Looking For A CI Tidal Wave? Clear Up Agent Questions First

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It is isnt necessarily consumer attitudes that are holding up fast-paced sales of critical illness insurance in the United States–sales that have reached tidal wave proportions in countries like the U.K., Australia and Asia.

Recent industry research and focus groups show that once consumers learn about the product and understand more about their own CI risks they believe CI insurance is a needed product.

Instead, it appears that insurance agents themselves are unsure about CIs benefits, dont know how to sell it, or are concerned about the cost. This article will address those very real agent concerns.

Benefits. In a nutshell, CI meets a very definite rising need.

Every 53 seconds, an American suffers a stroke; every 29 seconds, someone suffers a coronary event. In the U.S., one in two men and one in three women will develop some form of cancer. For many, income disruption in such cases can be significant. For example, over 50% of mortgage foreclosures are linked to sudden CI while only 3% are due to death.

Its long been said that a single person needs only enough life insurance to pay debts and a funeral. But if diagnosed with cancer, how would the single person pay new ancillary costs–for unexpected travel, the costs of an out-of-network specialist, or compensation for a family members time off from work? How would he or she cover the mortgage payment?

Think of the physician or entrepreneur who simply cant buy enough disability income insurance. Or the heart attack patient who goes back to work two weeks later, too soon for DI payments and without the option of time off to de-stress.

What about augmenting key person life insurance? As you know, such insurance pays if a business partner dies but does little if the partner has cancer or a heart attack. Even owners of long term care insurance have coverage needsbecause LTC insurance pays for nursing care as people age, but typically does nothing for a 45-year-old who has a heart attack.

In all these cases, a CI payment would help.

How to sell CI insurance. If CIs benefits are clear, then selling it can begin with this simple question: “Who do you know who has had cancer, a heart attack or a stroke?”

Almost everyone knows a friend, family member or co-worker with one of these illnesses. Chances are, they will also know about the financial undertow that these events caused.

Testimonials can be powerful tools, as well. For instance, the first CI claim paid in the United States was to a woman in her late 30s who was diagnosed with breast cancer and whose health plan had denied coverage of a bone marrow transplant. She took money from a CI policy to pay for this aggressive treatment, increasing her survival chances from 40% to 70%.

In another case, an agent could hardly find the words to say what his CI policy meant to him. After his heart attack, his wife did not have to go to work; because he had his CI proceeds, she could stay home with him and the kids.

This very personal experience underscores why the head of one insurance agency requires agents to buy a CI policy for themselves if they are going to sell the product–so theyll do the research and be sold on the concept before trying to sell it to others.

Cost. Certainly, the cost of CI insurance is an undeniable issue. Life insurance agents who are accustomed to cheap term rates often edge away from CI, asking, “Why is it so much more expensive than life insurance?”

Heres the answer: The costs reflect incidence rates of CI versus mortality. For comparison, in 1999, 1.27 million people were diagnosed with cancer, while 0.5 million died from the disease. For cancer, heart attack and stroke, the number diagnosed was nearly three times the number who died. In fact, while 3.1 million were diagnosed with these three diseases, only 2.4 million died from all causes.

Such statistics go a long way towards explaining why CI premiums are–and should be–higher than life premiums.

Since CI is so new, carriers will need to tap the resources of reinsurers and consultants to obtain the information they need to help producers understand the product. Once agents have the right tools and information, they will be able to make a case for CI, and sales will simply take off on their own merits.

is executive director-living benefits at ING Re in Denver, Colo.


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.