Don’t look now, but there’s a very healthy market for Hospital Indemnity out there
By Brian VestergaardMr.Vestergaard is Vice President of Product & Marketing for LifeSecure Insurance Company, based in Brighton, Mich. LifeSecure is dedicated to helping you see insurance differently and delivering an exceptional insurance experience. Connect with him by e-mail: [email protected]
When you think of hospital indemnity insurance, what comes to mind?
That question probably generates a good range of responses, but traditionally, advisors don’t often consider hospital indemnity as one of their more popular products. If you’re looking for an up and coming product with new sales potential, however, hospital indemnity is one to watch.
Let’s start with the bigger picture. As another year begins we’re naturally looking ahead with anticipation at what’s in store for our industry. With the supplemental health care market’s recent success – especially at the worksite with voluntary – it’s easy to see why many are predicting that its momentum will continue, and even accelerate in 2018.
Think product growth, new and diversified product offerings, greater customization, and streamlined DIY enrollments. And competition is heating up too. More brokers have been selling voluntary health products and growing their sales in recent years, according to a recent report by Eastbridge Consulting Group.
Meanwhile hospital indemnity has become an in-demand benefit – it was a top-five worksite voluntary product in 2016 (based on sales) and posted double-digit growth over the previous year. These trends have experts recognizing hospital indemnity’s potential. More carriers are trying to seize this opportunity by entering the market with new and redesigned products. The drive to create separation among competing carriers is also spurring product evolution.
And don’t overlook the opportunity for advisors – adding variety to your portfolio with hospital indemnity, or even making it a go-to product, can set you apart from a crowded field. Here’s what you need to know to start finding success with hospital indemnity.
If you haven’t been paying attention to hospital indemnity coverage in a few years, it’s time to take another look. Today’s products are stronger supplements to health insurance plans. Sure, even just a single night in a hospital can put a major dent on an average family’s savings and start a domino effect of other financial challenges. But hospital indemnity has evolved beyond just hospitalization benefits to become a far-reaching solution that provides financial support through multiple stages of an medical event.
With more carriers entering the market and introducing new products, they’re all in search of the next competitive advantage that helps them stand out. Products have expanded to provide benefits for rehabilitation facilities, ER visits, ambulance services, and diagnostics and imaging (CT, MRI, EEG). Other options can include coverage for skilled nursing, prescription drugs, physician visits, and even wellness and preventative procedures.
A solution for today’s health plans
We’re all familiar with the realities of the current health care landscape where the average consumer is being asked to pay a larger share of out-of-pocket costs. At the worksite, average deductibles for covered workers increased $1,221 in 2016, a nearly 90 percent increase from 2010. Given the flexibility of many hospital indemnity plans, they can be an ideal complement for many different employer health plans.
When paired with a health plan, consumers can choose a hospital indemnity plan that blends protection and affordability. For example, take a high deductible health plan, which can be very appealing due to lower premiums. Choosing the right hospital indemnity plan design and benefit options and pairing it with a high deductible health plan can extend protection at a lower total cost than rich health plans, which keeps more money in the policyholder’s pocket.
Need to get a clearer picture of how the two plans can work together? Try running a quick health care audit of your personal coverage and see how hospital indemnity can bridge any gaps in coverage. This is also a great idea to try at a one-on-one level with your clients to show the value of hospital indemnity. Uncovering potential out-of-pocket costs can highlight how a hospital indemnity can limit exposure and safeguard against unexpected financial impacts of a medical event.
When working with your clients, this approach will also help them customize their coverage and create a stronger solution to offset costs like deductibles, co-pays and co-insurance. Speaking of customizing coverage…
It’s all about customization
Can you imagine walking into Starbucks or any coffee shop and only having a choice between regular and decaf? Of course, in reality there’s coffee, lattes, frappucinos, endless flavors, hot or cold brew, whipped toppings – the choices go on and on because customers want options. Today’s voluntary benefit market is the same and it’s only going to pick up steam.
Today’s multi-generational workforce has diverse perspectives and needs. Employees want to make their own decisions about benefits and choose the ones that are important to them or directly impact their lives. Employees find great value in being able to choose voluntary benefits that can be customized to meet their needs – and three in four workers say that a benefits package is a primary factor in deciding to accept or reject a job. In response to this emerging trend, more than 92 percent of U.S. employers believe voluntary benefits will be important to their employee value proposition in the next three to five years.
It’s not hard to see the opportunity: Employers increasingly need your help to provide a menu of benefits that can be tailored to meet different demographics, lifestyles, financial habits, and other factors. And hospital indemnity is an important piece in this customizable benefit puzzle. Families are cost-conscious and looking for more complete coverage; younger workers are health conscious and want more choice and flexibility; and older workers are putting off retirement to improve their financial security.
Each of these demographics can find value in how hospital indemnity coverage complements health plans, better protects their health and finances, and prepares them for the unexpected.
Why are advisors like you taking a second look at hospital indemnity? Like other supplemental health products, hospital indemnity insurance can provide major benefits for agents looking to strengthen their portfolio and boost their business. You can sell – and earn – all year long. There’s no need to limit your sales with open enrollment periods and deadlines. And since supplemental health products aren’t subject to ACA commission limits, you can maximize your hospital indemnity commissions.
If you just wrapped up another successful open enrollment season, hospital indemnity also presents a great opportunity to solidify your health sales. Advisors selling hospital indemnity find that it provides another touchpoint they can use to reach out to their clients at any time of the year. Since it’s a flexible complement to major medical plans, bringing a new solution like hospital indemnity to the table can keep you ahead of the curve and position you as a trusted advisor. ◊
1. The Kaiser Family Foundation and HRET, Employer Health Benefits Annual Survey, 2016.
2. EBRI, Views on the Value of Voluntary Workplace Benefits: Findings from the 2015 Health and Voluntary Workplace Benefits Survey, 2015
3. Willis Towers Watson, 2016 Voluntary Benefits and Services Survey, March 2016.