Supplemental insurance can seem like a mystery. Even the savviest benefits gurus often wonder how it works, the type of coverage it offers, and whether it’s right for them.
Insights from a recent Aflac study 1 help shed light on a few common myths surrounding supplemental insurance, and can help you better understand and choose the coverage that is right for you.
Myth 1: Policies are nice to have, but not necessary for comprehensive coverage.
The terms "ancillary" and "voluntary" are often used to refer to supplemental policies. Although these are industry standard terms, supplemental insurance isn’t optional when it comes to having more comprehensive coverage.
Life, disability, accident and other supplemental policies provide cash benefits for expenses not covered by major medical insurance. Often, having these policies can save individuals from out-of-pocket costs, unexpected debt and even bankruptcy — helping them to focus on getting better and getting back to work. Now that’s a benefit that no one should be without.
Illness or medical bills contributed to 62.1% of bankruptcies in 2007, and three-quarters of these debtors had medical insurance. 2
Myth 2: I can't afford voluntary insurance policies.
If you are like most Americans, you can be hard pressed for any additional expenses — no matter how small. Yet, when it comes to additional health expenses, the recent Aflac study reveals that 51 percent of workers have less than $1,000 in savings for out-of-pocket health care costs.1 Without a sufficient financial safety net, supplemental policies can be a low-cost option to help protect your financial future. For example Aflac’s most popular Accident Indemnity Advantage® policy costs as low as $4.98 per week.*
While no one anticipates the unexpected, more than 38.9 million medically consulted injuries occur in a year. 3
Myth 3: Payouts can only be used for specified expenses, so I may never use the policies if I had them.
Unlike major medical insurance, supplemental insurance policies pay cash benefits directly to the policyholder. Since it's the policyholder’s decision to use the cash benefits however he or she wants, the policyholder can use it toward mortgage/rent, child care and even groceries. These are benefits that everyone can use!
46% of employees say they are not very or not at all prepared to pay out-of-pocket expenses not covered by major medical insurance. 1
Myth 4: State exchanges will eliminate the need for supplemental policies.
That's just not true. Supplemental policies help policyholders cope with daily living expenses and out-of-pocket costs associated with accidents or illnesses — costs major medical insurance was never intended to cover. Supplemental policies pay regardless of any other insurance policies, including policies that will be in place through state health care exchanges. These policies will continue to be in demand and pay cash benefits to policyholders to help with daily living expenses. We've seen the value of supplemental insurance in Japan, a country that has had a national health care system for many years.
In Japan, a country that has had a national health care system for years, Aflac is the No. 1 life insurance company in terms of individual policies in force. 4 1 2012 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 24–February 23, 2012.
2 Himmelstein, D.U., Thorne, D., Warren E. and Woolhandler, S. (2009), Medical Bankruptcy in the United States, 2007: Results of a National Study, The American Journal of Medicine, accessed on September 9, 2012, from http://www.washingtonpost.com/wp-srv/politics/documents/american_journal_of_medicine_09.pdf.
3 Injury Facts, 2011 edition, National Safety Council.
4 Aflac 2011 Year in Review.
*Rate is based on individual coverage for ages 18–70, 24-Hour Accident-Only, Plan 2, no riders, payroll deduction, Industry A. Individual Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, individual Aflac coverage is underwritten by American Family Life Assurance Company of New York. Policies may not be available in all locations.