Editor's Note: Ralph Weber spoke on the subject of positioning Critical Illness Insurance at the MDRT Annual Meeting in Indianapolis in June. With permission from MDRT, this feature is based on that presentation.
Critical Illness insurance (CI) is the fastest growing personal insurance product in the world, yet few U.S. advisors understand it well enough to present it to their clients. In Britain, there have been cases already where a producer has been sued by a client for not presenting it. It's only a matter of time before that happens here.
CI is the best way to build a fence around your client base, and differentiate yourself from your competition. It's the kind of product that unlike many others, almost everyone needs. Still, very few producers are talking about CI. Many general agents do not understand the product, and even fewer producers do. Yet, if done properly, the basic CI presentation can flow as naturally as regular conversation.
A hundred years ago -- or even 50 years ago -- if a person had a heart attack, was diagnosed with cancer or had a stroke, it was a essentially a death sentence. In those days, all he needed was a good life insurance policy to take care of his family.
Medical advances in the last 50 years have increased our life expectancy, and it is now much more likely that a person can recover from a critical illness. But there is still the matter of a recovery period, which can be lengthy (and expensive).
CI is a "good news" product because it is about survival and recovery, and about having the money so the policyholder's lifestyle is not affected adversely during this period.
While some producers like to make the CI sale a bad news story by scaring the prospect with statistics, I don't find people can buy into a solution on the tail of a bad news story. I turn it into a good news story, illustrating how a policy will have a dramatically positive impact on the recovery from a critical illness.
Here are the basic introductory questions I ask all of my prospects:
Question #1: "Can you name three people you know that have had cancer, a heart attack or stroke?"
Practically everyone can name three people who have been stricken, and I ask for names so that he or she can bring this close to home and make it personal.
Question #2: "How did it affect them financially?"
I ask the prospect to think of the financial impact it had on these people (which is often severe) to help him or her start thinking of possible financial solutions to the problems.
Question #3: "Do you think it is POSSIBLE for a _______-year-old ________ to have a heart attack, cancer or stroke?" (fill in the blanks with the approximate age, and the occupation of your prospect)
The prospect's answer here will almost certainly be "yes" or "sure." You might follow up by asking, "Do you think you would be likely to survive the incident?" Chances are he or she would. The fact is that today over 70% of people survive a critical illness.
Question #4: "If you had been stricken by a heart attack, cancer or stroke last night, what are the first three things you would be worrying about this morning?"
A typical prospect response is that he or she would want to be sure his or her family is taken care of; that the business would be taken care of; and that he or she would have ample time to recover with excellent medical care.
Question #5: "How much money would you need to do that?"
The prospect might respond that he or she has no idea what that would cost. You can help your prospect discover just how costly it could be by asking about mortgage and other loan payments and obligations -- both business and personal.
Managing expectations
By this time, I have determined what is important to the client, and done a "needs assessment." I have also made it personal. Now I have to manage expectations in terms of premium, and I usually do that by finding something of similar cost. When I am talking to a business owner, I usually ask if he or she accepts Visa, since I know CI is usually less than 2% of the face amount. The conversation goes like this:
Question #6: "Do you accept Visa or MasterCard in your business?"
Prospect: Yes.
Question #7: "And how much does it cost you to take in $100?"
Prospect: About 2%, or $2.
Question #8: "Do you feel it is a good business decision to pay $2 to protect $100 of income?"
Prospect: Yes.
Connecting the cost
While the Visa question is a favorite of mine because most business owners accept it, you occasionally have prospects who are not business owners or do not accept credit cards. In this case, I ask them if they lost 2% or 3% of their earnings, would that have a PROFOUND effect on their standard of living? It never does. Then I ask if a reduction of 100% would have an effect.
