Supplemental medical products lead the way in voluntary market growth
Nontraditional and value-added products and services are generating a lot of buzz in the voluntary benefits marketplace, while the traditional mainstays of life and disability continue to capture the lion’s share of sales. But if the industry were a horse race, you’d see supplemental medical products including hospital indemnity, critical illness and accident coming up fast on the inside rail.
If you’re like most brokers, these products are no strangers to you. Critical illness and accident plans are among the top three voluntary products brokers sell and hospital indemnity also is in the top five for voluntary brokers, according to our most recent “Voluntary Hospital Indemnity and Supplemental Medical Products” Spotlight™ report. Sales of these products combined are up 29% since 2021 — and in 2024 they accounted for 38% of all voluntary benefit sales.
Whether you’re already off and running with supplemental medical products or just getting into the saddle, here’s a look at some key findings from our recent research that can help you find the best fit for your clients and voluntary partners.
Growing interest and demand
Nearly one-third of U.S. employers offer hospital indemnity and supplemental medical plans as employer-paid, employer/employee share or employee-pay-all coverage, according to Eastbridge’s 2024 “MarketVision: The Employer Viewpoint” study. About half of those employers offer these products on an employee-pay-all, 100% voluntary basis.
Close to one-third (28%) of employees surveyed own a hospital indemnity or supplemental medical product, according to the 2025 Eastbridge “MarketVision: The Employee Viewpoint” study, the largest percentage of them sharing the cost of premiums with their employers. And although the majority of employees don’t yet own this coverage, a significant number show strong interest in obtaining it, even if they have to pay the full cost themselves: 31% of those surveyed who don’t currently own these products indicate they’d be interested in purchasing them on a voluntary, 100% employee-paid basis.
Carriers see strong market potential
The “Voluntary Hospital Indemnity and Supplemental Medical Products” Spotlight™ report shows the number of carriers selling supplemental medical products continues to increase, with group products the norm. In fact, hospital indemnity, critical illness and accident are the plans voluntary carriers are most likely to include in their portfolios, outpacing even traditional voluntary products such as short-term disability and term life. Not coincidentally, they’re also among the products carriers cite as very profitable, and least likely to classify as only average or somewhat profitable. No surprise then that carriers consistently list these plans as their top growth products over the past eight years, as well as those they expect to lead industry growth in the next several years.
Carriers are far more likely to revise or introduce new voluntary hospital indemnity, critical illness and accident plans than any other type of coverage. About two-thirds of carriers surveyed for Eastbridge’s 2024 “Voluntary Product Trends” Frontline™ report planned to change these products, usually by revising and refiling an existing product to create competitive differentiation. The majority of plans have been on the market for less than 10 years, and increased competition has driven many carriers to revise their products in the last two or three years with broader coverage, higher benefit amounts and rate adjustments.
More carriers are covering well-baby/newborn care, observation unit stays, mental health and substance abuse, and both inpatient and outpatient benefits in response to market demand. Fertility and reproductive care benefits are also a new trend in benefits. The number of plans offering these types of family-building benefits is still low, but carriers mention increased market pressure to include them.
The primary product differentiator may be flexibility. For many carriers, this means going beyond expanded benefits to offer flexible underwriting guidelines, claims payment and pricing, and both HSA-compatible and non-HSA-compatible plans.
Supplemental health isn’t “supplemental” any more
Voluntary hospital indemnity and supplemental medical products continue to evolve to meet the needs of today’s employers and employees — filling gaps left by major medical coverage and providing a way to offset other out-of-pocket costs associated with high-deductible health plans. It seems clear accident, critical illness and hospital indemnity insurance will play an increasingly vital role in helping employees manage the financial impact of serious, unexpected medical events.