Critical Illness Insurance Living Benefits Center
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Critical Illness Plans are Stand-Alones or Riders
CRITICAL ILLNESS PLANS ARE
STANDALONES OR RIDERS
Published in National Underwriter 9/9/96, by Lisa Schwager
This is about how many friends, relatives and clients you've known who have been stricken with a critical illness. Now think about how many of those same friends, relatives and clients who were financially devastated by that illness. The need for financial protection in case of critical illness is obvious, and now there is finally a product that meets this urgent need.
What is it?
How Does it work?
Where is it being sold successfully?
Critical illness insurance typically pays a lump sum living benefit upon diagnosis of a covered critical illness, regardless of the prognosis of the insured. Some covered conditions include heart attack, stroke, life threatening cancer, major transplant, kidney failure, multiple sclerosis, and Alzheimer's Disease. Better policies sold today cover seven to 14 covered conditions with a liberal benefit payout (100% of the face amount). This type of coverage is available as a stand-alone policy or packaged as a rider attached to a life policy.
Unlike terminal illness riders, this coverage typically pays upon diagnosis of a covered critical illness, regardless of how long the insured is expected to live. Rather than providing a monthly income, as with disability income policies, this coverage pays out a lump sum to be used by the client as needed. Traditional cancer policies are indemnity type contracts with more restrictive limits and payouts related to medical expenses only, whereas critical illness insurance typically pays out the face amount of the policy or rider in a lump sum upon diagnosis of cancer (or one of many other critical illness).
When selecting a specific policy to market, check to see if the payout is automatic upon diagnosis or if it is based upon being disabled or surviving for a specific period of time.
Critical illness insurance is a natural supplement to health insurance by providing additional funds to pay for medical costs not typically covered in health plans (deductibles, co-pays, certain rehabilitation costs, experimental treatments...).
One claimant received a $100,000 lump sum payment from her policy when diagnosed with breast cancer. She was thrilled with the payout, especially since she was struggling with her health insurance carrier regarding payment for a bone marrow transplant which they considered experimental. Without the transplant, her chances for full recovery were 40 percent. With the transplant, her chances increased to 70 percent.
The infusion of cash could be applied to cover additional costs for out-of-panel expenses with managed care plans, giving the insured the ability to choose alternative health care if desired. Critical illness insurance provides a great payroll deduction opportunity. With so many individual agents and agencies pursuing the more affluent market, many middle income Employees are never contacted by agents. Often their insurance portfolio consists of employer paid benefits (group term life).
Employees view critical illness insurance as a very comprehensive product with so many covered conditions. They like the idea of having an emergency fund should critical illness strike. Participation levels as high as 75 percent have been experienced using this type of product, higher than found with other voluntary products. For those who are marketing this type of policy, consider having a medical professional such as a physician or nurse review the policy and attest to the simplicity of the definitions for payout. This information will be helpful during a sales presentation and lend additional credibility to the product.
Critical illness insurance is an innovative coverage, one agents are not accustomed to selling. Nonetheless, more agents are beginning to take advantage of this untapped market and increase their income! This product creates a great reason to go back to clients, and it provides numerous new sales opportunities.