Critical illness insurance is all the rage.
While other mainstays of the insurance industry, including life insurance and general health insurance, are struggling for growth, a new study suggests that sales of policies purchased specifically in anticipation of major health crises, such as cancer, are on the rise.
The Gen Re Critical Illness Insurance Market Survey showed an increase in reported new business premium to almost $381 million in 2014. Meanwhile, in-force premium, covering roughly 3 million individuals, increased to $1 billion.
In a survey of the 59 carriers that cover 95 percent of the critical illness market, four-fifths said they had gotten into the CI game as a product diversification strategy. Other reasons cited:
- Demand from agents (64 percent)
- Part of a strategy to differentiate themselves from competitors (57 percent)
- Consumer demand (43 percent)
- Marketing department demand (29 percent)
- Competitive pressure (21 percent)
Nobody participating in the market appears to see any downside to the business. None of the companies surveyed suggested they would decrease their involvement, while three-fifths planned to become more involved.
Cancer is by far the top claim that is processed for critical illness insurance, accounting for over half of all claims.
Gary Harger, Vice President of Voluntary Products at UnitedHealthcare told BenefitsPro that more than a quarter of employers with more than 10 employees now offer critical illness insurance to their nonunion workers, a rate that has doubled since 2002. He said that such plans, which can cost as little as $60 a year, are a good deal for employers and employees alike.
“Major illnesses are expensive, and for employees with high deductibles or coinsurance payments and potential lost income, the reality of paying for them can be serious,” he said. “Critical Illness protection plans are designed to supplement medical benefits and allow employees to focus on healing from their illness instead of their bills.”