If you’re looking to boost your bottom line (and who isn’t?) you should consider tapping into the growing demand for critical illness (CI) and disability insurance (DI), says Stephen Frank, vice president of the Canadian Life and Health Insurance Association Inc. (CLHIA).
Since 2004, Frank says, there has been a steady growth in the demand for CI products. While sales of these types of living benefits products are still coming from a relatively small base of advisors, Frank says, “there is great potential for growth.”
The Economics of Loyalty, the report from a recent study by Advisor Impact Inc. and the Investment Industry Association of Canada, confirms that claim. The study says that CI and DI products represent one of the top “organic growth opportunities” for an advisor’s business.
Frank offers some tips to help you get started in incorporating CI and DI into your practice:
> Survey your clients
While there is a positive trend toward CI and DI sales overall, there is no guarantee that these types of products are compatible with your book of business.
To find out if CI and DI are right for your clients, it’s important to understand the nature of these products and the demographic make-up of you book.
Typically, these products work best for younger clients — those between 30 and 40. That’s the “sweet spot,” Frank says, because it is easier for a younger client to qualify for CI and DI, and premiums for these clients will be significantly lower than for those over 50.
> Explain the products to your clients
If you are going to offer CI and DI to your clients, Frank says, you must first dispel some common misconceptions about the Canadian healthcare system.
“Canadians think that we have a universal system, so everything is covered,” Frank says. “That is just simply not the case.”
For example, explain to your clients that although provincial health plans cover medical care, they do not cover the financial burdens that accompany serious illnesses and injuries.
Explain to your client that if he or she is diagnosed with one of the ailments covered by a CI policy, that client would be eligible for a financial benefit.
Frank recommends laying out a hypothetical scenario: for example, ask whether your client would be able to cope with the financial costs of suffering from cancer or a stroke.
“While [your client] is in hospital, their costs would be covered [by the provincial plan],” Frank says. “Once discharged, the expenses can be steep. Compound that with the fact that the client might not be able to get back to work right away and there can be a financial problem.”
> Get training
Before presenting these insurance products to your clients, get some in-depth training to familiarize yourself with the intricacies of how they work.
You might look to your dealer, one of the product manufacturers or an industry association for training.
Next week: Growing with long-term care.