sole reason behind 66% of all bankruptcies in the U.S. This is indicative of the fact that primary insurance plans have not kept up with the medical expenditures a significant proportion of the population faces, making critical illness insurance absolutely necessary. 

For example, a heart attack causes significant financial hardship  With average deductibles exceeding $1,650 and out-of-pocket maximums many times that time, it’s no wonder why 401(k) hardship withdrawals are most often tied to a major medical event.  This also forces people to exhaust their savings or emergency funds, which are typically a small fraction of the total financial exposure employees experience from average medical plan designs.  Given the circumstances, critical illness insurance becomes indispensable, providing a lump sum to cover related expenses.

Why businesses should see critical illness insurance as necessary

With the war for talent raging at a fever pitch, employers must realize the growing importance of critical illness insurance. A medical benefits program is incomplete without a critical illness offering, which ensures the financial stability of the employees in an event of a dire medical condition:

  • By giving your employees this insurance, you give them peace of mind. 
  • Employees feel way more secure about their futures if they know they are protected. 
  • Group critical illness insurance plans can work in two ways: 
    • Employers cover some or all of the cost or 
    • Employees pay the full premium while benefiting from a group rate. 
  • In both cases, the employees have a lot to benefit from, which makes critical illness insurance an attractive proposition. 

There is also the option of customizing group critical illness insurance according to an organization’s employee benefits plans. Some group critical insurance plans include a wellness benefit that encourages employees and their spouses to seek preventive care. Such plans can go a long way in improving employee satisfaction, thereby resulting in better employee retention. Employees who feel secure about their futures tend to be more productive.

Work with the insurance experts

Are you looking into ensuring you have the strongest, most beneficial insurance offerings for your team? The experts at BeneRe are here to help. Our company has expertise in group captive insurance, offering financially transparent insurance plans with a focus on providing value to employees. We’re here to help you select and implement the best plans for your company and its employees.

For a complimentary financial analysis of your existing insurance programs, contact us here.