It's not hard to understand why many benefits advisors get their foot in the door with new clients by offering life, disability and dental insurance — "core" voluntary products nearly all employers want to offer and arguably every employee needs. The downside of that approach is these are the products employees are most likely to already own, so there's less opportunity for new sales.
But that's not the case with hospital indemnity insurance. Even though the pandemic and the continued shift toward high-deductible medical plans have highlighted the need for this important coverage, the market is still poorly penetrated. If offering your clients a valuable product with a big opportunity for sales sounds good to you, hospital indemnity insurance should be in your portfolio. Here are five reasons why.
#1: The market opportunity is big — and growing.
Sales for hospital indemnity/supplemental medical products have fluctuated a bit with market changes in recent years, but have grown 46% since 2015, from $535 million to more than $780 million in 2021. They now account for close to 10% of all voluntary product sales, according to Eastbridge's most recent "U.S. Voluntary/Worksite Sales Report."
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And carriers expect sales to continue that upward trend, fueled by increased awareness of the need for this coverage due to the pandemic. Only a third of employees own a hospital indemnity/supplemental medical product, whether the cost is paid by employees, employers, or shared. That means two-thirds of employees do not — and half of that group say they'd be interested in buying hospital indemnity coverage on a voluntary, 100% employee-paid basis, according to Eastbridge's 2021 "MarketVision: The Employee Viewpoint" study.
#2: You have more options than ever for voluntary partners.
The number of carriers selling hospital indemnity coverage continues to increase, predominantly on group platforms. That means more competition for carriers, but more choices of partners for you.
#3: Hospital indemnity coverage offers more value than ever.
Market demand is driving expanded coverage in hospital indemnity plans. According to Eastbridge's most recent "Voluntary Hospital Indemnity and Supplemental Medical Products" report, more carriers are covering mental health care (79%), observation unit stays (76%), substance abuse treatment (72%) and well-baby/healthy newborn care (55%) in these plans.
#4: It's easier for all employees to qualify for coverage.
Nearly all the plans profiled in our recent hospital indemnity report offer true guaranteed issue coverage with no medical questions. Less than a quarter of plans use simplified issue underwriting, and none offer a full medical underwriting option.
#5: The claims process is becoming simpler and easier.
Carriers are under pressure to integrate claims across medical, life, disability and voluntary product lines. They're also expected to offer online claims filing and status updates. Better, more comprehensive service for employees means happier clients for you.
If you don't already offer your clients hospital indemnity insurance, it's time to add it to your portfolio. And if you're already on board with this valuable coverage, it might be time to evaluate the growing options in the market to be sure you're offering the best product available for your clients and their employees.
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