Should You Add Voluntary CI To Your Worksite Portfolio?
Producers across the United States are grappling with the question that heads this article.
Theyve read a lot about critical illness insurance in numerous insurance trade publication articles, and theyre beginning to hear about it from their customersemployers, benefit managers, and even employees. But is the product right for you and, more importantly, your customers?
Lets look at what is driving producers to introduce CI insurance to clients and prospects.
CI insurance is simple to sell. Why? Because people quickly recognize the need for it when its explained to them. And most people know someone who has suffered a critical illness, so its easy for them to understand the likelihood of contracting a serious illness themselves and the high costs associated with survival.
Then, too, CI insurance is a “hot” new product in the insurance industry. Its attracting a lot of press–not only from insurance trade publications, but also from consumer magazines, newspapers, and other household publications. With more information available, producers are receiving more requests for the coverage.
The consumer interest has been helped along by the fact that the coverage is highly consumer-oriented. For example, the policy typically covers multiple conditions such as stroke, heart attack, life-threatening cancer, renal failure, etc.all under one policy. This is much less confusing to people than having to buy multiple products, each paying benefits for just one illness each, such as cancer. It also simplifies decision-making.
For producers, the sales applications of CI insurance are vastat the worksite, and in individual sales, too. Married couples with children and single heads of households have obvious needs, for instance. So do business owners and self-employed persons, who need to keep the business running or buy out a business associate should critical illness strike.
In fact, CI insurance addresses many needs, including: mortgage protection, breadwinner protection, homemaker protection, lifestyle protection, single persons protections, protection for individuals with limited health insurance, key person coverage, and individuals in special occupations.
You could say most of us have a legitimate, unmet need for the protection, since most everyone is at risk for surviving a critical illness.
Consider: The life expectancy for people today is 31 years longer for men than it was at the turn of the 19th century and 33 years longer for women. Although this is good news, the fact remains that as people live longer, there is a greater chance for exposure to serious illnesses. The lifestyles most Americans lead today (high stress, alcohol and tobacco use, etc.) increase these chances.
Meanwhile, most people have a powerful desire to be financially independent. A critical illness is usually the most serious threat to that status, so concern about its financial impact is not small.
In fact, according to a recent consumer study conducted by a major worksite player, over half of those who have seen a friend or relative go through a critical illness said they were “likely” or “very likely” to buy a CI policy. Clearly, these people have witnessed, first-hand, the emotional and financial impact of a serious illness.
Now, for the role of the coverage in the worksite. Currently, most employers do not offer CI coverage.
Whats more, traditional medical insurance often does not cover, or provides only a limited amount of coverage for, many critical illnesses that can threaten a familys financial security.
Yet many people do not realize the limitations in their health coverage. Some may mistakenly believe they are well protected by their employer or government health programs. Others may feel they already pay enoughor too muchin health-related insurance premiums. Either way, they end up unprotected. This creates a market opportunity for those who can help employees understand the risk they face and show them the CI insurance solution.
There is even greater opportunity when you realize that the product has the potential of succeeding in markets not traditionally served by worksite products. For example, research by our firm found that CI insurance appeals to employees over age 40 and to those working in the white- and grey-collar markets. Traditional worksite products typically do not target these two markets.
Yet CI insurance doesnt appear to displace other coverages sold at the worksite. Early on, many companies feared that the coverage would replace new and existing cancer policies. However, several top players designed their CI policies to complement cancer protection, not compete with it.
A final attraction: CI insurance has the potential to be very profitable.
Therefore, if you are looking to enhance your worksite portfolio, give CI insurance some serious thought. The need is there, and the opportunity.
heads the worksite practice area of Eastbridge Consulting Group Inc., Avon, Conn. E-mail her at email@example.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.