CRITICAL ILLNESS: IT’S A CRITICAL SITUATION
The COVID pandemic raises employer and employee consciousness for the product
By Len Strazewski
The situation is critical. Hospitals are filled to near capacity with COVID patients. Health agencies are reporting more than 500,000 new infections each day. And new treatments are still months away.
The COVID pandemic is forcing myriad social changes affecting health-care, education, and employment, among others. Not the least of these changes, insurance industry experts say, is a change in the demand for supplemental health benefits, including critical illness insurance—a product that is evolving to cover infectious diseases such as COVID as well as organic ailments such as cancer, cardiac disease, and organ treatment.
About half of critical illness insurers have already expanded the coverage to include infectious diseases such as COVID, according to Bryan Burke, assistant vice president of voluntary benefits at Sun Life U.S.
He says that prior to the pandemic, voluntary benefits sales in general were down about 15%, with healthcare benefits such as critical illness and hospital indemnity insurance only down about 6%. But the COVID pandemic raised employer and employee consciousness.
Voluntary benefits sales are returning to stronger historical patterns. Prior to 2020, critical illness insurance sales were growing steadily and now that pattern is remerging, he says, along with hospital indemnity insurance sales, which is often sold with critical illness coverage.
Now driving the increase are coverage expansions, as insurers add coverage for infectious diseases and behavioral health such as anxiety and depression treatment.
“The coverage is expanding to include gaps in healthcare coverage that affect lifestyle and cover co-morbidities that are not directly covered by employer-paid health benefits,” Burke says. Employers are also supporting voluntary sales with better pricing and additional incentives for employees.
Laura Bongiorno, head of voluntary, technology and specialty sales for group benefits at The Hartford, agrees that critical illness insurance is evolving.
“The insurance industry adapted quickly during the pandemic and continues to look for ways to enhance the coverage and claims process for supplemental health benefits,” she says. “The Hartford, for example, adapted its critical illness coverage to provide benefits for COVID-19 testing and other related expenses, giving employers the flexibility to add the coverage. The inclusion of the infectious disease criteria in the critical illness contract has moved from something that was more of a ‘nice to have’ to a criterion that more employers are now selecting.
“At The Hartford,” she adds, “we are continually reviewing our products to make adjustments to respond to the needs of the market and to help our employer clients attract and retain employees with a robust benefit offering. This is particularly important as the country continues to experience a significant shift in the labor force. We’ll see more product innovation and utilization in the future.”
In 2022, the company is introducing a new critical illness benefit that will cover more conditions, provide simpler definitions about what is covered, and provide a range of benefits based on the severity of the diagnosis, she says. “We are making it easier for an individual to understand this benefit and making it more clear what coverage they would receive at time of claim.”
“People are thinking differently about their health and how to protect
themselves and their families from the unexpected. …
Sales for critical illness and other voluntary benefits have increased overall within the industry.”
Head of Voluntary, Technology and Specialty Sales for Group Benefits
Bongiorno explains that a general change in attitude has been driven by the pandemic.
“People are thinking differently about their health and how to protect themselves and their families from the unexpected,” she says. “Awareness about critical illness insurance and interest in this product, as well as other supplemental health products overall, has grown. Employees may have overlooked these benefits in the past but, whether it was a result of direct experience of becoming ill or heightened awareness, people are realizing how valuable these products and associated services can be.
“Sales for critical illness and other voluntary benefits have increased overall within the industry. Critical illness insurance, in combination with a high-deductible medical plan—or with short-term disability or long-term disability or hospital indemnity—creates additional benefits that truly provide a financial safety net.”
“It’s important to meet the employees where they are. Phone, email,
online chat, whatever connects. Enrollment has to be
active not passive to engage employees
to make their best decisions.”
Assistant Vice President, Voluntary Benefits
Sun Life U.S.
The Hartford’s 2021 Future of Benefits Study indicates the increased interest, she says. About 29% of employers said they added critical illness benefits during their open enrollment period this year and 84% of those said they added it due to COVID-19. Also, 46% of U.S. workers said they selected critical illness during open enrollment this year and 35% of those workers said it was a new selection this year.
