Worksite Life: A Door Opener For CI Sales

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Critical illness insurance marketers often position CI insurance as a door opener to sales of other personal insurance products.

But, for some worksite producers, other productsin particular, life insurancehave become the door opener for CI insurance sales.

How does that work? “We have many existing customers who own various voluntary products we have sold them,” says Joseph Gaudino. “Now, CI insurance is an opportunity for us to present something new to these people.”

The president of Worksite Communications, a Tallahassee, Fla., benefits enrollment company, Gaudino says voluntary life insurance in particular becomes a springboard for the CI discussion.

“Life insurance is easy to understand,” he explains, “so it is easy for us to open with that. Then, we suggest CI as an additional product the employer can offer.”

This becomes a natural discussion, says James Ward, owner of Ward Services in Columbia, S.C.

“Everyone needs life insurance,” he explains. “But not everyone has a need for CI insurance, or at least not everyone thinks they have this need.”

So, for Ward, it just makes sense to discuss the life insurance first.

He prefers to work with worksite universal life insurance that has living benefits features for long term care, home health care and critical illness insurance. Then, after the life insurance need has been addressed, he discusses the other features with the client.

In one plan he sells, the LTC and home health features are included in the base plan, but the CI component is available at an extra cost. The critical illness piece pays a CI benefit equal to one-third of the life insurance benefit, as a separate (not accelerated) benefit.

“Maybe, in the first year of a new account, we wont even offer the CI rider. We might introduce it later, at re-enrollment time, for instance.

“Then, in another year, we might offer the life and CI package and also a stand-alone CI product for those who dont want the life insurance,” Ward says.

This kind of phased-in approach helps the employer enhance the companys core benefit plan, Ward contends, and it does it by building on the life insurance.

For the employees, he says, this can be an easier way to purchase the coverage. “He or she already has the life insurance. Then, at review, you can enhance it by adding a new feature to the plan that already exists.”

That is an easy way to introduce CI in the worksite market, Ward concludes. “But I dont see why that same approach wouldnt also work in the individual insurance market.”

Segueing the discussion to CI insurance from life insurance is effective only in the context of reviewing the employees needs and circumstances, maintains Gaudino. “The link in the discussion is the financial risk the person is carrying, and the needs and circumstances.”

Remember, he says, “there may be no need for life insurance, or for CI, or for either one. A lot of the time, the persons own experiences and family situation will influence the decision to protect themselves from financial risk.”

Leveraging the current life insurance customer is a strategy that is working at Trustmark Voluntary Benefit Solutions. A division of Trustmark Insurance Company of Lake Forest, Ill., the voluntary operation now has about 60% of its sales in UL and CI insurance, says Martin Traynor, vice president in the Mequon, Wis., office.

That dual coverage ratio is especially pronounced in situations where Trustmark first placed the life insurance plan, he says.

The product life cycle has much to do with the trend, Traynor contends. In the voluntary market, the lead products for the past 18 years or more have been UL and disability insurance.

“Those were the main products,” he says, “but now, thats a pretty mature market.”

CI insurance is the newcomer, he continues. CI sales havent yet gotten to the point where people say, “Yeah, I know I need it,” Traynor allows. But he says “the potential for growth is there, especially since roughly two-thirds of the cost of a critical illness event is related to nonmedical expenses” that health insurance doesnt cover.

Some human resource directors initially are hesitant to allow the offer of CI insurance, points out Ward from Columbia, S.C. “They think its like cancer insurance.”

But when they see how it differsthat it covers multiple conditions and pays a lump sum benefit that can be used for anythingthe receptivity increases, he says.

“Were getting good feedback from the employees, too. They like that it pays not only a death benefit from the life policy in case of death but also a lump sum CI benefit upon diagnosis of one of 10 critical illnesses.”

Gaudino credits his firms use of professional enrollment reps with helping increase CI insurance sales. “When CI came along, many were already experienced with presenting cancer-only products, so it was not hard for them to go into CI,” he explains. The fact that the CI product pays a lump sum also helped, he says, explaining that “this feature is easily understand and easy to explain.”


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.