Brokers need to better position critical illness insurance and understand what clients really want, say experts. The product is often misunderstood and not marketed properly.
For example, the preconceived notion exists that clients want to be treated in the U.S. and many brokers pitch on this premise. However, a Best Doctors statistic reveals that very few Canadians want to be treated away from home.
The Best Doctors service is available with most Canadian critical illness insurance (CI) policies. It offers correct diagnosis, treatment options, finding the most experienced medical centres, and finding and contacting the “best doctors.”
“The number of people accessing services and then going to the U.S. is less than five per cent,” highlights Don Thomson, general manager at Best Doctors Canada. “There are a couple of reasons for that and it varies a little bit from market to market. We are able to help keep 90% of the people in their own market with their treating physicians or with one of our best doctors. So our primary goal is to go through the inter-consultation process and make sure that the person has a correct diagnosis and will be receiving the appropriate treatment. So we are always trying to work with Canadian doctors and keep clients in the Canadian healthcare system,” explains Mr. Thomson.
“Our goal is not to try and get people out to the U.S.,” he stresses. “When you are seeking medical treatment, continuity of care is very important. … We always try to work with the primary physician and that person is often the general practitioner and we always want to keep him in the loop.”
To change the misconception that clients want to go down south, Best Doctors is educating brokers. Mr. Thomson underlines that it is not the brokers’ fault that the service is sometimes not fully understood. Instead, he says that Best Doctors has to work on better marketing the service. Marketing consultants were hired to aid in the education of the Best Doctors product, says Mr. Thomson.
As well, he says that if clients are interested in heading to the U.S., brokers are not selling enough coverage. Typically, at least $300,000 of CI is needed, he explains.
Kim Stanley, co-founder of the Canadian Living Benefits Centre, agrees that very few Canadians opt to be treated down south, and the people that do go are generally more affluent.
She also agrees that brokers are not selling enough coverage. “I am not sure that a lot of agents that sit down with a small business owner question, ‘how big should the cheque be when you get sick to pay off your debt?’”
Ms. Stanley says that the average size policy of $75,000 is not enough. “The business owner may have a line-of-credit, outstanding loans, inventory that needs to be paid, plus a mortgage and that is how much the broker should be looking at,” she explains. “I know one major carrier that out of 4,000 policies last year, only had five that were over one million…. So that is where we are not doing our job. I don’t think brokers understand how CI proceeds can be used to really relieve financial stress.”
Ms. Stanley adds that insurance companies are also doing a poor job on the marketing of CI. “Insurers get competitive and they start saying, ‘my definition is better than yours.’ Agents get so confused!”
She says insurance companies “spend so much time on 22 conditions versus 24 rather than saying, ‘this is how you sell it, and this is how you position it.’ Most companies don’t do that well at all. And I’m not sure that most managing general agencies (MGAs) are dedicated to the living benefits portfolio side either.”
An MGA committed to CI is WCS Financial Services. Its president, Mari-Jayne Woodyatt, also finds flaws with the positioning of CI. “Agents are spending the client’s money for them in the sense that they are not presenting the product to the client because the agent has decided it is too expensive because the client may already have disability and life insurance.”
She emphasizes that there are variations to the product and that the broker does not have to sell the Cadillac of CI insurance. Ms. Woodyatt feels that the face amounts brokers are suggesting are too aggressive and $50,000 of coverage is better than nothing.
As for the U.S. factor, Ms. Woodyatt can understand why most clients would not want to go down south. As a cancer survivor, Ms. Woodyatt says that during her treatments the last place she wanted to be was away from home. She adds that her MGA used to promote the product by using the “down south” angle but she now understands it is not something most clients would want.
Highlighting the indirect costs associated with CI is a better selling angle, says David Benamron, director of living benefits for the MGA Copoloff Insurance Agencies. In 2001, the Canadian Cancer Association published that 67% of all cancer costs were indirect, which Mr. Benamron explains can be in the form of babysitting costs to mortgages.
“Don’t position it on the big operations the person will need or else you’ll shoot yourself in the foot…. Avoid scare tactics,” he says.
Instead, he says, “explain to the client that CI is the only product that will guarantee them a cheque. You’ll get your money; it is not like car insurance.”
He adds that ideally a client might need more CI coverage than life insurance. “In today’s environment where both parents are working, it is not if you die that someone is in trouble, it’s if you get ill.”