The other day, two very entertaining gentleman came to my office to pitch their supplemental insurance plan to me. Would Red Nova Labs be interested in supplemental insurance for its employees that won’t cost the company a penny? Hmmm. Normally I just ignore sales people. But one of our employees has the insurance and would get a discounted rate if the whole company joined in. So as a favor to him and to make sure we’re not missing out on something beneficial for all of our employees, I listened to the pitch.
As I mentioned, the sales people were entertaining. Young and eager to get a sale. Excited and knowledgeable about their product. I respect all of those things, but is their product good for our employees? For our company?
They start by talking about cash. Putting cash in employees pockets when medical insurance lets them down by denying claims. Or putting cash in your pockets when employees aren’t working due to an accident or illness and need to pay the rent and put food on the table. They give examples of people who had received the dreaded cancer diagnosis or been hospitalized due to a car accident. They were trying to tug at the heartstrings at the same time they tried striking fear in the heart. What if the worst happens and you can’t pay your bills?!
Accidents happen. Yes, they do. People get cancer. Yes, they do. Your employees should have insurance to cover these things. Hmmm. Don’t they already? They have a quality health insurance plan and vision insurance plan through Red Nova Labs with the company paying nearly 100 percent of the premiums. They have long-term disability (that insurance that puts 60 percent of your salary, aka CASH, in your pocket when you can’t work) with premiums 100 percent paid by the company. They have life insurance with premiums 100 percent paid by the company. If they own a car and drive, which most do, they have at least liability insurance if not full coverage to pay for repairs and medical bills. And Red Nova Labs has workers’ comp insurance for coverage on any work-related accidents. This company’s supplemental insurance would have the employees paying for it through a payroll deduction straight out of their hard-earned salaries. Should our employees buy more insurance?
Let’s think about the heartstring tugging pitch… What if an employee was diagnosed with cancer? Well, cancer is a disease of the aging. A quick review of the National Cancer Institute’s statistics on the median age of patients at diagnosis shows charts filled with people in their late 50’s and in their 60’s and 70’s. That’s not our staff. Does that mean no one here will get cancer before then? Certainly not. Does that mean our employees should forgo the cancer supplemental insurance policy? In my mind, yes.
It’s much more likely an employee could have an accident that would require a hospital stay. This company offers three plans for different kinds of hospital stays: hospitalization for accident, hospitalization for illness and hospitalization in the ICU. Hmmm. What if the employee chooses the wrong one? Should he or she pay for one of these plans? For all three plans? In my mind, absolutely not.
Insurance is not the answer. Financial planning is. Instead of advising our employees to give $20-$40 a month to an insurance company to whom they may never make a claim, I tell them to put that money in their rainy day funds. Then if an accident happens, they have money to pay the rent and put food on the table. And while it cost the company $0, at a $40 per month cost to the employee, and with 25 employees, that would be $1,000/month. That is a significant percentage of our current medical premiums for situations that are unlikely to occur. Not a sound investment. Thorough annual reviews of our entire benefits package are better investments for our employees and the company.
So, I’m sorry young and eager sales people. My answer is no; Red Nova Labs is not interested in your supplemental insurance plan even though it won’t cost us a cent.
