PLAG.2789.02.06 Critical Illness Insurance … NOW is the Time! Mary Grahovac, ACS Regional Vice...
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Transcript of PLAG.2789.02.06 Critical Illness Insurance … NOW is the Time! Mary Grahovac, ACS Regional Vice...
PLAG.2789.02.06
Critical Illness Insurance … NOW is the Time!
Mary Grahovac, ACSMary Grahovac, ACS
Regional Vice PresidentRegional Vice President
Protective Life Insurance CompanyProtective Life Insurance Company
R. J. (Bob) Ley, RHUR. J. (Bob) Ley, RHU
Vice President, A&H SalesVice President, A&H Sales
AIG American GeneralAIG American General
““Not because you are going to die, but because Not because you are going to die, but because you are going to survive!”you are going to survive!”
Dr. Marius BarnardDr. Marius Barnard
Surviving Critical Illness
We all know someone who has survived
Cancer…a Heart Attack…a Stroke.
But what was the financial impact on their family?
There is a solution to help prevent a critical illness from becoming a financial
catastrophe and destroying lives.
Historical Perspective
South Africa – 1983 Asia – Late 1980’s United Kingdom – 1987 Australia – 1990 Japan - 1993 Canada - 1995
Critical Illness was only accepted by 3% of the Critical Illness was only accepted by 3% of the producer market in England 10 years ago. Now producer market in England 10 years ago. Now it is promoted by 99% of the same market.it is promoted by 99% of the same market.
Peter DoddPegasus LifeLondon, England November 1999
Did You Know …
In the next four minutes …In the next four minutes … Nine Americans will have a heart attack. Five Americans will have a stroke. Ten people in the United States will be
diagnosed with cancer. Five American families will be forced to
declare bankruptcy because of a medically related financial hardship.
Sources: www.mercola.com-bankruptcy information
American Cancer Society (www.cancer.org) - cancer information
American Heart Association (www.americanheart.org) – heart attack and stroke information
Did You Know …
Every 45 seconds, someone will have a stroke. This number 3 killer is the leading cause of severe, long-term disability.
The leading cause of disease in women is cardiovascular disease, more than cancer, and only 13% of women consider cardiovascular disease their greatest risk. And, 40,000 more women than men have a stroke annually.
In 2000, 9.6 million Americans were alive having survived a history of cancer.
Sources: “Heart Disease and Stroke Statistics – 2005 Update” American Heart Association. Dallas, Texas. 2005. “Heart Disease and Stroke Statistics – 2004 Update” American Heart Association. Dallas, Texas. 2004.
Did You Know …
Approximately 1.7 million Americans suffer a heart attack each year. Of these individuals, 1.2 million will survive at least 3 years …75% are under the age of 47!1
The survival rate for cancer patients is 73% today.2
A person who has a heart attack at age 45 has a 57% chance of surviving for 5 years or longer.2
1 Source: National Center for Health Statistics/OptimumRe
2 Source: American Cancer Society and American Heart Association/OptimumRe
Sources: LIMRA’s Marketfacts Spring 2002 “Critical Illness Insurance: A Lump-Sum Review”
“Know the Facts, Get the Stats: American Heart Association 2002-2004”. (55-0576).2003
Are you prepared inthe event of a critical illness?
According to the U. S. Department of Housing and Urban Development, 50% of home foreclosures are the result of the homeowner suffering from a critical illness.
American Heart Association estimates Americans paid about $368 billion in 2004 for heart disease related medical costs and disability.
Research shows 33% of all families deplete all or most of their savings because of a serious illness.