Now it's time to connect the cost of accepting Visa to the cost of CI. My pitch goes something like this:
"If I could find you a plan that you could qualify for which paid $60,000 to replace one year of after-tax income, so you could stay home to recover; $40,000 to replace a year of your spouse's income, so he or she could be with you while you recover; $25,000 to pay your mortgage for a year; and $80,000 so you could hire a manager to run your business while you recover; and the policy cost less than 2% of the amount required, would this be the kind of policy which would give you peace of mind?"
I tend to get a lot of affirmative answers at this point.
CI selling tip sheet
Show your own policy
I always show my policies to the prospect. The most successful producers are those who make the first sale to themselves. I've never met a great producer who didn't own one on himself, unless he's already uninsurable.
Make it easy for the prospect to say "yes"
You can de-personalize the process by asking the prospect generic third-party questions about someone who is approximately the age of the prospect -- a 50-year-old, for example. If I ask if it's possible for a 50-year-old to have a heart attack, it's impossible to say no, while if I had asked personally, the prospect might have been able to say no. Always make it easy for the prospect to say yes, and always make it a good news story.
It's not an interrogation
I ask questions about the prospect feels about his or her financial issues, and try not to make it sound like an interrogation. Unlike many other financial products which are based on a percentage of something, CI, like life insurance, is designed to meet specific lump sum goals. I never tell my prospects how much CI coverage they need. By asking good questions, I let them tell me how much they want.
Why not apply?
Suggesting that the prospect "apply and see if you qualify" can also help as opposed to "buying" the policy on the spot. For one, it manages expectations, and second, it makes the prospect want to be approved.
A tale of two shoe salesmen
In 1955, the Bata Shoe Company sent two shoe salesmen to Ceylon. One landed at the north part of the island. After a day there, he sent a Telex to the office: "No one wears shoes here, send for my return."
Meanwhile the other shoe salesman landed at the south part of the island. After a day, he too sent a Telex back to home office: "Send more shoes! No one has any -- everyone is a prospect!"
CI: At a glance
The first critical illness insurance policy was created in 1983 by Dr. Marius Barnard, who assisted in the world's first human-to-human heart transplant in 1967. He has since introduced the product successfully in countries around the world, and while it has already become very popular in the U.K. and Canada, it is just starting to gain traction in the U.S.
Recovering from an illness like a heart attack, stroke or cancer often presents a significant financial burden for the afflicted person and their family. Money from critical illness insurance, given as a lump sum amount upon the diagnosis of a serious illness such as a heart attack, can be used at the policyholder's discretion. It is often used to pay for both out-of-pocket medical expenses (medical deductibles and co-payments, out-of-network costs, experimental treatments) and hidden indirect costs such as child care expenses, loss of a family member's income from time off, and travel to treatment centers.
CI: By the numbers
More than half (55%) of consumers are very or extremely concerned about being able to make key payments such as mortgage, car insurance and child care if they were to become disabled or hospitalized.
61% of those who have experienced, or had a spouse experience, a critical illness encountered unanticipated expenses.
One in five Americans would fund uncovered medical expenses with a credit card if they faced a serious illness such as a heart attack.
Employees are interested in having critical illness insurance. Nearly 45% of consumers said that they would likely enroll in such coverage if it were offered at their workplace.
Source: Guardian's Benefits & Behavior: Spotlight on Group Critical Illness Study
On average, every 40 seconds someone in the U.S. suffers a stroke. 1.2 million Americans suffered a first or recurrent coronary attack in 2007.
From 1995-2005, the stroke death rate fell 29.7%, and the actual number of stroke deaths declined 13.5%.
The median survival time (in years) following a first stroke is:
ages 60-69: 6.8 for men and 7.4 for women.
ages 70-79: 5.4 for men and 6.4 for women.
age 80 and older: 1.8 for men and 3.1 for women.
Source: American Heart Association
Ralph W. Weber, CLU, REBC, is founder and president of Route Three Benefits, a Paso Robles, Calif., company that actively markets health care, insurance and financial products in the U.S. and Canada. In 2005, Weber moved his head office from Canada to California to build an agency specializing in Critical Illness Insurance. He is a three-year MDRT member with two Court of the Table honors.
