Be CI savvy, brush up on medical terms, advisors told

(January 24, 2003) Advisors interested in selling critical illness insurance need to familiarize themselves with medical research and statistics, experts say. Health and medical issues dominated the final day of the world’s first critical illness conference last weekend in Vancouver.

“If you want to do CI profitably you better get to know malignant melanoma really well,” said Hank George, a Wisconsin-based specialist on CI medical definitions, adding that those kinds of cancerous tumours are increasingly common and could be the reason for a major payout.

George also shared his thoughts about what illnesses should be included in a CI policy, and which shouldn’t, sparking controversy and debate among the delegates. “Does multiple sclerosis belong in a CI policy?” he asked. “I don’t see how MS is a hand-in-glove fit for CI. MS is not a hot button for most people. People fear heart attack and cancer. The bread and butter for CI is heart attacks and cancer.”

Another major illness covered in even the most basic CI policy is stroke. However, George explained that if a client was diagnosed with a minor stroke (defined as having the effects of a stroke for less than 24 hours), he may not qualify for the payout, unless the contract includes that particular type of stroke.

Imagine delivering that kind of news to your client, he said to the group, emphasizing that the advisor is accountable if the claim is denied and that a detailed and honest medical application is absolutely crucial to make a successful claim.

During the afternoon break-out sessions, more than 100 advisors learned how common medical impairments could affect the underwriting of their clients. Isabelle Dailly, a business development manager for RBC Insurance based in Calgary, helps brokers position cases properly to help them get past underwriting successfully.

“You must understand the impact underwriting has on pricing,” she told the group. “If we didn’t underwrite, we would all have higher premiums.”

Dailly says common medical conditions such as obesity, high cholesterol, high blood pressure and diabetes, which she referred to as “the deadly quartet,” have major impacts on whether or not a client is insurable. “There is a 30% decline rate for CI,” she said.

Besides all of the medical tests conducted to determine eligibility, often family history is the biggest reason an application is dumped, Dailly said. The following is one of the cases Dailly presented:

A 34-year-old, 5’7″, 188-pound female is applying for term insurance, CI and wants a waiver of premium and return of premium on CI. Her personal medical history is clear and so is that of her natural parents and siblings. She voluntarily underwent genetic testing and discovered her paternal aunts were diagnosed with breast cancer and that she has the same mutated gene (known as BRCA2).

Women with an altered BRCA2 gene are three to seven times more likely to develop breast cancer than women without alterations in that gene. Dailly explained the cancer discovery would not be caught in the simple family history question on an insurance application, confirming the importance of having a thorough application. The client was offered life insurance, but no waiver of premium and, much to the surprise of the advisors in the room, the client’s CI was declined.

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“I am absolutely impressed by the amount and quality of the information provided,” says Darlene Gunter, a Victoria, B.C.-based advisor who attended the conference. “My clients will definitely be affected by my attendance at this conference.”

Alphonso Franco, the organizing chair of the conference, follows international medical research very closely and can rapidly list off medical statistics. This knowledge has helped him sell more than 2,368 insurance policies over the past three years.

Franco says less than 1% of the working population in Canada has purchased CI. “There could be 1000% growth in the sale of CI and Canada would still be underinsured,” he said. CI came to Canada in 1997, and Franco hopes the conference helps CI find a permanent place on the product shelves of Canadian advisors.

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Is CI something you’re thinking about offering to your clients? What challenges do you face in selling CI? Do you think CI is an emerging product or a flash in the pan? Share your thoughts in the “Insurance” forum of the Talvest Town Hall on Advisor.ca.

Filed by Sheila Avari, Advisor’s Edge savari@rmpublishing.com

(01/24/03)

Sheila Avari