Many agents do not yet understand they can make a living by selling critical illness insurance, says Gordon Gladstone, who finds this impossible to believe.

The owner of Critical Illness Insurance Services, Inc., Los Angeles, and a board member of the National Association for Critical Illness Insurance, Washington, D.C., Gladstone says he personally has sold 200-300 individual CI policies a year in the United States–for several years.

He sells group CI contracts, too.

Even in 1990, his first year of U.S. CI sales, he says he sold 80 CI riders attached to universal life policies.

“Am I a genius?” he asks. “No.”

It did take a few days to learn CI, building on his life insurance expertise, he allows. “But it wasn’t difficult. And then, I found a way to work with it.”

Specifically, he presents CI as a living benefit that pays upfront if the insured survives a covered condition.

This is the 21st century, Gladstone says of his approach. “Due to medical advances, chances are good that many people will survive a critical illness.” That survival and today’s increased longevity create financial needs CI can help meet, he contends.

Therefore, agents who sell CI have a “great revenue opportunity,” he says, noting this is “living insurance” that deals with the realities of life in today’s world.

CI professionals interviewed for this article agree the opportunity is huge and the possibility for success realistic. How so?

Success will come from meeting client needs, says Dorian Hansen, vice president-individual CI underwriting, distribution and training at MetLife, in the Liberty Corner, N.J., office. “It’s a matter of, ‘do right for the client and you will be made whole.’”

People today need to achieve financial freedom, she says, but several medical-related trends are creating a gap in coverage that hinders this. Agents can show people how CI can help fill that gap, she says.

The trends to which she refers include: more people being diagnosed with critical illnesses; more people surviving these illnesses; more survivors becoming “financially sick” from expenses associated with the illness and the survival; health insurance costs that keep going up while health insurance itself is covering less; and, people not saving enough to be financially prepared for post-illness financial expenses.

As a result, Hansen says, a CI diagnosis (stroke, heart attack, etc.) often makes people look around and wonder, ‘who’s bringing me a check?’

As CI experts everywhere put it, health insurance pays the hospital and doctor costs; life insurance pays at death; disability income insurance replaces income at disability; and long term care insurance pays for specified care. But what traditional product pays the after-diagnosis costs such as special meds, transportation and more?

This is the need, Hansen says, and CI insurance can help meet it.

Agents who become passionate about that will end up with sales, she predicts. MetLife sees such “huge growth” potential here that it decided to enter the CI market this year, she notes, adding “the problem is not going away.”

E. George Reynolds Jr., owner of Houston City Agency in Texas, agrees. Critical illnesses like cancer, heart attack and stroke “put tremendous strain on families,” and the CI policy can be used to alleviate some of that burden, he says. For instance, people can use it to obtain alternatives, such as going to a better hospital or physician than provided by the medical plan, or they can use it to meet other payments or replace income.

To uncover this need, agents should speak with clients about their needs, wants and desires, contends Reynolds, who is a master general agent with the Independent Advisor Network of AIG American General.

Clients generally have not thought about this as it relates to CI, he says, so the agent’s job is to bring it out.

For instance, Reynolds says, the agent might move from discussing life insurance to discussing disability income insurance and how it generally covers up to 60% of pre-disability earnings after a waiting period. Then, the agent can inquire whether the client wants to supplement the DI with CI, to fill the remaining financial needs.

This is a “very realistic” picture of how an agent can start making a living at selling CI insurance, he maintains.

“The discussion with the client gets down to, ‘how much can you afford, and how much do you want?’”

This is generally a 2- or 3-interview sale, he adds. “In the first interview, we discuss wants and needs, and what the client can afford. The next interviews address solutions.”

Agents “absolutely” can make a 6-figure income in the first year, says Mark Gebhardt, president of Aigilis Corp, Lake Mary, Fla.

“That’s realistic,” he continues, “but it is based on how hard you want to work and what markets you are in already.” He believes choosing the market segment, and the approach for that segment, is key.

