An appeal from sales managers: too much money is being left on the table. Cross sell. Build with life insurance and investments and then follow through with living benefits. One sale can lead to another.The prospects you meet all agree with you – they must at all costs avoid leaving their families in need if the worst happens. When it comes to life insurance, they get it and don’t dither for long. But what if the client leaves their family in need while still alive, but seriously ill or disabled?
“It is up to the advisor to make them understand,” underlines Claudine Cloutier, director of living benefits at Group Cloutier. In an interview with The Insurance and Investment Journal, she says she notices it in her own practice. Many advisors are more comfortable with life insurance, they like to talk about investments, but they do not willingly deal with the question of living benefits. This hesitation even allows some advisors to fill this void by presenting themselves as living benefits specialists.
It is regrettable that many advisors are not selling these products themselves. Thanks to their versatility, living benefits products can open the door to multiple sales opportunities.This includes critical illness, long term care and disability insurance. Each one can open the door to another sale, or build on what already exists in your client portfolio: a program of individual life insurance, financial planning for retirement, or a group plan that does not offer enough coverage.
Advisors should also take advantage of the trend that favours critical illness and disability insurance sales. “Living benefits products have become essential. They are easier to sell than people think and help provide a more complete solution to the customer,” says Ms. Cloutier.
Some advisors are put off by living benefits products. They see them as more expensive products that are harder to get underwritten than life insurance. Ms. Cloutier wants to debunk these myths. “Many products are simple and affordable, especially for younger people. For limited budgets, go with the basic.” Among other things, Ms. Cloutier suggests that young families purchase 20 year term coverage for critical illness.” For a few more dollars more a month, she suggests having this long coverage period is a better deal than a 10-year term product.
Quick issue products are a good example of a basic product, according to Ms. Cloutier. She points to LS Mutual’s ProHealth - Cancer Insurance product as an example. The outcome of this policy is determined by two questions of insurability. “You answer no to both, you get the policy,” she says. Under this product, a male non-smoker aged 25 years can obtain $20,000 of coverage for $11 a month. A woman with the same criteria will get this protection for $13 a month.
What if a client who is well established in his career but juggling a mortgage says he would like long-term protection and wants a refund of premiums? Better to go with coverage to age 75 than a permanent policy, which is often expensive.
Ms. Cloutier also sees many opportunities to cross sell with group insurance. For example, individual disability and critical illness insurance products allow certain categories of employees, often high-income earners, to go beyond the limits established in their group plan, she explains.
A managing general agent in Markham, Ontario, LSM Insurance generates much of its business through living benefits and group insurance. Sales manager Syed Masood Raza, believes that most customers need several kinds of coverage, not only life insurance.
Build from the foundation
Mr. Raza believes in cross-selling in both directions. “Our advisors typically use life as the foundation of a financial plan and then build from there. Living benefits insurance including disability and critical illness insurance is usually the next tier of coverage we look at,” he says. “Having said that, many clients have a single living benefits need and we will offer them coverage based on that need. From there, we will continue to stay in touch to see if there are more cross selling opportunities on the investment or insurance side.”
He suggests that advisors who are less keen on selling living benefits work in tandem with a specialist. But don’t take on too much, he warns. “If you discuss too many products in one meeting, its often too much for the client to comprehend,” says Mr. Raza.
However, one product can cover several needs without having to pull out a whole array of accessories. LSM Insurance has had a great deal of success with RBC Insurance’s Critical Illness Recovery Plan Policy. “It’s competitive and offers a long-term care conversion option which can be useful for clients,” comments Mr. Raza. This option allows the insured to convert all or part of his critical illness insurance into long term care coverage between the ages of 55 and 65.
He notes that this product can also tie into a group insurance plan. “For the group market, they offer a guaranteed standard issue plan for ten or more lives, where they’ll issue the plan with no medical requirements at up to a 30% percent discount on the premium. The discount increases as you add more lives to the plan,” says Mr. Raza.
Nancy Elkas, director of living benefits at Force Financière Excel, also focuses on the differences in prices between disability insurance products in her cross-selling strategy. She was not predisposed to the concept before, given her past experiences. Formerly with Great-West Life and Manulife Financial, she was devoted to guarantees and high-end, non-cancellable products. But they were so expensive that it was difficult to sell additional products.
She said that there is still a place for non-cancellable products when dealing with young professionals in working classes 4A and 3A (i.e., doctors, managers). In her current practice, however, Ms. Elkas leaves ample room for guaranteed renewable products. Their premiums are not guaranteed but they still do the job in the blue collar market. They can also cover white collar workers. “On average, there is a 30% difference in premiums between non-cancellable and guaranteed renewable products,” says Ms. Elkas.
The insurers she uses in this segment are usually Blue Cross, Excellence, LS Mutual and Penncorp. What’s more, selling this kind of product frees up money that can be put toward another type of coverage: critical illness. It is an approach that she uses regularly. “We need to cross sell more. The guaranteed renewable product’s lower price allows us to add something else, and then the client is really well served,” comments Ms. Elkas.
Widen the definition
The money saved with a product with non-guaranteed premiums can also be used to improve disability coverage. She suggests it is possible to widen the definition of disability, to the point of bringing it closer to what is done in non-cancellable. “The definition is the issue in disability insurance. The non-cancellable is well known among professionals because it offers own occupation coverage, for example allowing a surgeon to teach at a university even if he cannot practice,” says Ms. Elkas.
The guaranteed renewable products, on the other hand, provide regular occupation coverage, which provide that after a certain time (typically 24 months), the insured will be deemed able to work at any job for which he has training or relevant experience.
“Saving premiums makes it possible to subsidize the product. For my part, I always offer an extended period of regular occupation coverage. It’s not that expensive and it enhances advisors’ credibility. When an insurance company has the right to return and reevaluate the insured after only 24 months, that’s not very good.”
As for the possibility that premiums may increase, Ms. Elkas says that this situation rarely occurs. To her knowledge, there have been no increases for at least five years in Canada. When they do occur, these increases only affect certain groups of insured, and they only apply to new policies.