Critical illness insurance has not enjoyed the same sales success here in the United States that has been seen in other countries.
Consumer awareness and lack of product education are factors, but the origin of the CI sale starts with the agent, in the trenches and in the field.
Agents have been hesitant to enter the CI marketplace for many reasons, but the major roadblock for CI sales success is failure to understand what CI insurance is “not.” (Note: U.S. consumers have also misunderstood the value of the product.)
The problem is, agents try to place CI in an insurance box they already understand.
However, although CI has attributes of many other types of insurance, it is in a box of its own.
Is CI insurancelife insurance? Health insurance? Disability income insurance? The answer to each of those comparisons is “no” but “yes” to all of the above.
The point is, trying to place CI in a stereotype category and not fully understanding the product can lead to missing out on the benefits the product can provide. Following are some examples that clarify this point.
CI insurance is not cancer insurance, as some consumers believe.
Although cancer is a covered condition within a CI policy, a cancer insurance policy requires a diagnosis of a covered cancer, and then only reimburses based on actual medical expenses incurred. Also, cancer policies only pay for cancer-related conditions, whereas a CI policy covers many other conditions in addition to cancer. A cancer policy can help with reimbursing cancer expenses, but a CI policy pays a lump-sum, up-front cash benefit that can reduce the stress of cancer and its treatment and allow the patient to recover much more quickly.
The consumers who say, “I already own a cancer policy and dont need a CI policy,” or the agents who say they dont want to focus on cancer insurance sales are both missing the boat.
A CI policy that pays its cash benefits up front so the insured can pay for uncovered medical expenses and indirect costs associated with the illness is superior to receiving payments in drips.
Critical illness is not disability income insurance, either. While DI coverage protects an individuals income, there are elimination periods to satisfy and requirements for continuous disability to collect benefits.
Many clients do not consider the shortfall in income that can be created by a disability. Receiving only 60% of ones income can create undue financial stress.
A CI lump-sum benefit can fill in the gaps when the shortfall occurs. Unlike DI, CI is an income protector during your working years and an asset protector during your retirement years. A lump-sum CI payment can relieve the stress of disability much faster than a monthly DI check that pays in dribbles. Consumers need both.
What about long term care insurance? No, CI insurance is not LTC insurance.
While LTC policies provide periodic payments to cover nursing home and home health care expenses, LTC coverage can be inflexible and restrictive. A CI policy provides a lump-sum immediate benefit to be used as the insured desires. A lump-sum cash benefit from a CI policy can greatly expand the medical choices of an individual in need of long term care. For example, this payment may allow the person to remain at home, as opposed to entering a nursing home.
As for life insurance, we already have said CI insurance is not life insurance. However, a CI policy can provide a life insurance benefit. The agent or consumer who says “I already own a life insurance policy” should be asked this question: “Will your existing life insurance policy pay you a lump sum if you dont die, but suffer a critical illness such as heart attack, cancer or stroke?” The National Vital Statistics Report states that 82% will have a critical illness before they die. Also, if death results from a critical illness, a CI policy pays just like a life insurance policy.
Note: Life insurance with an accelerated death benefit rider or terminal illness rider is not the same as CI insurance. These older riders usually require that death occur within 6 or 12 months. By comparison, a CI payment does not require a terminal illness diagnosis; it just requires diagnosis of a covered condition. After all, this is survival insurance.
While CI insurance has many attributes of cancer, DI and LTC insurances, it is not a substitute for these other types of coverage.
Rather, CI insurance complements the other policy types, helps fill in the gaps and does not coordinate the benefits. In some cases, CI insurance can do a better job.
The main purpose of a CI policy is to restore and maintain the quality of life when a person suffers a critical illness. The process is simple: Get diagnosed and get paid.
When agents and consumers realize that a CI policy can help repair the quality of a persons lifestyleboth physically and financiallythen sales will explode.
Joseph P. Crawford, CLU, ChFC, critical illness manager of The L Group in Ridgeland, Miss., can be e-mailed at [email protected]. Jesse E. Leverette Jr., president of The L Group in Ridgeland, Miss., can be e-mailed at [email protected].
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.