For instance, advisors in the 401(k) market have access to many clients, and that’s a “golden opportunity,” he says. For financial planners, “CI works well with clients who want the best of the best; it’s just another slice of the pie.”

But, “CI is probably not a play for annuity specialists,” Gebhardt says. “It’s apples and oranges.”

What about the worksite? CI has appeal there, he says. Workers like being able to use CI benefits to pay for out-of-network care, rehabilitation or supplemental income upon partial return-to-work, he explains.

CI positions well in the professional market, too, as a complement to disability income insurance, Gebhardt says. Example: A dentist in his 50s had a stroke, he recalls. The existing patients went to other providers, so the dentist had no practice to sell and wound up rebuilding his old practice after recovery. The CI helped with some of the upfront costs.

DI policies do replace income, Gebhardt allows. But DI typically “doesn’t cover the first 6 months, and the first payment often doesn’t arrive until the 8th month,” he says. Further, even if the DI is set up for buyouts, “it can still take a year to pay.” On the other hand, a CI policy pays right away.

In the small business market, employers might buy a CI policy not only for themselves but also for a key employee, he adds.

The best age demographic for receptivity to CI is 40+, he maintains, because “that’s when medical events start to happen.” Also, these are people who “want to get what they want, not get what they get.” CI facilitates wants, he says.

CI proponents differ over whether to specialize in CI or make it a side coverage.

Reynolds thinks specializing may not be effective, because once the CI sale is made, clients will have to go elsewhere for other needs. “Take care of the client no matter what the needs are,” is his advice. Therefore, he positions CI as ancillary coverage that complements life insurance.

But Gebhardt says agents can “absolutely build a lucrative practice with CI” itself.

Hansen shares that view. She predicts CI specialization will grow in the U.S., as it has in other countries. Agents will enjoy incremental growth in sales as they present CI as a solution, she says. But, she adds, they can pick up other business, too.

Gladstone has built his own CI specialty and he thinks others can do the same. But, he stresses, agents must get educated on CI and understand it; they must have access to decent products from top-rated companies; and, the CI underwriting and pricing must be what the market is willing to pay.

Gladstone has another caveat, too: CI carriers must market the coverage–to both agents and consumers.

Agents in Canada, Britain and other countries have been very successful with CI, he contends, largely because agents get trained on CI, and because banks–the largest sellers–insist clients own it. By contrast, the U.S. industry has so far offered little training, Gladstone says. “Carriers have to train the agents, and that’s it…. Everything else is there, all laid out.”

The CI carriers have to train the agents

CI To-Dos

Strategies For Building CI Into The Practice

Ask the client, “What bank will give you a loan to cover expenses, once you are sick and can’t work?”

==Gordon Gladstone, Critical Illness Insurance Services, Los Angeles

Remind the client that most people live on 100% of their current income, not 60%.

==E. George Reynolds Jr., Houston City Agency, Houston, Texas

Know the positives: This is good coverage; it’s not hard to sell; the learning curve is short; and, many CI policies are simplified issue, so underwriting turnaround is quick.

==Dorian Hansen, MetLife, Liberty Corner, N.J.

Keep in mind that ignorance and poverty are two factors you can’t deal with. So, go back out the door if the customer says a critical illness will never happen to him.

==Mark Gebhardt, Aigilis Corp., Lake Mary, Fla.

If you offer CI in a contract that pays a death benefit as well as in event of critical illnesses, you can remind the client that “this will pay out anyway, even if you never have a critical illness.”

==Gordon Gladstone, Critical Illness Insurance Services, Los Angeles

Expect training on CI insurance to be simpler than training on DI and LTC insurance–because CI has far fewer variables to consider.

==E. George Reynolds Jr., Houston City Agency, Houston, Texas

Rely on it as an excellent door-opener, because while consumers often say they have life insurance, few say they have CI insurance.

==Dorian Hansen, MetLife, Liberty Corner, N.J.

Ask the small business owner, ‘what will happen if a critical illness takes you or a key employee out of the picture for 6-8 months?’

==Mark Gebhardt, Aigilis Corp., Lake Mary, Fla.