Benefits Basics for Employers: Understanding Life and Critical Illness Insurance
Offering an employee benefit plan is a great first step, but knowing what to include in your employer health insurance plan can be overwhelming. You may be familiar with health and dental benefits, but life and critical illness insurance can be a more mysterious. This type of coverage can be an uncomfortable topic, but in the toughest of times, it can mean so much.
Let’s dive into the basics. What exactly is life and critical illness insurance? Why might you want to include it in your employee benefits plan?
Life insurance pays out a specified lump sum at the death of a covered plan member. It’s tax free and is meant to help an employee’s loved ones (called “beneficiaries”) deal with the financial impact of the death. The lump sum may help replace lost income; or pay for funeral expenses; or any number of other financial challenges.
GroupHEALTH’s life insurance also includes a benefit called “Living Life.” This means a covered plan member can choose to receive part of their life insurance if they have been given a terminal diagnosis. This is very powerful, as it can help those who are nearing the end of their life make the most of the time they have left.
Critical illness insurance is a “newer” type of coverage that is less well known than life insurance. It pays out a specified lump sum if a plan member has been diagnosed with a covered critical illness. Typically, these illnesses are life threatening. In general, they are treatable but they often have long recovery times.
Every policy is different, but some common examples of covered critical illnesses are:
- heart attack
- organ failure
- multiple sclerosis
Critical illness insurance is often offered with life insurance. But there is one main difference: life insurance pays out if the plan member dies, whereas critical illness insurance pays out if the plan member lives.
For both employee life insurance and critical illness insurance, the amount of coverage can be customized. Usually, the employee can add additional coverage to any coverage provided through their group benefits plan. Typically, the coverage amount is based on the employee’s salary, and is capped at a maximum.
Plan members can also secure life and critical illness insurance for their spouses or minors. As well, GroupHEALTH’s life insurance coverage extends to stillborn babies.
Peace of Mind
First and foremost, offering life and critical illness insurance for your employees gives them peace of mind. It’s frightening to think about what would happen if you and/or your family suddenly didn’t have your income; your employees feel that way, too. With life and critical illness coverage, plan members would know that in the toughest of circumstances, they and their loved ones would receive financial help. This can provide one less thing to worry about when other parts of life become challenging.
Life insurance and the reasons to have it are self-explanatory. Critical illness and its ramifications are another story. Many people have not considered how often critical illness occurs and what is means to the people affected by it.
The reality is that people are diagnosed with a critical illness all the time.
- Someone is diagnosed with cancer every 3 minutes in Canada (according to the Canadian Cancer Society);
- Someone has a stroke every 10 minutes (according to the Heart and Stroke Foundation of Canada)
- Someone has a heart attack every 8 minutes (according to the Heart and Stroke Foundation of Canada)
- This adds up to 312,000 cancer diagnosis, heart attacks and strokes every year in Canada (and that’s just 3 critical illnesses)
The statistics are sobering, and highlight how important it is to be covered for critical illness.
With coverage, your employees will have money to help deal with a myriad of expenses they probably haven’t even considered. Non-medical expenses like childcare, accommodation, travel expenses and renovations to accommodate an illness can quickly add up. The list goes on and on, and highlights what a significant impact a critical illness can have on lifestyle and finances.
The “Benefit” to Group Life and Critical Illness Coverage
Whether you’re just beginning to explore sponsoring an employee benefits plan, or whether you’re considering expanding the benefits you sponsor, there’s no question that these benefits are valuable.
Even if it’s not in your budget to sponsor life insurance or critical illness coverage as part of your employee benefits plan, you can still help. By offering your employees the option to purchase life insurance and critical illness coverage on their own, you’re giving them access to group buying power. They’ll have better rates than if they do it privately. They’ll have better benefits. It’s one more option for them as opposed to securing these coverages privately.
The other benefit to group plans is that typically your employees can receive guaranteed coverage (capped at a specific amount) without providing medical evidence or completing a medical questionnaire. This is assuming the employee enrols in the benefit plan within a specified time from when they are eligible.
Lastly, if you’re offering life insurance and critical illness coverage as optional benefits, your employees will pay for them through easy payroll deductions. That’s one less bill for the employee to manage.
Good Advice is Key
Life insurance and critical illness coverage help support your employees and their families during life’s toughest challenges. Are you interested in exploring how they would fit into your employee benefit plan? Review your options with one of our licensed advisors on the phone or in-person or contact us for a comparison quote.