Flat sales in the critical illness insurance (CI) market is largely due to the fact that advisors are just not offering the product, says Diane Carruthers, senior consultant, custom sales solutions at Standard Life Canada. One of the main reasons explaining this situation is that advisors are concerned that their clients will receive ratings.

Clients often refuse to proceed after learning that their ratings mean higher premium costs. “That number could be reduced if the client were better prepared,” she says.

“Managing expectations,” is the key to readying clients for a possible rating, Ms. Carruthers adds.

Many advisors have told her that they shy away from selling CI because they’ve had a negative experience where a client has been issued a standard rating for life insurance, but not for CI. Advisors fear that because the client may not understand this outcome (and the advisor may not either) the client can become upset and walk away from both the life and CI sale, she explains.

But, there is a logical explanation that advisors can give clients in advance to prepare them for the possibility of this type of underwriting decision, she adds. It is that the expectation of payout happens over a shorter period of time. Someone might pay life insurance for 30 years before a claim is made, whereas for CI, the payout could potentially come within just 10 years. For example, an average 45 year-old-male has a life expectancy of 75 years. But, that same person has a 53% chance of developing a critical illness by age 54.

Reduce rejections

Advisors can also play a role in helping to reduce delays and rejections of CI applications during the information gathering process, she adds.

Ms. Carruthers offered hints involving research and careful use of language in the application:

• check the client’s family medical history. “When I say family history I mean immediate blood relations,” she says. That has greater impact on decisions in CI insurance than conventional life insurance because medical traumas such as cancer can result from a genetic predisposition in the family;

• take care with loaded phrases such as ‘stroke’ being specific about whether it was caused by medication or other factors;

• avoid catch-all phrases such as stating that the applicant’s father ‘died of natural causes’ unless he was truly elderly.

Marketing

With respect to marketing CI to clients, Ms. Carruthers says that advisors should avoid positioning it as a product that they can use to get additional medical care. The driving factors behind CI sales are debt and family, she says. A CI payout can enable the policy holder to pay off or down debt and reduce financial stress during their sickness or perhaps to pay for bringing home far-flung family members during a medical crisis.

She says that insurers need to make an increased effort to train advisors on selling CI. “If we don’t do it, who will? We don’t have a choice. We have to step up to the plate,” she states. On this note, Standard Life is gradually rolling out its new Business Implementation and Development (BID) program aimed at training advisors on how to best integrate CI sales into their practices.

Ms. Carruthers adds that insurance companies have been making a big mistake in pushing their CI products instead of educating the sales force. “You can have the best product on the planet, but if nobody buys it…”

Al Emid and Donna Glasgow