Unlocking The Market’s Vast Potential

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Critical illness insurance is built on a great concept–provide cash to spend any way you want to a person diagnosed with heart attack, cancer, stroke.

But is there a real need for this protection? After all, many insurance “prospects” already have life, disability and medical insurance. So why should these people need additional money during recovery from a serious illness?

The fact is that increasing numbers of people are completely uninsured for medical expenses. In the face of medical costs trending upward in excess of 20% annually and rate increases to medical benefits of 40% and more, many employers are being forced to respond by making changes to their employees medical plans–adding or increasing deductibles and co-pays to mitigate the cost increase.

We are all aware of the statistics that remind us of the alarming frequency of heart attack, cancer and stroke, even among young people. Add to the equation the fact that, in addition to increasing out-of-pocket medical expenses, people face many non-medical uninsurable costs when serious illness strikes.

Therefore, there is a real need for this type of protection. But who is a good prospect, and why would they buy? The prospect list is long:

Anyone with debt or financial obligations.

Fact: Nearly 50% of mortgage foreclosures in the U.S. are the result of sickness, while only 3% are due to death of one of the borrowers. Yet mortgage life insurance or term life to cover mortgage obligations sells well. As you can see, CI insurance positions easily as a way to take the pressure off “paying the bills” during recovery.

Singles who are often poor prospects for life insurance.

In fact, singles are perfect candidates for CI insurance protection. As a living benefit, it works well for singles because “its for me–and Ill appreciate the choices it allows me to make.” Single parents especially could benefit. If stricken with a critical illness while lacking extra funds, such parents could be ruined financially by medical bills not covered by insurance, existing bills that must be paid, and childcare costs during recovery. Disability and health benefits alone wont do it.

Anyone whose occupation makes him or her a poor disability insurance risk.

This includes firefighters, police, truck drivers and pilots. Though they may find disability coverage difficult to get and very expensive to buy, they could qualify for CI insurance, making the policy a “safety net” if serious illness strikes.

High-income professionals.

These individuals are serious candidates for high face amount coverages. In particular, those in small practices or partnerships where the absence of one person during a period of recovery would damage the business should consider CI insurance as a business protector, even as a part of Buy/Sell Agreement.

It takes only a bit of thinking to expand the scope of this partial inventory.

How, you ask, do we reach such prospects with the right message? Ill grant you that the industry has historically done a poor job of selling this product concept. Thats frustrating, because it should be a “slam dunk,” since the message is simple. This is the message in a nutshell:

“You have a pretty good chance of suffering from one of the conditions covered by CI insurance. When you do get a critical illness, you will face a financial challenge almost bigger than the challenge of recovery. But if you have this insurance, it will give you the money youll need to cope.”

Easy sale! But often we get tangled up in the powerful statistics that support the need for the product and overlook the need to personalize the possibility.

All the categories of people identified here will be responsive to the idea of CI insurance if: 1) they first acknowledge the possibility that they might some day face a serious illness; and 2) then consider what would happen if that circumstance does, in fact, happen.

There is a bright future for CI insurance. The need for this kind of protection crosses all socio-economic classes–with middle and lower middle-income people/families as key prospects. For these people, even modest face amounts could provide invaluable financial support in a health crisis.

The real question is “Who doesnt need the protection offered by CI insurance?”

Sheila Matheson is senior vice president-marketing at ESG Re North America Ltd,Toronto, Ontario, Canada. Her e-mail is Sheila.Matheson@esg.re.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, March 25, 2002. Copyright 2002 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.