By Stephanie Shields
Our lives are in constant motion – we’re continually reaching new milestones and passing into new stages. Because our needs shift as much as our lives do, it’s important to consider whether we have safeguards in place for ourselves and our families as we pass through each stage. Voluntary benefits provide financial protection that can be tailored based on a number of personal factors to give just that.
Insurance isn’t one size fits all. A product that’s crucial for a young adult just starting out in the workforce might not be as important for a middle-aged employee with children, let alone for an older worker staring into the face of retirement. That’s why it’s important for benefits experts to emphasize the continual need for employers to assess their benefits offerings and for workers to be certain their insurance combinations provide the best protection possible.
Here are some key types of insurance that workers can rely on to help them make it through the worst of times, as well as the types of workers who need this protection and at what life stages – or more specifically, at what career stages – they need the coverage. We define those career stages as follows:
- New workers – In the first decade of their careers, most people are just getting on their financial feet. They may be mired in college debt, or living at home or with roommates to save money. Many stay on their parents’ health insurance plans until age 26, when they must find their own insurance coverage. Maybe they’re single for a time and then a significant other comes along, leading to further financial obligations. Life is expensive, and their incomes don’t stretch very far.
- Middle-career workers – A decade or two into their careers, employees usually become family-focused. They may be married, raising children, or providing support for aging parents or grandparents. They’re likely to be more aware of hereditary health issues. Retirement is a long way off, but they should be planning for it.
- Home-stretch workers – Employees in the final decades of their careers are likely making all-time high salaries and putting money away for retirement. But life events can interfere with savings: A change in marital status, adult children returning home and elder care all can be expensive. Plus, those in their 50s and 60s may be dealing with health issues.
So what types of coverage are most needed by workers and why? And at what life stages do they need the coverage and how does it work? Let’s break it down.
Accidents can happen to anyone at any time, resulting in everything from a broken arm to a broken back – or worse. The sobering fact is that the total cost of unintentional injuries in the U.S. in 2013 was $860.6 billion, according to the National Safety Council.
After a serious injury occurs, most people immediately focus on treatment and recovery. However, once the shock wears off, their thoughts turn to finances. Although major medical insurance may pay some doctor, laboratory, pharmacy and hospital costs, most people are confronted with out-of-pocket expenses.
Voluntary accident insurance helps employees cope with out-of-pocket costs associated with serious accidents or illnesses — costs major medical insurance was never intended to pay. Depending upon the policy, accident insurance pays a specific benefit amount for:
- Emergency room treatment, X-rays, diagnostic exams, physical therapy and follow-up treatment.
- Ground or air ambulance to a hospital.
- Each day the policyholder is confined in a hospital due to injuries sustained in a covered accident.
Some policyholders may select an optional accidental death benefit rider, which pays a lump-sum death benefit for covered common-carrier accidents and other accidents.
Accident insurance appeals to workers in all life stages but for different reasons. Many new workers lead active lifestyles, have longer work commutes and are parents of small children who are accident-prone. But because accidents don’t discriminate by age, mid-career and home-stretch workers should examine their needs and lifestyles to determine whether accident insurance is a necessary part of their insurance plans.
Nearly 1.7 million Americans were projected to be diagnosed with cancer in 2015, according to the American Cancer Society. For many, a diagnosis is a difficult financial blow, even if they’re covered by major medical insurance. A Duke University Medical Center study found that the average monthly out-of-pocket cost for cancer patients covered through private insurance, Medicare or both is $1,266.
In the event of a cancer diagnosis, policyholders enrolled in voluntary cancer plans receive cash benefits to use as they see fit. Sometimes the funds go toward daily living expenses, such as rent, gas, groceries, babysitting and other necessities. Other times, they can be used to help pay copayments and deductibles.
The American Cancer Society reports that nearly 14.5 million Americans are living with cancer. This figure should make it clear to workers at all stages that voluntary cancer insurance an option they should consider.
Critical illness insurance
Advances in medicine mean people today live longer lives, even if they suffer from critical illnesses. Naturally, this means paying more treatment-related costs – a possibility that has many Americans concerned.
A Sun Life Financial survey revealed that 47 percent of those ages 40 to 50 said finances would be their top worry if faced with a critical illness, far more than the 29 percent who named dying as their primary fear.
Critical illness coverage helps provide protection from the financial liability of certain catastrophic health events, such as a heart attack, stroke, organ transplant, end-stage renal failure, coma or paralysis. Receiving a lump-sum benefits payment helps policyholders worry less about how to pay illness-related expenses and concentrate more on recovery.
New and middle-career workers with family histories of cancer, strokes or heart attacks should consider this type of insurance when they’re young and healthy because coverage may be less expensive. Critical illnesses become increasingly common with age, which should make this coverage appeal to home-stretch workers.
Hospital indemnity insurance
Hospital inpatient care accounts for nearly a third of U.S. health care costs, and there’s no relief in sight: The average hospital stay is 4.6 days and costs $11,000, according to the Agency for Healthcare Research and Quality. For workers with low or moderate salaries, one inpatient stay could mean years of debt.
In the event of hospitalization, participants receive cash benefits that can be used to help pay daily living expenses, such as groceries, utilities and other necessities. While some hospital indemnity plans provide only hospitalization benefits, others may be more far-reaching and address diagnostic procedures, outpatient surgery and ambulance transportation.
Illnesses and injury are increasingly common with age, making this type of insurance attractive to those in the “home stretch” stage of their careers.
In the event that a breadwinner dies, life insurance can help provide survivors with financial protection when it’s most needed. Benefits can be used to help cover immediate final expenses, everyday living expenses and long-term obligations in the event of a death.
Life insurance is a particularly attractive benefit for middle-career and home-stretch workers. These workers generally are in the higher income levels, meaning a higher standard of living for an employee’s family to maintain in their absence.
Short-term disability insurance
Just over one in four of today’s 20-year-olds will become disabled before reaching age 67, according to the Social Security Administration. Given the frequency of disabling accidents and injuries, you would think that Americans would be diligent about setting aside funds for rainy days. However, according to the 2015 Aflac WorkForces Report, 52 percent of American workers have less than $1,000 on hand to pay out-of-pocket expenses associated with an unexpected serious illness or accident.
Short-term disability insurance helps workers cope with out-of-pocket costs associated with serious accidents or illnesses. It protects an employee’s financial well-being by replacing lost wages if an illness or injury prevents them from working.
Although anyone who works should consider voluntary disability coverage to help pay bills in the wake of a disabling injury or illness, middle-career and home-stretch workers should pay particular attention to this coverage as illness and injuries are often more frequent with age.
Life is unpredictable, and getting sick or becoming injured is something most employees don’t expect to happen. Voluntary insurance gives employees of all ages an opportunity for financial protection should something happen to them.
Stephanie Shields is vice president of product innovation and marketing at Aflac. Stephanie may be contacted at [email protected].
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