Here’s Why Critical Illness Insurance Is a Must-Offer

By BeneRe
December 20, 2023

Why Critical Illness Insurance Is Now a Must-Have

Critical Illness insurance can no longer be a supplemental (voluntary) insurance product. As a “must-offer” to your employees, it 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
  • Encompasses a lump sum payment
  • Covers direct and indirect costs incurred after critical illness diagnoses 
  • Should no longer be considered supplemental because severe diseases correlate with negative financial implications
  • Should be included by all companies in their employee insurance packages

Offering your employees the right insurance plan is pivotal in a company’s human resource strategy. The employee benefits package should be carefully tailored and provide employees with financial security against any unexpected medical expenses – including critical illnesses.

Critical Illness coverage 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 Illness insurance policies

People suffering from severe diseases can face significant financial stress. Critical Illness insurance policies:

  • Help people cope with the costs of expensive treatments, pay the mortgage, and cater to other unexpected medical expenses
  • Can be used with complete freedom
  • Cover heart attack, stroke, and cancer, among other illnesses
  • May also cover conditions such as a coma, paralysis, Alzheimer’s, transplants and kidney failure 
  • Come 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 unexpected illnesses. Group Critical Illness coverage can be customized to the specific 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 address most medical expenses, 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 result in considerable financial expenses. That’s why there is a 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 this insurance help 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 should no longer be 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 indicates that 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 a 10% rise in average deductible amounts over the last five years and 53% over the last ten years, 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 coverage. A medical benefits program is incomplete without a critical illness offering, which ensures the financial stability of the employees in the event of a dire medical condition:

  • Critical Illness insurance is one of the most affordable benefits a company can offer its employees
  • By giving your employees this insurance, you offer them peace of mind 
  • Employees feel much 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, resulting in better employee retention. Employees who feel secure about their futures tend to be more productive.

Work with the insurance experts

Looking for the strongest, most beneficial insurance offerings for your team? The experts at BeneRe are here to help. Since 2018 we have operated a first-of-its-kind group captive insurance solution, 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.