Every agent has a story to tell. In the senior market, that usually means visiting clients and prospects in their homes to discuss typical offerings such as health, life insurance, and final expense plans.
Most health agents focus on health. Life agents sell life. But there’s one product that eclipses these two areas: Critical illness. Demand is rising, and it could be just the medicine you need to boost your sales.
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So just what is a critical illness plan? In most cases, this type of insurance provides a lump-sum payment or graded benefit following the diagnosis of any critical illness listed in the policy. Funds are paid directly to the insured (not doctors or hospitals) and can be used for any purpose. Some plans provide a per-day benefit for surgery or other procedures and can help stabilize household finances during an incredibly stressful time.
According to trends observed by BenefitsPro, many carriers are adjusting the structure and delivery of their products to meet both employer and employee needs, particularly as ObamaCare facilitates the greater use of high-deductible plans. Individual plans for the self-employed and small businesses are also seeing a rise in popularity. Some plans are available on a guaranteed-issue basis to employer groups with at least 100 employees.
When Life Insurance Is Not Enough
The 2017 Life Happens and LIMRA Insurance Barometer Study found that more than 20 percent of respondents who have life insurance coverage don’t think they have enough. And they’re right. If a critical illness strikes while your client is still alive, proceeds from life insurance won’t cover it. An accelerated death benefit rider may help cover some costs, but only if that client is terminally ill (in most cases). That’s why many agents today are looking at presenting critical illness plans as part of a larger strategy for asset-protection rather than just a stand-alone ancillary solution.
A Silver Lining for Agents
There are many critical illness plans available and some cover cancer up to age 85. Many plans also cover renal failure, stroke, heart attack, or a combination of conditions. In most cases, a simple series of questions asked in the house can prequalify your clients for coverage.
Recent statistics show that one out of every three women and men will get cancer. As an agent, you already know selling health policies and life insurance to anyone over age 65 is challenging. Health issues, underwriting, and cost all play a role in eligibility.
But, if you’re already in the house discussing life or health plans, chances are your clients haven’t considered critical illness coverage as a way to protect their nest egg if unexpected medical treatments should arise from cancer or other conditions.
Plan payouts can range from $10,000 to $1 million in a lump sum per person. Other plans pay out in stages. Do your research and compare. There are some critical illness policies out there that will provide cancer coverage for smokers (at a much higher premium, of course, but creative plans do exist)!
Ask That Critical Question
Your ability to ask, “By the way, have you thought about critical illness?,” is a good way to learn more about family health history and open the door to additional fact finding. Save the question for last in your presentation after you’ve closed a sale for something else. Ask about your clients’ parents and other relatives. Do certain conditions run in the family? Usually, your clients will see the value of critical illness protection, but it’s up to you as an agent to show them how having that extra money to fight unexpected illness can be a literal lifesaver.
Living proceeds from critical illness policies can also be used to pay for services often overlooked, such as temporary in-home care (especially when many seniors don’t qualify for fully underwritten long-term care). Other uses for critical illness coverage include paying for expensive medications and treatments and keeping the household moving forward by covering utility bills, groceries, travel expenses, and other essentials.
The Future of Critical Illness Protection
Critical illness plans can change on a year-to-year basis, and some carriers are making it more difficult to qualify. Others are reducing lump-sum amounts. Overall, these plans continue to add value and can be leveraged by agents as a powerful and strategic tool when it comes to building sales and protecting clients.
Last year’s 16th-annual Critical Illness Insurance Market Survey, conducted by Gen Re in partnership with the National Association for Critical Illness Insurance (NACII), reported that the critical illness insurance sector is in a good overall state of health.
Respondents predicted an average annual growth rate of around 10% for individual policies and about 14% for employer or group policies over the next three years.
Keep the Conversation Alive
Building good rapport with clients and protecting their interests can usually be achieved with a simple conversation around critical illness. These plans are also well suited to younger individuals and couples with kids who may have a family history of certain conditions. It’s a well-known fact in today’s economy that one of the key factors leading to bankruptcy is unexpected medical bills.
For households worried about rising out-of-pocket costs and balancing health care with everyday costs, critical illness plans provide additional peace of mind. So, no matter who or what age your clients are, it makes sense to have a candid discussion about critical illness strategies. With the right plan and affordable premium in place, your clients will feel at ease knowing those “what ifs” won’t become “what nows.”
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A modified version of this article was previously published in the July 2015 issue of California Broker Magazine.