CI Insurance Isnt Just A Stand-Alone Product Anymore
Interest in critical illness insurance is growing. So, too, are the ways of offering this coverage to clients, including an accelerated rider on life insurance policies and other hybrid products.
CI protection increasingly resonates with consumers because it helps cover financial obligations during a serious illness that are not covered by medical or disability insurance.
Thats important since, according to the National Center for Health Statistics, the probability of suffering a critical illness event before age 65 is three times that of death for the average American.
Furthermore, CI benefits can be used for any expenses, not just medical. For instance, the money can be used to pay a mortgage debt, provide funding for future income needs, prevent depletion of retirement savings, or provide “key person” protection for small businesses and partnerships.
Its true that the majority of CI policies in the U.S. right now are stand-alone health products.
However, it is clear from my vantage point in the market that producers and consumers increasingly are opting for an accelerated CI rider attached to a life insurance policy.
This hybrid structure provides a solution that capably answers two needs: 1) the rider may accelerate a portion of the death proceeds when a covered condition occurs; and 2) the underlying life policy still provides a level of death benefit protection.
Adding a CI rider also creates an attractive new twist for life insurance products that have seen limited growth in recent years.
CI riders that accelerate from a life policy offer several advantages.
They are somewhat less expensive than stand-alone CI products, for instance. This is chiefly because of reduced administrative costs.
It should be noted that the probability of a CI payout at an earlier age remains sizably higher than the chance of death. Therefore, the cost for the accelerated rider remains higher than premiums for comparable life insurance. Yet attaching CI rider to a traditional life policy can be a more economical way to provide both types of coverage.