Where are you on the critical illness insurance sales track? Most brokers are keenly aware that the demand for critical illness insurance is on the rise. Among businesses of all sizes, from 10 employees to more than 5,000, an average of 19 percent offered CI insurance to employees in 2006, up 7 percent from 2002, according to LIMRA International. And the percentage keeps growing.
Voluntary benefits in general have become more and more lucrative tools for brokers, providing an excellent portfolio of added benefits to enrich their sales. Many employers today find it increasingly difficult to afford a rich benefits package. However, they still desire to provide their employees with access to benefits to fill in the gaps. According to a MetLife study, more than 90 percent of Americans believe that it is important for companies to continue to offer benefits, even if employees must pay most or all of the cost.
Voluntary benefits are endorsed by and made available through employers, but are purchased by employees themselves. According to LIMRA, the median number of benefits offered by smaller companies (10 to 19 employees) is seven, while those in the 5,000-plus category offer 12. So no matter the group size, brokers have tremendous opportunities to sell critical illness and other voluntary benefit plans through employer group endorsements.
The Critical Illness Insurance Difference
Critical illness insurance provides the benefit of a tax-free lump sum amount of money upon diagnosis of a critical illness, such as cancer, heart attack or stroke. What makes CI insurance special, in particular, is that it not only can fill gaps in medical coverage (by providing extra funds to pay for deductible and coinsurance), but also in everyday finances (rent, food, children's education). A Harvard University study reported that 50 percent of bankruptcies filed are the result of costs associated with a health crisis. And 80 percent of those people already had a health insurance plan.
Fifteen or 20 years ago, more critical illnesses proved fatal than they do now. Think of those you know today who have been stricken with cancer, a heart attack or stroke, but survived. Life insurance gives a financial cushion for beneficiaries when someone dies. Critical illness insurance, in a similar fashion, provides a financial cushion to cover everyday expenses for the insured who survives and recovers from a critical illness, which happens ever more frequently. CI insurance is made for the needs of today.
Best Approaches to Land CI Sales
How can you actually go about selling CI insurance? When you sit down with your employer client or prospect, think first of exploring their employees' needs before outlining CI plan benefits.
It's a time to pose provocative "what if" questions with your client. Ask your client, "If one of your employees had cancer, a heart attack or stroke tomorrow, would the employee be able to continue to pay mortgage or rent for six months until he or she recovered?"
According to the U.S. Department of Commerce, Americans, on average, spend 1 percent more than they are earning. MetLife's 2008 "Study of Employee Benefit Trends" reveals that 70 percent of employees are highly concerned about the ability to pay bills during sudden income loss and 61 percent are concerned about having enough to make ends meet.
A second question posed to the client could be: "In the event of a critical illness, who would take care of your employee and his or her family?" If the employee is single, or married to a spouse who must work, a nurse might need to be hired. And a single parent, in particular, would need extra childcare. Thirdly, "Will the choice of doctors and treatments be important to your employees?" Most people want to get the best treatment possible. Yet out-of-pocket costs for cancer, for example, average $35,000.
According to the American Cancer Society, one in three Americans will contract some form of cancer. More striking, every 29 seconds someone suffers a coronary event and every 53 seconds someone has a stroke, according to the American Heart Association.
It's up to you to help the employer realize there will be real financial hardships that the average employee will undergo when faced with a serious illness. The next step in meeting these needs is to present the solution: critical illness insurance.
You might tell the client to think of critical illness this way: "Doctors and health insurance can fix a person's health. Critical illness benefits can fix a person's finances." CI lump sum benefit levels of $25,000, $10,000 or $7,500, as examples, can go a long way to cover the insured's many household, health and pharmaceutical expenses not covered by medical insurance, in the event of a critical illness.
An employer will win approval when employees can return to work without being disheartened by financial binds caused through health issues. Note that companies whose employees are satisfied with their benefits are more productive and have less turnover.
How Much CI Will Each Employee Need?
Explain to the client that an enrollment firm you hire will consult with and educate employees on a one-on-one basis, showing how critical illness insurance plays a vital role in their lives. The enroller will also help employees determine how much critical illness insurance they need. No two employees may need the same amount of coverage.
The calculator pictured in the attachment shows how you can estimate an employee's average monthly expenses. It's an easy way to determine what level of critical illness benefits would meet their financial needs for three, six or 12 months. The calculator also provides reminders of common expenses both single people and families face.
Another quick way to calculate how much CI coverage is needed is to add two to three years of the person's mortgage or rent payments, as well as credit card payments. Typical coverage premiums for the employee range from $3 to $10 per week.
What to Look for in a CI Carrier
Be sure to offer critical illness insurance that obtains premium from employees on a payroll deduction basis. According to a MetLife employer/employee study, 64 percent of employees surveyed find payroll deduction to be a convenient way to make payments. Does your carrier have payroll deduction expertise? Look for plans that have rates that don't increase as the insured ages, and which may offer options such as a health screening benefit to help identify risks before they turn into critical illnesses.
Your reputation and success as a broker can only increase when you find benefit solutions to the current needs of your employer clients and their employees. Critical illness insurance fills an important gap in even the best benefits programs by giving insureds financial assistance when they need it most, as well as giving employers the ability to offer benefits employees want.
