By Craig Nordyke, Vice President and Chief Actuary, Dearborn National^®

In the midst of one of the worst economies our country has experienced, critical illness insurance sales jumped 40%[1]. Strong growth continues today, driven by a combination of factors.

Many people may realize they are less financially secure than they once were—or than they thought they would be. Jobs can become increasingly in peril and financial safety nets could be substantially reduced.
As employers address health care costs, many consider opting for high-deductible plans, which leave underlying coverage gaps and higher potential costs to address these.
In addition, as the population ages, consumers may recognize the increased possibility of being stricken by a critical illness. This is true in all segments of the population, from factory floors to executive suites.
Finally, broader carrier involvement, product enhancements and stronger marketing efforts have bolstered product attractiveness and boosted awareness of critical illness insurance and the protection it offers.

High health plan deductibles bring critical illness insurance to the forefront
Critical illness insurance can play a role in managing certain costs as high-deductible health plans become more common. Heightened popularity of these high-deductible plans present potential problems for insureds faced with extraordinary medical costs for everything from heart attacks and strokes to cancer and more. It’s common to see health plans with $5,000 deductibles.

Critical illness insurance can cover these deductibles and associated co-pays as well as pay for expenses not generally covered by medical insurance. This is especially important considering that medical expenses are a leading factor driving consumer bankruptcies.[2]

Ongoing growth opportunities for agents and brokers
Agents and brokers are becoming more familiar with critical illness insurance, its features and the role it can play in a comprehensive benefits program. They’re incorporating the product in their portfolio both as a door opener and as a way to increase loyalty among existing clients.

One broker we work with has introduced the product and its benefits to every one of its Fortune 100 companies, regardless of industry, with very positive response. In addition, affluent buyers are just as likely to be faced with —and be aware of—gaps in health insurance plans, job insecurity and bankruptcy risks. This increased interest among white-collar workers represents a shift from a decade or so ago, when I believe blue-collar workers were the more likely purchasers of critical illness insurance

Flexible Product Design

Built on a group chassis
Agents and brokers who sell our product value its flexibility. Generally, the group product carries with it certain advantages in terms of pricing, guarantee issue limits and portability.

Employers can help protect employees as they opt for higher traditional health insurance deductibles by providing critical illness insurance at a relatively low cost. If employees pick up the costs, it’s easy to handle payments through payroll deduction.

Critical illness and life insurance: two benefits in one
A particularly attractive feature specifically related to our design is the life insurance benefit associated with the critical illness benefit we offer. When someone has a condition covered by a typical policy, he or she receives a cash payment. But with our design, the critical illness benefit is part of a life insurance policy, so even if no covered illness occurs, our insured still has a death benefit—something that is unique in the marketplace.

Plug-and-play flexibility
What may be most popular, particularly on the group platform, is the plug-and-play flexibility of the benefit. For instance, if an employer has a cancer policy already in place, we can remove the cancer benefit from our critical illness design. The ability to add or remove features offers a tremendous degree of pricing flexibility. In short, agents and brokers have the ability to create a multitude of various plan designs to meet different price point objectives.

A simple concept that’s easy to explain
Employers and individuals are increasingly receptive to discussions about critical illness insurance. Most customers can relate to the need directly, because everyone knows someone who has had a condition. And the concept is quite simple to explain: either you encounter a critical illness or you don’t.

It’s also a natural fit with health care discussions. Agents and brokers that have been selling health insurance recognize the impact of legislative changes. They are looking for other sources of income; critical illness insurance is a logical benefit to help fill select health insurance gaps.

Partner with Dearborn National
Critical illness insurance benefits have the potential to be an important part of any agent’s or broker’s offerings. The product is easy to understand and sell. Consumers clearly recognize the need. The cost is relatively low. In addition, continued changes in traditional health insurance coverage will continue to provide new and exciting opportunities.

The Dearborn National brand companies are trustworthy, financially strong partners who are willing and able to share expertise and offer the platforms and tools to complete the sale. By making Dearborn National your partner, you can make critical illness insurance benefits an important part of the protection and service you offer.

Products and services marketed under the Dearborn National® brand and the star logo are underwritten and/or provided by Fort Dearborn Life Insurance Company® (Downers Grove, IL) in all states (excluding New York), the District of Columbia, the United States Virgin Islands, the British Virgin Islands, Guam and Puerto Rico. The critical illness benefit may not be available in all states.

Instant Insights /

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