Most brokers and enrollment companies boast a standard list of voluntary (or worksite) benefits they offer: short-term disability, term life, universal or whole life, and accident are certainly the most common. Over time, many brokers began to add a strong cancer plan to their portfolio. With the advent of critical illness insurance, many industry professionals predicted the demise of the cancer plans, and yet the resiliency of cancer plans proves that, to paraphrase Mark Twain, the reports of the product's death remain greatly exaggerated.
The Strategy
It's true that critical illness certainly put a dent into the market share cancer insurance once enjoyed, but there is still a sizable portion of the broker population that takes advantage of some sort of cancer product. Some still simply prefer cancer plans over the more robust critical illness plan, but many are using cancer along with critical illness not only in their portfolio but in the same employer group and insuring the same employee. In some cases both products are used to add another layer of protection in case of cancer.
But more frequently, when a broker employs both products in a case or with an employee, they are utilizing a critical illness plan that has a feature that will allow the cancer coverage to be carved out and then adding the separate cancer plan. There is some debate on the value of this, but most frequently a broker believes that it saves on the overall cost to the insured.
Plan types and riders
There are two primary types of cancer plans with a various selection of features and riders. The most well known and more traditional cancer plan is an indemnity-based plan that pays a fixed cost upon treatment of a diagnosed cancer. Many carriers now pay upon diagnosis rather than treatment, but still on a set schedule. The other very popular cancer plans are those that pay a lump sum directly to the policy holder upon diagnosis. These plans seem to fit well when carving out the cancer provision of a critical illness plan.
There are several different riders that help separate one plan from another such as a return of premium rider, which pays back the premium to the insured after the expiration of a policy, and a reoccurrence rider, which pays additional claims if the policy holder suffers from a separate incidence of cancer. Usually this comes with a one-year waiting period. The return-of-premium rider, for cancer and other policy types, is a source of debate on the value to the owner of the policy as the cost is built into the premium, but there is certainly no debate about the popularity of the rider within the broker community or the end consumer; It remains very popular. As is the reoccurrence rider concept, though, with less debate about the actual value.
Cancer comes in other shapes and sizes -- namely the length of the policy; There are 20-year policies, lifetime policies and several things in between. Finding the right policy for their clients is something that every insurance professional must discover.
A Solid future
Throughout the history of cancer insurance, carriers have had an interesting relationship with the product. The industry has seen an insurance company shift the policy provisions of cancer frequently, as they often have had negative claims experiences when claims have been uncapped or the reoccurrence benefit was utilized more frequently than expected, for example. Sometimes the carrier changes the way the product fundamentally operates. Other times the carrier lowers the commissions. They may even do both or leave the market all together. Either way, cancer insurance seems to have had its fair share of actuarial misfires.
Actuarial errors or not, cancer policies as a whole have been very lucrative to carriers and brokers and, most importantly, helped a lot of families and individuals in a time of great need. It should also be noted, not only has cancer coverage been a successful worksite product, but has thrived in the individual market as well. It's rumored it has done pretty well in overseas markets too.
The future of the product seems solid now, as more brokers and benefits consultants are still figuring out ways for a cancer policy to co-exist, work with and thrive with critical illness products. The brokers who believe strongly in cancer-only insurance continue to offer the product to business owners, HR directors and C-level executives for their workforce, whatever the size.
Employers worried about cancer meds
Employers are increasingly concerned about cancer medications and are showing more interest than ever in health, wellness and disease management initiatives. At least that's the latest research from Health Industries Research Cos.
Health Industries Research Cos. is an independent, nonpartisan group that's been conducting market research on trends in health care, pharmaceutical and managed care businesses for 20 years.
"Due to the economic recession in 2010, employers have been increasingly challenged to balance budgetary concerns with the needs and demands of their employees and beneficiaries," cites Lauren Bolen, HIRC's director of employer research. HIRC market research finds that the drug categories that generate the most costs are: cardiovascular, GI, antidepressants, diabetes, and cancer. Over the past five years, products that treat cardiovascular disease and GI disorders remain of highest concern.
However, it is notable that employers are increasingly concerned with pharmaceutical costs associated with cancer medications, and, to a lesser extent, antidepressants and diabetic treatments. Over the past five years, HIRC employer panelists have reported an increasing likelihood to implement health, wellness and disease management initiatives. However, Lauren Bolen notes, "the challenging economic environment is forcing employers to increasingly justify ongoing investments in DM and wellness initiatives." While many employers may not be expanding these programs in the wake of the economic recession, they continue to fund existing programs to address underlying factors driving their employees' consumption of health care products and services.
