Serving up critical illness coverage
Have you ever compared the role of an insurance sales consultant to the role of a waiter in a fine dining establishment? They’re more similar than you might imagine. In dining, there’s the appetizer, the main course and the dessert. In insurance, we have life, disability and critical illness.
In the menu lineup, critical illness (CI) coverage is very much like dessert. Sure, clients can go without, but should they? Disability insurance (DI) covers lost income, but what about the extra expenses of insurance co-pays, prescriptions, durable medical supplies, extra childcare, housecleaning and more? A CI policy provides a supplemental lump sum of cash to use for extra expenses.
For most people, dessert is an indulgence. But when the main course isn’t quite sufficient (because of DI limits and other variables), dessert is crucial. Below are a few effective ways to make your clients yearn for CI à la mode.
• Make it hard to refuse. There’s a reason fine dining establishments bring by the dessert tray. They know that if you see and smell their tasty treats, you’re more likely to say yes. Likewise, when you submit a DI case to be quoted, ask the distributor to quote CI, too. Then, after you sell the disability policy, show your client the CI dessert tray. Emphasize that he is already qualified, so all it takes is a signature. Paint a picture of the safety and security of this added layer of protection. Bring along a list of all the types of expenses that can be covered by a lump sum critical illness benefit. You’ll be amazed by the power of suggestive selling.
• Promote layers of protection. When it comes to cake, more layers mean more satisfaction. The same is true of DI, but with DI, the layers can be added vertically (to the same person) or horizontally (to the spouse). In fact, one of the most ideal CI prospects is the spouse of a high-wage earner. It doesn’t matter if that spouse does not have a job outside the home. Most high-wage earners (like surgeons, attorneys, business owners and financial consultants) say that a very supportive spouse is one of the most important forces behind their success.
Now imagine what happens when a supportive spouse becomes sick with cancer and requires bed rest and in-home care. Who takes care of the children? Who supervises the landscapers and housecleaners? Who drives the carpool? The high-wage earner is often expected to bridge the gap at home unless he has critical illness coverage. With critical illness, the family receives a lump sum that can be spent to hire a nanny or in-home care, so the breadwinner can continue earning money to support the family.
• Ensure those with big appetites are satisfied. For big eaters, a main course can be insufficient. The same can be said for those with big paychecks. If you’re working with someone who earns $300,000 or more, you’ll run into some difficult DI limit issues. In fact, some high-wage earners are limited to receiving 50% of their income, or even less, through traditional individual DI policies. As a high-wage earner’s financial consultant, you can help in two ways: you can offer a DI plan for an added layer of protection, and you can suggest dessert in the form of a CI policy. I recommend you do both to optimize your client’s protection.
• Provide sustenance to those who are going without the main course. Although we don’t usually recommend that clients eat dessert first, critical illness is a tasty alternative for clients who can’t qualify for disability insurance because of a high-risk occupation. Because the coverage is based on illness rather than injury, underwriters are less likely to discriminate against those involved in high-risk activities. But beware — CI underwriters aren’t as understanding when it comes to medical impairment. In my experience, critical illness underwriters are similar to disability insurance underwriters in their handling of preexisting conditions.
• Supplement lean health plans. With skyrocketing medical costs, many employer-sponsored plans are leaner than ever before, leaving the policyholder with more out-of-pocket responsibility. A critical illness policy can help offset the exorbitant costs of co-pays and deductibles for those who have been diagnosed with serious medical conditions. This is an especially attractive feature for those who are self-employed with high-deductible medical plans.
• Control expectations and don’t forget the to-go box! Regardless of whether you’re selling DI or CI, it’s important to control expectations during the initial consultation. If your client tells you about a preexisting condition, forewarn him that the underwriter may exclude the condition. Then remind him that he will still be covered for thousands of other diseases, so the policy is still valuable, even with an exclusion. With both DI and CI, portability (the to-go box) is key. When a client changes or loses his job, he can keep his coverage. There’s never been a better time to take action than now — before rates increase on the client’s next birthday and before he becomes sick or disabled.
Most quality waiters prefer to work at the hottest place in town. Likewise, I can tell you firsthand that critical illness is one of the hottest topics in the industry right now. If you’re not telling clients about CI, I can almost guarantee you’re leaving commission on the table and the door open for competitors. So again, I’ll leave you with one final piece of advice: don’t forget to offer dessert!
Daniel C. Steenerson, CLU, ChFC, RHU, is the president of Disability Insurance Services.