In recent years, insurance companies were quite optimistic about critical illness plans, since the industry showed almost 20 percent increases in new premiums annually. Yet, according to LIMRA's research, less than a quarter of private employers offer CI plans, and the workplace participation rates are in single digits. So, what is really growing CI premiums or the number of employees who purchase coverage? Are we actually witnessing a growth in consumer interest in CI products that will eventually create a long-term potential for CI sales?
LIMRA conducted a series of focus groups to examine what employees understand about CI when they decide whether or not to purchase the benefit. While the focus was on employees, the results of the conversations are also true about the general population. We found that most individuals have limited knowledge of what CI is and mistakenly believe that this is some sort of medical insurance — a resource they can utilize only to pay for their medical bills. This creates a "mistaken identity" for CI, and profoundly shapes consumers' attitudes towards CI insurance. The result of their decision is based off of CI misconceptions built into the decision process.
Here's an idea at what that process might look like:
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First, people look into their health /family history to see if their medical risks warrant CI coverage. As often happens, younger individuals believe that they are immune to serious illnesses, but older people also significantly underestimate their risks. Next, consumers determine if their current medical plan provides them with enough coverage already. Aside from the issue of how well people know their medical insurance (in most cases, consumers have minimal knowledge of their health plans), the reality is that many individuals mistakenly consider CI insurance to be a duplicate of their regular medical coverage, something of a luxury — an add-on that they can live without.
As one of the focus group participants stated: "Why would I need an additional thing if I already had that covered someplace else…"
Considering these misconception, brokers have an opportunity to garner interest for CI using these effective approaches:
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Explain how this benefit is different from other plans, such as medical insurance, long-term disability, or long-term care. Break down CI's "health insurance" myth.
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Transform the line item into something actionable; don't just mention the benefit availability. Explain how it helps people to meet their financial obligations while they recover from a serious illness, and that it's not simply for paying out-of-pocket medical expenses. Give examples of people in similar situations with and without CI insurance.
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Bring comparisons to the cost issue. Is it truly a luxury? And is it an expensive option compared to the benefits it provides? Re-focus potential CI buyers to think about their financial risks, not their health threats. Explain that 6 in 10 Americans have less than $1,000 in savings, while the average out-of-pocket medical expenses in the event of critical illness can easily amount to $10,000.
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Use the positive language and be a dynamic educator! Highlight the high-survival rate for catastrophic illnesses, but point out that people can insure themselves against the steep costs with a CI plan.
Brokers and carriers must look beyond premiums and recognize that true industry growth will come from the increased number of people taking coverage. Ultimately, the long-term potential for the CI industry centers around the efficiency of educational and communicational campaigns. If current marketing strategies fail to address CI misconceptions and allow the myth that CI is just another health benefit to continue, it is unlikely that we will continue to see the pace of increases in CI sales that we have witnessed in the past.
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