Group Critical Illness 101 What it is and How to sell it

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Group Critical Illness 101 What it is and How
to sell it
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History of Critical Illness Insurance

• Developed in South Africa in the early 80s to
  provide financial assistance to heart attack
  victims
• Introduced in the U.K. around 1985
• Cancer Policy has existed in the USA for many
  years
• Launched in Canada in the mid 90 s

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The Need

• Most people have not set aside money to cover
  unexpected expenses related to a serious
  illness
• There are on-going financial responsibilities
  while earning capacity decreases
• Direct needs
• Home care, home/auto modification, medical
  equipment, convalescence
• Indirect needs
• Child care, day-to-day cost of living, vacations,
  etc.

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IAPs Group Critical Illness Insurance Plan

• Covers 18 Illnesses
• ALS (Lou Gehrigs Disease) Heart attack
• Alzheimers disease Kidney failure
• Blindness Loss of speech
• Brain tumour Major burns
• Cancer Major organ transplant
• Coma Multiple Sclerosis
• Coronary artery bypass surgery Paralysis
• Deafness Parkinsons disease
• Dismemberment Stroke

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Comparing CI Plans
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How to compare products

• The first component a client/broker looks at is
  PRICE, however there are important differences in
  a product that can explain the price.
• The second area a client/broker considers is the
  number of covered conditions..more is not always
  better!
• The most important thing to look at when
  comparing CI products is the exclusions and
  definitions of covered conditions.

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Product Comparison - Price differences explained

• Waiting period
• 30 days is stated, however, if you look at
  small print for Heart Attack and Stroke it is
  actually 60 days
• Exclusions
• Covered conditions only if result of Illness (IAP
  plan covers loss of sight, dismemberment
  paralysis if a result of accident)

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Product Comparison Continued

• Restrictive Definitions
• Cancer must be invasive and likely to result in
  death within 24 months
• Stroke must results in permanent loss of vision,
  the inability to speak or severe paralysis. Must
  be so severe that the insured person is unable to
  perform two of the five Activities of Daily
  Living, without assistance.

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Exclusions

• Most plans have fairly standard exclusions, i.e
  suicide, war, participation in criminal act
• Look at the small print for hidden exclusion (
  I.e First Diagnosed requirement)
• The most common Pre-Ex is 24/24 (No payment will
  be made during the first 24 month of insurance
  for an illness that resulted from a pre-existing
  condition which occurred during the 24 month
  prior to the date of coverage (24/24)

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Taxation

• Lump sum benefit is not taxable for the
  participant
• Employer paid premiums are not taxable for
  employees at the federal level (CI is thus far
  considered as a private health plan and treated
  in the same way as accident and sickness
  insurance)
• Employer paid premiums are taxable for employees
  under Quebec taxation like other health premiums
• Employee paid premium for an optional plan is not
  taxable

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Voluntary CI

• Do not tend to market the Vol Product unless
  Basic is chosen
• A large group is needed as take up rate is very
  low
• Vol CI not unlike Individual CI requires face to
  face meeting to sell it. In most cases the broker
  is better off selling an individual product.
• Family history can lead to decline

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Making the sale

• Patience and Repetition- It may take mentioning
  CI several times before a client makes the
  decision to add this benefit to their existing
  benefits program.
• Most Employers have experienced the effects of
  an employee who is battling an illness. They can
  identify with the need/desire to know an employee
  has some financial support during an illness.
• CI adds to the value of an existing benefits
  program and is useful in attracting and retaining
  employees

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Handling Objections

• Too Expensive- Restructuring an existing benefits
  plan to reduce/eliminate or carve out coverage
  can free up funds
• Too Complicated- CI contracts can be
  overwhelming, learning to look for the main
  points will take a little practice sales
  support is available
• Too many declined claims- Selling a quality ( not
  the cheapest) product will ensure high percent
  of paid claims

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Who is selling it ?

• Brokers are the primary supporters of this
  product
• No consulting firms have placed CI with IAP, they
  are much slower to promote this product
• A good opportunity to use CI as a door opener
  to sell or take over all of a clients group
  benefits

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BBD CI Advantages

• BBD - Represents our largest block of CI based on
  number of cases
• 3-10 lives exclusive to BBD (3-4 lives 10,000
  5-9 lives 25,000)
• Administration/billing combined conveniently with
  other benefits (PAC)
• In house quoting ability

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Trends

• Employers are seeing the value of including CI as
  a standard part of a comprehensive EE benefits
  package
• Brokers/TPA are introducing CI to the Small
  Employer group market
• Larger organizations such as Unions are starting
  to add CI to their group plans
• Consultants are slow to introduce CI to their
  clients
• Increased number of covered conditions and
  product features (i.e Conversion, Dependant
  coverage, Waiver of premium, Oneworld medical
  Graded Plans)

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• Questions?