Not all productsor product featureshave staying power. Consider the Edsel automobile, the black and white television or the eight-track tape player.
The insurance industry also has introduced products and policy riders that were promising at first but have had to change from their original intent to remain marketable.
Fifty years ago, disability benefits were paid as part of a life policycalled a permanent and total disability (PTD) benefit. Some of these policies still exist but are basically holdovers. New buyers are finding long term disability income protection insurance a more effective solution.
One of the most recent emerging products is critical illness insurance. Will this be a sustainable product?
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Right now, CI insurance is evolving. The insurance industry is looking at ways to maintain and grow it as a viable product in the marketplace. But to ensure it is sustainable, the industry needs to examine how it treats this product. The industry also needs to look at those things that might put further market development of CI insurance in danger.
One issue that must be overcome is the stigma of CI insurance being known as “cancer insurance.” Such references limit the products potential. CI insurance covers a wide range of illnesses that are prevalent in the population. These may include heart attack, carcinoma, coronary bypass surgery, stroke and major organ transplants. Some policies may include cancer coverage in a separate rider.
Hence, the proper approach is to market and promote the product with accurate representations of all its benefits.
The industry also needs to examine the products potential for success. In general terms, there are 3 criteria that must be met for an insurance product to be successful and persist in the marketplace. The product must be something customers need, it should serve a social need and it must be reasonably priced.
Statistics clearly demonstrate the need for CI insurance. The American Heart Association, in its 2003 Update, reported that approximately 650,000 Americans would have a new coronary attack and about 450,000 would have a recurrent attack in 2003. It also said that every 45 seconds, an American suffers a stroke.
Thanks to medical advances, the chances of surviving such illnesses are high. But survival sometimes comes at a significant financial cost. Common expenses include private nursing care; medical treatment outside the medical network; insurance and prescription co-payments and deductibles; rehabilitation; and childcare during a parents treatment or hospitalization. These costs can take a toll on families already dealing with the illness.
The second point to consider is whether the product serves a social need. The CI product gives customers added financial protection, much like life insurance. But the CI benefit is one that customers can use during their lifetime.