From the agent's point of view, critical illness insurance can help open the door to new clients as well as to differentiate from other agents. Most important of all, it can significantly increase the agent's revenue.


Employer benefit objectives

As employers have increased deductibles and out-of-pocket exposure in an attempt to control medical insurance premiums, employees have become increasingly dissatisfied with their benefits. A group, employer-paid critical illness insurance program is an inexpensive way to manage employee perception of any benefit changes. To offset an increase in out-of-pocket exposure, the employer provides a $2,000-$3,000 critical illness insurance policy to each employee. This new offering should cost the employer between $2 and $4 per employee per month, depending on the carrier. From the employee's perspective this is seen as a much larger benefit than it really is, and provides a counter balance to the perceived loss of benefits. From the agent's perspective, this opens the door to the voluntary critical illness insurance buy-up.


CI as a voluntary benefit

For the agent who has used an employer-paid critical illness insurance product to manage employee perception, the voluntary critical illness sale is a natural. But even where the employer has not chosen to provide a critical illness benefit to employees the voluntary critical illness offering is a natural fit. By incorporating the voluntary critical illness insurance enrollment into the core enrollment the agent minimizes his time investment while maximizing revenue for the enrollment. A successful enrollment should see employee participation rates of 70% or more.

But the agent can also use critical illness insurance to open the door to new groups. There are two different approaches to using critical illness insurance as a door opener. In the first approach the agent can choose to actually prospect for the critical illness opportunity. While this is a more complicated prospecting approach than asking for an opportunity to quote on the medical, it can be a back-door into a new group.

The second approach is what I refer to as the "pivot." The "pivot" occurs when a prospect is not open to talking about the medical insurance. In this case the agent then "pivots" to critical illness insurance as a reason to meet. In next month's article I will delve more deeply into the marketing and sales systems for critical illness success.


Why critical illness?

Beyond simply managing employee perception of any benefit change, CI is an absolutely necessary insurance product for working Americans. Most readers should be aware of this statistic: 62% of all bankruptcies in the United States are directly related to a medical event. What most agents are not aware of is the historical statistics surrounding this number. In 1981, only 8% of all bankruptcies were directly related to a medical event. By 2001, that number had increased to 50%. If you are wondering why there has been such a surge in medically related bankruptcies, the answer should be readily obvious. According to the Kaiser Family Foundation, deductibles of $1,000 or more can be found in 50% of companies with fewer than 199 employees. That is up from 16% of companies in 2006. Deductibles of $2,000 or more are now found in 28% of all companies with fewer than 199 employees, up from only 6% of companies in 2006.

Combine those increased deductibles with an out-of-pocket exposure that has increased from $1,000 to $2,000 or more. For an employee affected by a critical illness this means an incurred medical liability of $3,000, $4,000 or even $5,000 in deductibles and coinsurance. That does not take into account loss of income, not just as the sick individual, but also as the caretaker of a loved one. And if the treatment rolls over into a second year, that employee may incur that amount again.

Unfortunately, most working Americans are living paycheck to paycheck. A $10,000 check from a critical illness policy can be a lifesaver.

Reach Schlesinger, RHU, REBC, at

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