Why this hot product offers more value than ever — no matter what happens with health care reform
by Steve HeslerMr. Hesler is an assistant vice president of product development at Colonial Life & Accident Insurance Company Connect with him by e-mail: [email protected] For more information visit here.
May 25, 2017 — By the time you read this, repeal-and-replace health care reform legislation will either be a done deal, a dead duck or somewhere in between. But here’s the kicker: It doesn’t matter, because a competitive employee benefits program is about much more than medical insurance.
No matter what happens in our nation’s capital this year, one thing we’re sure of is the cost of health insurance and health care will continue to increase. Some industry pundits forecast the rate of growth as slowing, but it’s still going up. That means your clients will still be looking for ways to control their benefits costs, and their employees will still be looking for affordable ways to get the medical care they need, especially when the unexpected happens.
Voluntary benefits such as accident insurance offer a solution for both concerns — not to mention a new door opener and revenue stream for your business.
Sales are soaring
Voluntary accident sales jumped 11 percent from 2014 to 2015, with nearly a billion dollars in annualized premium and more than $2.4 billion of in-force premium.1 For companies such as Colonial Life, the trend continued in 2016, when individual accident was the second-highest selling product, trailing only individual disability. Our sister company, Unum, has seen double-digit growth in accident sales for much of the last decade, and the market continues to grow overall.
Why? It goes back to those rising costs and out-of-pocket expenses. The average major medical insurance deductible is almost $1,5002 and more than triple that — $5,000 — for high deductible health plans.3 Yet most employees don’t have that kind of money readily available. In fact, nearly half of Americans say they’d have trouble coming up with just $400 in an emergency.4 And only 37 percent could cover a $1,000 emergency room visit with money they’ve saved.5
Accident insurance can help workers protect their financial well-being by bridging that gap. Even good major medical insurance can leave workers with significant out-of-pocket costs following an accidental injury, including emergency room fees and co-payments not to mention those high deductibles. There also can be non-medical costs health insurance doesn’t cover, such as lost income from being out of work, rehabilitation, caregiver fees and travel costs to treatment.
How voluntary accident insurance works
Accident insurance is usually indemnity-based, meaning it pays a set amount based on the injury and treatment the insured receives. For example, a policy might pay $1,400 for a broken leg or $2,800 if surgery is required to treat it. The benefits are paid directly to the insured and aren’t reduced by what some other insurance might pay. Unlike Workers’ Compensation, it can cover injuries that happen off the job as well as at work.
With voluntary insurance, employees select and pay for the coverage if they want it, so there’s no cost to your clients. Employees can buy coverage for themselves, and sometimes their spouse or partner and their eligible dependent children.
Some accident plans also are usually compatible with health savings accounts (HSA), which could be increasingly important if health care reform proposed changes continue to make HSAs more attractive to consumers and employers.
Accident insurance hasn’t rested on its laurels just because sales have been rocking along. Accident plans have evolved in recent years to offer greater customization and even more value. The newest plans allow your clients options to include additional benefits in their base plan to create coverage that best meets the needs of their employee population. Examples include an “active lifestyles” option that increases the benefit amount, a gunshot wound benefit for expenses from a nonfatal gunshot wound, and a wellbeing benefit that helps pay for routine preventive care such as a colonoscopy, mammogram or blood test.
Today’s plans also allow employees to further customize their coverage by choosing from a variety of optional riders. These can include a disability income rider that pays benefits if the injury keeps the employee out of work, a critical illness rider that pays a lump sum when a serious illness such as heart attack or stroke is first diagnosed, and a hospital confinement rider that helps pay for hospital admission to treat a covered sickness.
Strong emotional drivers
Successfully positioning accident insurance with your clients — and subsequently enrolling their employees — is about more than numbers, though. Recent research6 suggests benefits buying behavior has strong emotional drivers. In fact, peace of mind is by far the most commonly cited reason for enrolling in accident coverage. (The same holds true for other voluntary benefits such as life, disability, critical illness and hospital confinement.) An emotional appeal, coupled with a strong ROI, is important for employers, too, according to some of our top producers.
“I tell them as an employer who cares about their employees and their well-being, they can provide important protection at no cost to the business and at an affordable cost to their staff,” says Mike Coakley, a Colonial Life sales manager in Rhode Island. “It only makes sense to protect them against the rising tide of health care costs.”
Cost concerns and lack of perceived need are most often mentioned as reasons to waive voluntary coverage, the same research shows. That’s where education comes in, on both the affordability of accident protection and the gaps in existing coverage. For example, some people say they don’t need accident coverage because they already have auto insurance. But many accidents treated in hospital emergency rooms are related to sports, not driving. Basketball, bicycle riding, exercise, football and soccer are among the top injury-producing sports.7 And many common accidents such as falls, burns and cuts occur at home — by far the most “popular” place for nonfatal accidents.8
People with active lifestyles, or who have children involved in sports, are good prospects for accident coverage, agrees M.J. Gattozzi Licata, a benefits counselor in Colonial Life’s North Atlantic region.
“I always ask if they’re married or have children, and if they play sports,” she says. “With single men under age 30, I point out if something were to happen while they’re out there having fun, there might not be anyone around to help with bills. And if they work with their hands, an accident could prevent them from doing their jobs for a period of time.”
Don’t let the distraction in D.C. disrupt your efforts to bring your clients more value to their benefits program. Adding accident insurance to your portfolio is a flexible and affordable solution your clients and their employees can take advantage of now — no matter what the future holds.
SIDEBAR: What to look for in an accident plan
Accident plans come in many varieties. Some popular features and benefits to keep in mind as you compare plans include:
- Customization options — Increased coverage for active lifestyles, preventive care, disability income, hospital confinement, critical illness diagnosis or even gunshot wounds.
- Guaranteed issue — No health questions asked.
- Wide range of coverage — Emergency treatment in an emergency room, doctor’s office or urgent care facility; hospital admissions; fractures and dislocations; surgery; rehabilitation unit; X-rays; occupational therapy; medical imaging study; and accidental death and dismemberment.
- Affordability — Different coverage levels to fit most budgets.
- Coverage options — Employee, spouse, child, employee/family or family-only; on- and off-job or off-job only.
- Wide range of age limits — Some plans cover newborns to 80-year-olds.
- One rate — All employees may pay the same premium for individual policies regardless of their job titles or management status. Group policies offer composite rates.
- Multi-state friendly — Employers with workers in multiple states can offer the same benefits to their entire workforce.
- Portability — Both group and individual accident policies typically allow employees to keep their coverage if they leave their jobs, as long as they keep paying premiums.
1 U.S. Supplemental Health Sales and In Force Survey, LIMRA, May 23, 2016
2 Kaiser Family Foundation 2016 Employer Health Benefits Survey, Sept. 14, 2016
3 TheBalance.com, Sept. 9, 2016).
4 The Atlantic Magazine, May 2016.
5 Bankrate Money Pulse survey, 2016.
6 Customer Benefits Analytics and Lodestar A.P., “Who Buys Voluntary Benefits and Why,” 2016.
7 National Safety Council, Injury Facts, 2016.
8 Centers for Disease Control and Prevention, Quick Stats, January 2016.