A NEW AND “LIVING’ BENEFIT NOW AVAILABLE UNDER GROUP LIFE GROUP CRITICAL ILLNESS PLANS (by George Tavares)
Group Critical Illness represents one of the most comprehensive packages of living benefits available to employees today. It is a living Benefit that allows the insured to enjoy the benefits of the policy while alive. If the insured employee is diagnosed for the first time with any of the diseases covered by the Plan, the Insurer will pay 100% of the sum assured directly to the employee. These proceeds can then be used to cover anything from Medical Costs associated with the treatment of the disease to making life for self and family more comfortable. It is a modern benefit that traditional plans could not have dealt with in the past and should be eagerly embraced.
This new benefit is only available as a rider to your Group Life Plan and therefore cannot be bought as a stand-alone benefit.
The Benefit is provided either on an “Accelerated” basis, where any payment made reduces the Group Life Benefit or on a “Non Accelerated” basis where the full Life Benefit remains intact. The “accelerated” basis was the only available option in the early years of its introduction as a rider to group life plans, however, competition and reinsurance security have gradually expanded the coverage to the much preferred “Non-Accelerated “ basis.
The most common sum insured is based on 50% of the Life Insurance Benefit subject to a maximum benefit such as $500,000 or $600,000. Another common formula is based on one year’s salary. This is also subject to a maximum, (usually higher) such as $1,000,000.
Usually, there is a waiting period of three or six months after one’s effective date of coverage, for the manifestation of a Critical Illness to be considered for payment.
The number of and the different benefits that are covered vary from insurer to insurer and range from ten to seventeen. The most common are as follows:
Infarctions of the Myocardium (Heart attack)
Coronary Artery Disease Requiring Surgery
Heart Valve Surgery
Loss of Hearing
To qualify for payment an illness must fit the Insurer’s Benefit Definition. The Benefit Descriptions are provided in advance which provides excellent transparency and avoids issues of interpretation after a claim is presented. Following are three typical Benefit Definitions:
1. CANCER- means the diagnosis by a Medical Doctor of a malignant tumour characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue.
2. HEART ATTACK means the Diagnosis by a Medical Doctor of the death of a portion of the heart muscle. This is as a result of inadequate blood supply to the relevant area. The diagnosis must be based on all of:
chest pain, and
new electrocardiographic (ECG) changes, and
elevation of cardiac enzymes above normal levels.
3. STROKE means the Diagnosis by a Medical Doctor of a cerebrovascular incident, caused by infarction of brain tissue, hemorrhage, or embolization from an extra-cranial source, excluding a Transient Ischemic Attack (TLA). In addition, the Medical Doctor must provide evidence that the Insured Person has suffered a permanent, measurable neurological deficit, which has persisted.
The cost of the benefit is relatively inexpensive and is based on the group’s demographics of size, average age and female content. The Insurer’s reinsurance cost is also a major factor.
Average monthly premium rates can range between thirty cents and ninety cents per thousand dollars of coverage. The cost is borne by the Employer and is usually under three percent (3%) of payroll.
The Human Resources are the most valuable assets of any organization and critical to its success. Therefore, it has been recognized that the same or even greater care and attention must be given to the care, protection, efficiency and insurable aspects, as is given to the material, physical and mechanical resources.
A worthwhile proverb says, “People are judged by the Authority they keep, but a Company is judged by the people it keeps”.
A tailor-made Employee Benefit Program can take care of all the foregoing aspects of asset management. The financial stress, which can be caused by heavy medical expenses, can be relieved and a “rest” brought about by an efficient Medical Plan. The advent of Group Critical Illness has brought another opportunity for Employers to enhance their Employee Benefit Program in order to attract and retain its human resources. It is therefore imperative that all Group Life Plans include this exciting “living” benefit.