Clients more willing to talk about health coverage

(May 4, 2005) Disability insurance sales are on the decline, in part because many advisors are not well prepared to talk about health with their clients. Insurance companies however say the latest rise in awareness of products like critical illness insurance are bringing health and disability matters back into advisor/client discussions.

“Now with critical illness insurance, more advisors are willing to talk about healthcare with clients,” says Nathalie Tremblay, health products manager with Desjardins Financial Security. “It’s easier to position that product for a lot of people.”

The push to provide complementary coverage to go with disability insurance that many clients get through group plans might be easy to dismiss, especially considering the costs, but a recent poll done for Desjardins by survey company SOM, suggests that clients could be more willing than ever to consider the possibility that they might find themselves in a position where they need income replacement.

More Canadians know that personal and household expenses and partial responsibility for some medical costs could wipe out their retirement funds. Survey respondents with knowledge of potential funding shortfalls increased to 77%, up from 72% last year.

“In our survey we found that there is a greater awareness in the population. People feel the need to save for future health problems,” says Tremblay. “People are ready to hear about this from their financial advisor.”

She suggests getting potential clients onside while they’re young. Roughly speaking, one in four clients are not eligible for critical illness insurance. One in five do not qualify for disability coverage.

Although clients are sometimes disqualified for circumstances that are beyond their control, family medical histories play a big role in determining a client’s eligibility for CI coverage, there is also a host of physical and mental problems that clients can develop later in life, such as back pain or joint problems that would make them ineligible for coverage.

“Meet your client before something happens. The sooner you can meet them the better. As soon as they finish their degree, just before entering the work market sometimes is the best time to make an offer to plan for their financial security,” says Tremblay. “They’re young, they haven’t experienced any health problems. I know they don’t have a lot of income at that point, but they can start little by little and do financial planning at the very beginning.”

If clients can afford coverage, other statistics suggest it might not be such a bad idea. Expenses like semi private rooms, some physiotherapy expenses, travel costs and accommodation when treatment that is not available where the client lives, even wigs for breast cancer survivors are not covered by government health plans. On top of that, the cost to enter a long term care facility in Canada, provided there is even a spot available, ranges from $300 to $5,970 a month.

“We found people are not informed enough about long term care. 50% or respondents thought it was free to go into a government facility. It’s not. People are not well informed on that fact. Advisors should be more aware that there’s a need for long term care.”

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com