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The Rising Popularity of Gap Plans

 Financial security is a top priority for families all over the country. Although many people plan ahead and purchase life insurance in case the primary breadwinner of the household dies, many do not consider the financial impact of a critical illness or accident on a family's finances. In 3 out of 5 cases of bankruptcy, medical bills are responsible for a family's financial crisis. Although supplemental insurance is well known amongst insurance professionals, many clients have never heard of plans that can protect them from the financial risks of a medical emergency.

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In the past, selling a client 4 different plans (a cancer plan, heart attack/stroke plan, accident plan, and hospital indemnity plan) was just too much, both premium and policy quantity wise. However, in recent years, the rise of the "gap plans" has removed the hassle of managing several different policies and premiums. Today, you can sell your client 1 plan that combines coverage for all 4 plans, and may even include additional benefits such as coverage for critical conditions like Alzheimer's or diabetic amputation.

These gap plans on the market are relatively affordable, and for a family can cost as little as $75 to cover everyone for cancer, heart attack/stroke, accidents, critical conditions, and hospital stays. The security of having a plan that pays the out-of-pocket costs to supplement your clients' major medical can make a world of difference to them financially.

For Example: a family of 5 has an ACA plan with a family out-of-pocket of $12,000. They currently do not have enough in savings to cover this out of pocket cost, and when the father, the sole breadwinner of the family, is diagnosed with lung cancer the whole family is devastated. Over the course of the year, the family ends up having to pay the full annual max out-of-pocket due to the father's many treatments. In addition, the family is worried about paying the mortgage on the house since the father is no longer able to work. Even worse, the current hospital in the area is not as adept at handling cancer patients as the hospital 4 hours away, and so the family takes frequent trips to the distant hospital in hopes of getting the best care possible. The expenses of these trips further burden the family. After 2 years of treatment, and many expenses, the father has beat cancer! However, the family is now in great financial distress.

Had the family purchased a gap plan with a $30,000 indemnity, the situation would have been far different. The family would have received a check for the $30,000 upon the father's diagnosis. The 2 years of out-of-pocket costs would have been paid for along with many travel and lodging expenses of the family. The mortgage at the least would have been partially covered, and at the end of the 2 years, as a cancer-free man, the father could have really been able to appreciate fully his recovery, and continue on the same path without financial worries. For years after that, any broken bones and emergency room visits from the kids playing sports and any hospital stays are covered.

This is just one example of how such a plan can truly make all the difference in someone's life. So the next time you speak with a client about their coverage, be sure to at least ask the question. "What gap coverage do you have?" and when they ask what that is, be sure to explain to them the incredible benefits these plans can offer as a financial protection product.

For more information or product specifics please visit The Brokerage, Inc.'s website or email our ancillary department at daniela@thebrokerageinc.com.

Daniela Levi

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