Boomers Seen As Good Market For Critical Illness Insurance
By Linda Koco
When Jim Nader speaks with baby boomers about critical illness insurance, it first strikes many of them as a new concept.
But once they learn about it and see what it does, it excites them, says the Los Angeles, Calif., agent with Mutual of Omaha. When that happens, CI sells better than life insurance and disability insurance.
Brent Affolter, a Willoughby, Ohio, sales manager with Western-Southern Financial Group, has the same experience.
Boomers have not heard as much about CI insurance as one might expect, given the amount of CI development in the industry, he says.
But when we propose it, the boomers often say, tell us more about it.
The older boomers, age 50 and up, are particularly interested, Affolter says.
They see how they can use CI insurance to help them get back on their feet after a disability, he explains. Thats important, he says, because disability is a key concern for middle-aged people.
The CI sale is not made in lieu of disability insurance, he stresses. Rather, his firm positions it as a supplement to disability insurance.
Do boomers see CI as something they just cant afford, given their house payments, rising health insurance costs, college funding costs and other financial pressures?
The subject does comes up, agree both CI insurance marketers.
But, says Nader, once clients see all that a CI policy can do, the objections start to shrink. For example, the policy he sells offers 3 basic ways for benefits to be paid: a lump sum to the insured who suffers a covered critical illness and survives it; the full CI benefit to the beneficiary if the insured dies from the critical illness rather than survives it; or all paid-in premiums to the beneficiary if the insured dies from some other cause (not a covered critical illness).
Additionally, people can add an accidental death and dismemberment rider to the policy, if they want, Nader says.
Seeing all the ways this policy pays benefits helps boomers see the cost in perspective, he says, adding so does showing the client the different ways to use the benefitssuch as to pay hospital bills not covered by medical insurance, to supplement ones disability insurance, etc.
Affolter, with Western-Southern, says his office suggests setting up the CI so its face amount equals 3 to 6 months of income.
That would be good for a boomer who is working and who intends to use the CI policy to supplement existing disability insurance if he or she ever suffers a critical illness, he says. The benefit would be enough to help many CI survivors get back on their feet and go from there.
But first, he cautions, the agent and client need to discuss the persons entire financial position, including life and disability insurance, employer-provided products, and individual products they may have or want to have.
Its a portfolio approach, he says.
Then, bring up the CI, he explains. In doing so, he says his firm recommends reviewing with the client some of the national statistics concerning people who survive from critical illnesses.
If citing cancer statistics, for instance, point out how many more people are survivors today than in years past and what their survival entails. This helps the client see that people need to have a way to pay for the extra expenses that occur due to survival, he says.
Positioning the CI as a supplement to life insurance is also helpful, Affolter says. That is possible for him to do because the product his company sells includes a death benefit. This equals all premiums paid less any claims paid.
The baby boomers appreciate that, he says, explaining that we show that feature as a part of their life insurance portfoliowhich includes their group life, their individual life and this CI death benefit.
The result, says Affolter, is the CI presentation positions CI as a product that can serve as a supplemental disability benefit or a supplemental death benefit.
Though some boomers do object to the price of the coverage, Affolter says these objections are not any different than objections about the cost of other insurance. Some people even complain about the cost of term insurance, he says.
A good response, he says, is showing how the product will fit into the clients particular portfolio and adjusting the coverage amount if necessary.
It also helps to point out that the coverage costs less if purchased now than at an older age, says Nader of Mutual of Omaha.
For the policy he sells, the maximum issue age is 59, he notes. But, once covered, clients can keep their insurance as long as they continue paying the premium. At age 65, the coverage amount drops by half, but the important thing for most people is that they can keep the insurance as long as they want.
In Naders area, the buyers showing most interest in CI insurance are educated people earning higher than average incomes, especially self-employed people. Health care workers are a good market, too, he says, because they know the medical issues. Some doctors like the supplemental disability income role the coverage can play, he adds, particularly if the doctors already have maxed out on the amount of individual disability insurance they carry.
A good thing for agents to keep in mind, Nader says, is that CI is underwritten as health insurance. The client doesnt need to show proof of income or submit the income tax return, as is required for disability insurance underwriting.
Sample cost: For a male non-smoker buying a CI policy that Nader sells with a $100,000 face amount, the annual premium would be $1,022. If his wife, also an age 45 non-smoker, also buys a $100,000 CI policy from that same insurer, both spouses get a discounthe would pay $997 a year and she would pay $925 a year.
You have to explain the benefits and the details, he contends. But once they get it, they go crazy for it.
Reproduced from National Underwriter Edition, August 19, 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.