Underwriters typically ask applicants if any immediate family members have ever had a heart attack, stroke, cancer or other major illness. Most companies require applicants to be younger than 60 when they apply. Policies usually remain in force for the client's lifetime, but policy benefits may be cut in half after age 65 or 70.

Critical illness insurance is a relatively new product, with the first policy issued in 1983, and it's just now gaining awareness in the United States. Payments can be used to pay both out-of-pocket medical costs and nonmedical costs associated with treatment, such as child care or transportation. A Towers Watson survey found that 35 percent of midsized and large companies offer this coverage, up from 12 percent in 2002.

This burgeoning market raises two questions for brokers: Why should they offer critical illness coverage, and what are the best ways to sell it?

Right product at the right time

Rowley offers several answers to the first question.

“Agent demand for the product is on the rise, and the insurable need is growing as other insurance products trim down or limit their product features to maintain affordability,” he says. “Although most apparent in the medical insurance arena, the same types of 'gaps' in coverage are becoming apparent in traditional products such as disability income, long-term care insurance and even life insurance.”

Mark Randall is a Minneapolis-based researcher and trainer for GoldenCare. Although his company focuses on long-term care insurance, he is a big proponent of critical illness coverage.

“Critical illness insurance grew by 72 percent last year,” he says. “That makes it by far the fastest-growing insurance product on the market. Even though the market share is still fairly small, it's a hot product. The bottom line is that every broker should add this product to their portfolio.”

People who survive a catastrophic illness can easily find themselves in one of the gaps that Rowley mentioned.

“Many of your clients will be forced to choose between life-saving care and affordability when facing such events,” Rowley says. “Even with high-quality medical plans, deductibles and co-pays rising rapidly, and the out-of-network coverage often [being] cost-prohibitive. Add a related disability to the situation, and the problem only worsens as the insured is now forced to make difficult care or treatment decisions on only 60 percent to 65 percent of their pre-disability income.”

A clear presentation of risks can make critical illness insurance an attractive option.

“It provides consumers with a far greater degree of choice and treatment options than they may otherwise have,” Rowley says. “And choice is what consumers are asking for today when it comes to their personal health care.”

The return on investment to brokers also is appealing. A typical critical illness policy carries a $2,200 premium, with a 70 percent first-year commission and 4 percent renewal commissions paid to the writing agent.

It may sound counterintuitive, but advances in medicine and implementation of the Patient Protection and Affordable Care Act increase the need for this type of insurance. More people now survive conditions that once would have been fatal, and many of them must pay higher deductibles.

“PPACA has had a big effect on the need for critical illness insurance,” Randall says. “High deductibles come into play big time during a critical illness. A smart broker will combine critical illness insurance with a deliberately higher-deductible plan and save a client money overall.”

Learning how to sell

Even the most experienced broker can use a few tips for selling a product with which they may not be familiar.

“Simplicity is everything,” Rowley says. “Some of the practical advice for improving sales is pretty simple but not practiced enough. Agents and enrollers are begging for training — not product training specifically, but ideas for how to demonstrate the need to the consumers. This product is sold, not bought, so agents really need to find the right message for each client.”

Randall has an extremely simple plan for closing the deal.

“Just offer it,” he says. “That's all you have to do. Most agents don't understand it, so they don't offer it. There are a ton of online resources to learn more about it.”

The fact that no one plans to have a heart attack or stroke is a key selling point. A lump-sum payout can make life much easier financially during recovery. In fact, many brokers recommend positioning coverage as “financial recovery insurance.”

Advances in medical technology increase the likelihood not only of surviving critical illnesses but also needing time off work to recover while bills pile up. For example, high medical expenses lead to one-half of home foreclosures.

A good next step is to ask potential clients how much money they would need to cover three months of living expenses. For most people, this will be somewhere between $25,000 and $150,000. The minimum benefit for a critical illness policy is $10,000; the maximum coverage can be $500,000.

Randall recommends bundling critical illness and long-term care insurance.

“As a long-term care company, we can get a lot of people accepted for critical illness who may not qualify for long-term insurance,” he says. “The two products really complement each other well. There is about an 80 percent crossover between the two.”

Round out the portfolio

Brokers who don't currently offer critical illness insurance may be missing the low-hanging fruit in their portfolio.

“The reason you have to sell this is because there is a big financial risk out there,” Randall says. “Many brokers don't understand that a 40-year-old person faces a 75 percent risk of a critical illness at some point in their lives. In fact, you have no choice but to offer it if you want to provide the best options to your clients.”

Rowley agrees.

“The time has never been better to add critical illness insurance to your product portfolio,” Rowley says. “After more than a quarter-century of taking root in other countries, critical illness insurance has finally taken hold in the United States, where insureds and insurers are beginning to understand its real value.”