Critical Illness As a Supplement to Disability
Only two things are needed to successfully sell any insurance product. The first is a belief in the product itself: A deep belief that you are doing a disservice to the community if you don't get the word out about the importance and necessity of the product to the consumer's financial and physical well being. But passion alone is insufficient to sell any product.
The second thing needed to sell a product is the "hook," or a personalization of the product. The hook anticipates and answers the questions "Why is it needed?" and "What's in it for me?"
Too often we proceed with sales of a product based on a canned pitch or set of stories that we expect will resonate with all consumers. We start with the product and hope to backfill the need. That works sometimes, but the key to the successful sale is to first probe for the need, determining the solution, and then tailor the solution to fulfill the customer’s unique need and "hook" them.
Over my next few blog entries, we will discuss various "hooks" that an insurance salesperson should have ready while probing the customer to properly position a secondary or supplemental sale of a Critical Illness policy.
Perhaps Critical Illness insurance is the most natural fit when it's a complementary sale to Disability Income insurance.
When probing a customer about his or her Disability Income needs there are three primary scenarios, with a multitude of subtleties that the insurance producer will find. These are that the customer is:
- Adequately insured for disability income
- Underinsured for disability income
- Uninsured for disability income
Once determined, it's time to problem solve and begin developing the hook.
Adequate DI Protection: Excellent. Good for them. The insured has done the right thing. But has he or she thought about what "adequate" DI protection means? In most cases, and for very good reasons, it means the insured will get 60% of pre-disability earnings should he or she become disabled. Or to put it another way, the insured will receive a 40% pay cut at the precise time he or she may need the money most.
This may be fine, or at least acceptable, with many disabilities such as back strains, orthopedic issues, or even mental and nervous situations. But what about those insureds who suffer from serious illnesses that may be associated with additional out-of-pocket costs, such as Cancer, Heart Attack and Stroke?
Most likely the consumer purchased this amount of DI with the goal of maintaining the current lifestyle, provide for the family, and perhaps continue to save a little something for retirement. What will happen to that plan if, in addition to a 40% pay cut, he or she incurs significant additional medical expenses as a result of a medical condition?
A Critical Illness policy could help the consumer protect disability payments as they were intended, by providing cash to help cover out-of-pocket expenses.
Underinsured: Probing may also reveal that the customer is significantly underinsured for DI. Once discovered, it is important to probe a bit deeper. Is the customer underinsured simply because income has grown? Is affordability an issue? Or is the customer underinsured because his or her occupation or medical condition limits the amount of disability coverage available?
Income Growth: The simple answer here is to determine how much more DI the customer needs and help find a suitable and reputable carrier to provide it. Once that is in place, defer to discussion on adequate coverage above.
Affordability: Disability coverage is quite expensive, especially for the lower occupational classes. It's quite possible that an insured may qualify for a certain amount but only afford a half or a third of it. This may especially be the case if the disability coverage has been rated. In either of these situations, a Critical Illness policy may serve as a less expensive way to increase protection by "topping off" the disability coverage.
Uninsured: Many individuals have no disability protection whatsoever. Several common reasons and action plans are outlined below:
- The consumer has not been approached to buy. In this case, solve for this issue, if possible, then refer to discussion above on adequate DI protection.
- The DI industry has concerns with insuring part-time workers, 1099 employees, new business owners, seasonal help, or individuals working out of their homes. If these people suffer a loss from a major medical condition and are unable to work, Critical Illness insurance could be a viable part of the solution.
- The individual has chosen not to work but to stay at home and raise the family. Where there is no "insurable income," there would be a huge financial impact should the individual not be able to take care of their family's needs, and Critical Illness would benefit them.
- In a few cases, the insured does not have DI coverage because he or she was medically uninsurable for it. In some of these situations, such as a history of cancer or major cardiovascular problems, the insured will unfortunately be uninsurable for CI, as well. But in others, such as chronic back problems, a past history of disability, or some mental & nervous conditions, the individual may qualify for Critical Illness insurance. Though not as robust as DI, having a Critical Illness may be an excellent option for those unable to secure a traditional DI policy.
Probing the consumer for his or her needs, resources and other forms of coverage will present the producer with facts needed to create the "hook," that will help the consumer understand the value of Critical Illness insurance, and the possible benefit of having this important coverage.
The scope of this article permitted the exploration of a handful of situations related to the consumer’s underlying Disability coverage (or lack thereof). By engaging the consumer in a dialogue, and probing deeper into his or her unique situation, we will find additional opportunities to make a personal connection, use the hook and ultimately sell the consumer on the benefits of having a Critical Illness policy.