CI Insurance Is The Right Solution– So Why Arent Sales Growing Faster?
If you look at critical illness statistics alone, the answer to the question posed above is most likely “yes.”
And, if you look at who has either bought or is interested in buying critical illness insurancewhite collar and blue collar; low, middle, and high income wage earners; and traditional and nontraditional worksite buyersyou would have a hard time saying CI insurance is not the right solution for many people.
So why then arent CI insurance sales growing at a faster rate? No one can say for certain, but I suspect that one reason is the reluctance of some producers to sell the coverage.
Many worksite producers havent sold CI insurance either because they dont know enough about the product, or because they havent had the time to “check it out.” Others are waiting for a stronger carrier to offer a CI product, or they are waiting for their “carrier of choice” to offer the product.
Some producers are concerned about the products profitability, how it will affect sales of their other product lines, the products pricing and underwriting, and/or lack of customer interest.
Although all of those are legitimate concerns or reasons, producers who have sold CI insurance shed a different light on the issue. Many claim that producers (worksite or non-worksite) can, in fact, sell CI insurance effectively, that their customers will buy it, and that other product sales wont sufferas long as they take time to educate themselves first and then their customers.
Education starts with understanding why people need this insuranceand why many already have purchased the coverage. It also involves understanding how CI insurance fits with other insurance products and, of course, mastering the product basics and developing the appropriate sales materials and approaches.
Who needs CI insurance? The answer is simple: virtually everyone. Married couples with children and single heads of households have obvious needs. Additionally, business owners and self-employed persons who need to keep the business running or buy out a business associate.
The product appeals to independent people who want to ensure that their lifestyle, asset base and business will not erode in event of a critical illness. These individuals may have one or more of the following needs: mortgage protection, “breadwinner” protection, homemaker protection, lifestyle protection, single persons protection, protection for individuals with limited health insurance and those in special occupations, and key person coverage.
Who is the “typical” CI insurance buyer? It is a married female in her mid-40s, with children, according to an industry study done in 2000 by Eastbridge Consulting Group, Columbia, S.C. This buyer also works in a professional or managerial job and earns an income of around $42,000 or more. But the charts with this article show the product also appeals to a wide variety of consumers, as measured by age, income, occupation and industry.
CI insurance is a natural complement to other insurance products in an employers benefits package, not a replacement. It is designed to cover the nebulous territory where health insurance leaves off, but life insurance does not yet pick up. Simply, its the “missing piece” in the living benefits equation.
For example, not too long ago, life insurance met most peoples need for critical illness protection because many died when stricken with a major disease. But today, people survive these illnesses. CI insurance pays benefits while the person is living to help with increased expenses resulting from a critical illness.
Disability insurance pays a monthly income to help the insured (not spouse or caregiver) replace a portion of lost salary, traditionally 60% to 70%. But this often is not adequate for clients who face immediate needs after the onset of a critical illness. In addition, not everyone has access to disability coverage.
On the medical insurance side, todays stricter managed care guidelines, rising deductibles and co-payments, and uncovered expenses, mean health insurance alone will not cover all expenses associated with a serious illness. With treatment costs in the tens of thousands of dollars, even a 10% co-pay can be a significant hit on a familys financesnot to mention all the indirect expenses.
The message in all of this: educate, educate, educate. Only then will you know if critical illness insurance is the right solution for your prospects and clients. Once understood, critical illness insurance will be embracedand sales will mushroom!
is vice president at Eastbridge Consulting Group in the Columbia, S.C. office. Her e-mail address is [email protected] The data shown here is based on research with employers, employees, and producers.
Reproduced from National Underwriter Edition, January 16, 2004. Copyright 2004 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.