Bongiorno says critical illness is a natural fit alongside hospital indemnity and accident insurance, which are commonly bundled as a supplemental health package. “We’ve seen an increase in employers choosing to offer all three products,” she says. “These benefits help to supplement and protect income when an employee is faced with the unexpected. When used together, supplemental health plans make a stronger safety net.”
For example, if an employee is hospitalized, hospital indemnity insurance may also provide a cash benefit for each day the employee is in the hospital, which could be used to cover co-pays or other expenses, adding a layer of protection to what they receive from their critical illness benefit. “Preventative care is also very important and many critical illness policies provide benefits for certain health screenings,” Bongiorno says.
Melanie Cannon, vice president of worksite at Amalgamated Life Insurance Company, agrees that coverage for infectious diseases has become an important aspect of the new critical illness insurance policy language and employers are responding with increased interest in offering the coverage.
“We have seen a marked increase in the desire to offer critical illness insurance to enhance their employees’ current portfolio of voluntary benefits, especially with the onset of the pandemic. A Gen Re survey reported that the participating carriers sold approximately 2 million new critical illness policies in 2020, generating an estimated $562 million in new annualized premiums,” she says.
“Over recent years, technology has become the driving force for voluntary
benefits. Many companies have more robust websites
and portals delivering product information as well as
mobile apps to make purchasing insurance
Vice President, Worksite
Amalgamated Life Insurance Company
The new coverage typically rounds out a menu of voluntary benefits that include disability, life, and accident insurance, which are also showing increased employer and employee interest, Cannon says.
The pandemic has also forced an evolution in voluntary benefits administration. Burke says voluntary enrollment and administrative services used to be supported by in-person enrollment meetings with either small groups or individual employees meeting with agents, brokers, and human resources representatives. But because of the pandemic, fewer employees work onsite, making them less accessible for in-person education.
“Everything is going digital now. Prior to 2020, all employers did not have digital employee benefits enrollment,” he says. But as remote work developed and employees retreated home, the need for and use of benefits technology increased.
Benefits education is essential to benefits administration, he says, and as critical illness insurance evolves, employees need to learn more about the coverage. Agents and brokers partner with insurers in providing that education.
“It’s important to meet the employ-ees where they are,” Burke says. “Phone, email, online chat, whatever connects. Enrollment has to be active not passive to engage employees to make their best decisions.”
Bongiorno says agents and brokers can help generate the necessary employee engagement in the decision process. More than ever, employees are looking to their employer to provide valuable products to protect them, and effective communication is the only way to create greater awareness among the employee population. Technology continues to play a big role in the education and enrollment process and has made the experience more personalized, she says.
Increased communication and personalization are key elements to benefits education. Employees want personalized communications and recommendations for what benefits they should consider, she says.
“Story-driven content helps bring these benefits to life for employees. We find that brokers and employers embrace that—showing the workforce why the benefits are relevant to them at their different life stages. Short videos can be powerful in helping people learn about a particular benefit through the art of storytelling, for example.”
Year-round benefits education has also become very important and effective. The more employees hear about the benefits, the more likely they will understand what the benefits cover and that they are there to use when they need them the most, she says.
It is also important for the insurance company to seamlessly integrate with the human resource management platforms that employer clients choose for their benefits administration to create a smooth enrollment and seamless overall customer experience for both the employer and employee, she notes.
Specifically, insurers are using levels of technology with which general consumers have become comfortable, adds Cannon.
“Over recent years, technology has become the driving force for voluntary benefits,” she says. “Many companies have more robust websites and portals delivering product information as well as mobile apps to make purchasing insurance very convenient. Some enrollment communication companies are using text and email blasts with QR codes that take the employee directly to the enrollment site. Educational YouTube videos are also becoming popular in raising awareness regarding the value of critical illness insurance as well as other products.”
But face-to-face meetings have not completely disappeared from the marketing mix, Cannon says. “While we have had to adapt to virtual enrollments at the height of the pandemic, we are finding that groups are now allowing us back for in-house enrollments.”
For more information:
Amalgamated Life Insurance Company
Sun Life U.S.
Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.