Supplemental insurance can seem like a mystery. Even the most savvy small
business leaders often wonder about how it works, the type of coverage
it offers, and whether it’s right for their business.
Insights from a recent Aflac study help shed light on a few common myths
surrounding supplemental insurance, and can help you better understand
and introduce supplemental coverage to your small business.
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. Even Aflac uses these industry-standard
terms; however, supplemental insurance isn’t optional when it comes
to 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 may even prevent 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.1
Myth 2: My employees can't afford voluntary insurance policies.
If your employees are like most Americans, they are likely living paycheck
to paycheck, and are hard pressed for any additional expenses — no
matter how small. Yet, when it comes to additional health expenses, the
recent Aflac study reveals that 33 percent of workers at small businesses
have less than $500 in savings for out-of-pocket health care costs.2 With so many workers lacking a sufficient financial safety
net, supplemental policies can provide a low-cost option that can help
protect your workers.
While no one anticipates the unexpected, more than 38.9 million medically consulted injuries occur in a year.3
Myth 3: My business can’t afford to offer the coverage.
You may be surprised to learn that many supplemental policies are offered
at no direct cost to the policyholder’s employer. You can choose
to contribute a portion of the premium, or simply make the products available
for your workforce to purchase. Carriers like Aflac even offer payroll
deduction, without any added direct cost to your business. Additionally,
the advantages of offering voluntary insurance can help your business build
a healthier and better-protected workforce. For instance, 31 percent of
small businesses offering voluntary insurance have experienced fewer workers’
compensation claims since adding the coverage.2
Small business employees who are not offered voluntary benefits by their employer are 8% more likely to be at least somewhat likely to look for a new job in the next 12 months.2
Myth 4: My employees do not want supplemental policies.
While you may think your employees would not be interested in supplemental
policies, surprisingly employees overwhelmingly said in the recent Aflac
study that they would likely apply for supplemental coverage if policies
were made available by their employer. Many (65 percent) also say they
are more likely to participate in benefits that are tailored to their personal
Small business owners can use supplemental policies as a way to offer
a range of benefits options that can be tailored to specific employee life
stages and personal needs, ultimately making your benefits package better
suited for a range of workforce demographics. Voluntary insurance provides
the opportunity for your small business to offer competitive benefits options
that boost your ability to attract and retain a talented workforce —
with little or no cost to your bottom line.
58% of employees at small businesses say they would be likely to purchase voluntary insurance benefits offered by their employer.2
Myth 5: Payouts can only be used for specified expenses, so my employees may never even use the policies if I offered 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!
53% of small-business employees say they are not very or not at all prepared to pay out-of-pocket expenses not covered by major medical insurance.2
Myth 6: 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 in addition to major medical
insurance, including policies that will be in place through state health
care exchanges. These benefits 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 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.
- 2 2012 Aflac WorkForces Report, a study conducted
by Research Now on behalf of Aflac, January 24–February 23, 2012.
- 3 Injury Facts, 2011 edition, National
- 4 Aflac 2011 Year in Review.