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Critical Illness Insurance

As medical bankruptcies skyrocket, CI insurance may be the best option for your prospects and clients.

By Ralph Weber, CFP, REBC

“Destroyed by Doctor Bills,” blared one headline, in People magazine. “Sick and Broke,” cried another, in The Washington Post. Over the past year, the issue of ordinary Americans forced into bankruptcy by medical bills has exploded in the media—and for good reason. Last year, a Harvard study found that half of all personal bankruptcies in America were triggered by a critical illness like cancer or stroke, as opposed to only 7 percent by a death in the family. Because of medical advances, nearly 75 percent of people who face a critical illness don’t lose their lives—just their life savings, or what savings they once had. For advisors, this reality raises an important point: Many of us spend a lot of time protecting our clients from the financial fall-out of a death in the family, but very little time protecting them from an even greater risk—the hefty price tag of survival. That’s where critical illness insurance comes in.

How CI insurance can help
CI insurance can provide up to $500,000 of tax-free cash when it’s needed most—upon the diagnosis of an illness. No other product does that—not disability income (DI), not long-term care, not life and not health insurance. The Harvard study, for example, found that three-quarters of those Americans who had filed for medical bankruptcy actually had health insurance when illness struck. This news hardly bodes well for many Americans. About half of them will develop a critical illness during their lifetime, and some three-quarters will survive it. In the midst of these statistics, set yourself apart from the competition by offering CI insurance—one of the fastest-growing products today.

Selling CI insurance
Here’s how to get started selling it:
• Work with a general agent or a product specialist in your company who has first-hand experience with CI insurance. By first-hand, I mean someone who has personally sold CI insurance and owns a policy, too. Also, make sure he is willing to work with you one-on-one, rather than just sending you carrier-designed marketing materials. A high-level contract is no substitute for hands-on training. And remember, don’t just get product training—get sales training as well. The latter would include a discussion of who would be an ideal candidate for the product.

• Have contracts with several CI insurance carriers because one carrier may not fit all needs or markets. Make sure your general agent or agency can help you decide which carrier or product to use for which clients or markets. Also, make sure you are getting a full, stand-alone CI product, not an accelerated life insurance policy or a CI rider.

• Fully understand the need for this product within your market. CI insurance can work well for people who don’t qualify for DI insurance. Examples include stay-at-home spouses, pilots, actors and the self-employed (e.g., accountants, business owners and attorneys who often maximize available deductions to reduce their taxable income). As for those individuals who do buy DI insurance, many can’t financially survive the frequent two- to three-month waiting period, only to live on 60 percent of their former income after that. In such cases, I often sell a CI policy as a supplement to DI insurance. Lastly, CI insurance is ideal for businesses that need keyperson or buy/sell coverage, like a doctor’s private practice.

• Clearly articulate how CI insurance can benefit your prospect. If you’re talking to someone like a stay-at-home spouse—a mother in her early 40s, for example—you can get her thinking about CI insurance’s benefits by saying, “Think of someone you know who’s been affected by something like a heart attack or cancer—what financial challenges did she later face?” I usually follow-up with, “Do you think it’s possible that an illness like that could happen to a woman in her late 30s?” Notice how I depersonalized the last part of the question by saying “a woman in her late 30s” instead of “you.”

• Learn the idiosyncrasies required in underwriting. Before you sit down with a prospect, you should know which carriers require what. For example, one carrier may not accept someone who has a family history of cancer, heart attack or stroke before the age of 65. For another carrier, the age may be 60. If you don’t familiarize yourself with this information beforehand, you’ll do your prospect a great disservice; you may lead him to apply based on the least expensive quote, only to find that the carrier rejects him because he does not meet its medical requirements. And rejection will thwart a future chance of coverage by another carrier. On every application, the candidate is asked if he has ever been declined CI insurance.

• Finally, make the most important sale first—to yourself. Unless you do not qualify medically, you need to believe in the product enough to buy it yourself. Otherwise, you will never be a blockbuster marketer of this product. In my case, I always tell prospects, “I believe in this product so much that I bought three policies on myself.”

Ralph Weber, CFP, REBC, founder of Route Three Life Health Disability in Paso Robles, Calif., trains producers nationwide on selling CI insurance. He can be reached at 877-474-7074 or at


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