The market for selling ancillary products will continue to grow both as great options to cross-sell and as a primary selling strategy – depending on your business plan.
More carriers create plans and solutions for clients that combine products like an accident, cancer, hospital, and critical illness plans. Combining these products makes it easier for you to support your clients and makes it easier for clients to understand they are protected from many risks that carry heavy financial burdens.
What is Ancillary Insurance?
Ancillary products are sometimes called supplemental insurance products, as they are used to supplements existing benefits and provide protection against health insurance benefit gaps. A few of the common types of ancillary insurance are:
- Accident insurance
- Cancer insurance
- Hospital insurance
- Critical illness insurance
- Dental, Vision, and Hearing Coverage
It is common for agents to cross-sell these products, especially alongside Medicare products.
Accident Insurance
Accident insurance policies are affordable policies that will pay a pre-determined amount of cash benefit to the beneficiary when they suffer an accident. For example, if a child breaks their leg at the park? The policy will kick in and pay cash benefits at every step of treatment. This includes ambulance rides, x-rays, surgery, follow-up appointments, etc.
This coverage is sold to multiple markets, including the senior market, the underage market, and voluntary worksite benefits.
Hospital Insurance
Hospital insurance helps policyholders manage a hospital stay’s financial risks, especially for those enrolled in an HDHP (high deductible health plan) or plans that have daily hospital stays.
For example, say the client spends four days in the hospital, and their plan says that they are responsible for $300 daily for the first seven days. In this scenario, they can claim their hospital insurance plan to pay them $350 per day. They will end up paying $1,200 to their insurance plan and receive $1,400 from their hospital insurance plan.
This coverage is sold to all markets.
Cancer Insurance
Cancer insurance is a supplemental policy that will pay a benefit to the policyholder if they are diagnosed with various types of cancer.
For example, if they are diagnosed with breast cancer and have a cancer insurance plan, they will be paid a lump sum for diagnosis or begin receiving payments based on treatments.
This coverage is sold to multiple markets, including the senior market, the underage market, and voluntary worksite benefits.
Critical Illness
Critical illness is a policy that pays out when someone is diagnosed with a variety of acute illnesses or conditions such as heart attacks, strokes, organ transplants, cancer, and others. They typically cover illnesses that require treatment that carries a high cost for the client. When paired with an HDHP, it brings significant financial risk.
Critical illness insurance is available for all markets.
Hybrid Ancillary Insurance
These policies have elements of the types of policies listed and often more bells and whistles.
Think about which of the following scenarios you would prefer for your clients.
- Explain four different ancillary plans, their benefits, costs, and have them complete four various applications.
- Explain the different ancillary plans and show clients how you can protect them from all those risks with a single policy, application, and bank draft.
A hybrid product increases your chances of a sale at the end of the day and provides the same coverage level as the four separate ones.
Structure of Ancillary Plans
First, they will choose a type of plan.
- Individual
- Individual and child
- Individual and spouse
- Family
Then, you would choose a lump-sum benefit (the amount will vary depending on the carrier and plan). These benefits amounts range from around $5,000 to up to $100,000. It is important to note that children’s payouts are often less than parents’.
Next, choose the coverage type such as:
- Cancer
- Radiation and chemotherapy upgrade (if available)
- Heart attack and stroke
- Critical illness
- Hospital insurance
- Accident insurance
- Return of premium, cash value, or disability riders (if offered)
Dental, Vision, & Hearing Plans
These plans are not the same as the previous plans listed, as they do not pay out lump sums. Also known as DVH plans, dental, vision, and hearing plans help cover dental, vision, and hearing care costs. They usually pay on a sliding scale and have a maximum benefit for the year and a small deductible. These plans typically cover standard services like contacts, x-rays, and hearing aids. Most plans also allow you to see any provider, but there are “preferred providers” that you may receive additional discounts or lower coinsurance by visiting.
There is also the potential that you will pay a small coinsurance. For example, a plan might have a $1,000 maximum benefit for the year with a $100 deductible. Some significant services may require coinsurance, while routine services are often fully covered. A basic plan usually costs around $35 monthly, while a preferred (higher coverage) plan will cost approximately $75 per month. These plans also most often do not have any underwriting. These plans are most common in the senior market for those aging off their employer plans used to have dental and vision coverage before.
Ancillary Underwriting
Underwriting for these policies is reasonably simple and does not require medical testing. It includes things like:
- Yes or no knockout questions for certain benefits
- Unisex tobacco and non-tobacco rates (typical with most carriers but verify to be sure)
- 30-day long waiting period (standard with most carriers)
- 5-year look back for cancer and heart conditions
For more information on ancillary plans, or to get started selling them today, contact Agent Pipeline at 800.962.4693 today!