The Cost of SurvivalExpenses usually covered by healthcare insurance:
Surgery Hospitalization Prescription
Medications Doctors Office Visits
Expenses not usually covered by healthcare plans:
Experimental Treatment Childcare, Housekeeping Transportation & Lodging
During Treatment for Family
Home or Auto Modifications
Home Healthcare Needs Lost Income
Product Designs
Stand Alone Critical Illness product built on a health
chassis Acceleration
A Critical Illness rider added to a life chassis product
Product Designs
First Generation Lump sum benefit paid upon first
occurrence and diagnosis of a covered critical illness; policy lapses following payment
Second Generation Lump sum benefit paid upon first
occurrence and diagnosis of a covered critical illness; policy remains in-force to pay subsequent benefits
Product Designs
Subsequent Benefits Additional benefit payment for a subsequent
first occurrence and diagnosis of an additional covered critical illness
Additional benefit payment for second occurrence of critical illness for which a benefit has already been paid
Product Strategies
Fully Underwritten Generally benefit amounts up to $500,000
Simplified Issue Generally worksite products with lower
benefit amounts usually up to $100,000 Guarantee Issue
Group Chassis – generally benefit amounts of $5,000 to $20,000
Critical Illnesses Covered by Various Carriers
Heart Attack Coronary By-Pass Angioplasty Invasive Cancer Cancer in Situ Stroke End Stage Renal Failure Major Organ Transplant Coma Aortic Surgery
Severe Burns Blindness Deafness Paralysis Advanced Alzheimer’s
Disease Loss of Independent
Living Multiple Sclerosis Motor Neuron Disease Benign Brain Tumor Heart Valve Surgery
Product Differentiators
Benefit Extension Riders Continuance Recurrence
Multiple Payment Benefit Benefits for Spouse/Children Return of Premium Upon Death Best Doctors
Underwriting Critical Illness Insurance
Remember … incidence occurs before mortality
Morbidity based underwriting versus mortality based underwriting For example, in assessing coronary risk,
there is a higher occurrence for the event of either a heart attack or coronary bypass surgery than the probability of dying from either one of these.
Source: OptimumRe
Underwriting Critical Illness Insurance
Family history typically has a greater impact on CI underwriting than life underwriting. Variables associated with family (natural parents and siblings) history include: The number of affected first degree relatives
(FDR) The FDR’s age at diagnosis – not death The current age of the applicant The sex of the applicant (in some cases)
Source: OptimumRe
Potential Impact of Family History on CII
18
23
28
33
38
43
48
53
58
63
18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63
Age of Applicant
Age o
f D
iagnosi
s of FD
R
Less Impact
Greater Impact
Underwriting Critical Illness Insurance
Build is an important factor in critical illness underwriting; obesity is a major contributor to cancer and heart disease
Generally, APSs will be ordered more frequently on CI applications
Typically the best candidates for standard CI underwriting would be the those individuals eligible to qualify for Select Preferred or Preferred life underwriting
Source: OptimumRe
Business Market Key Person Buy-Sell Worksite/PRD
Professionals/Highly Compensated maxed-out on personal DI protection
Singles, Single Parents Family Market – one or both spouses
employed
Selling Critical Illness … Who’s a Prospect?
Selling Critical Illness … Who’s a Prospect?
Alternative to DI to those who can’t qualify for traditional product Stay-at-home Moms/Dads Truckers, Barbers, Work out of home
“Assets under management” protection
Mortgage Market Only 3% of Mortgage foreclosures are due
to death1
Source: 1 Ken Smith, Assurity Life
President, National Association for Critical Illness Insurance
Consumer Focus Groups
Reinsurance Companies conducted consumer focus groups to get input on the concept of CI insurance protection
They found these participants to be among the most enthusiastic of any focus groups ever conducted on any insurance product
Source: Ken Smith, Assurity Life
President, National Association for Critical Illness Insurance
The Gap Between What ProducersOffer and What Clients Want
Long Term Care Insurance
Longevity Insurance Critical Illness Insurance
28%21%
8%5%
13%
2%
Currently obtain from advisor
Would like to discuss with advisor
Source: Fidelity Advisor 2006 Survey of Investors at Retirement
McKinsey & Company 2006 Consumer Retirement Survey
Effective and Compelling Marketing - Consumers
Focus on the need for CII - They don’t already have it It’s hard to self-fund Health insurance isn’t full coverage They are financially ill-prepared
Communicate what the product is and what the product is not
Issues and Concerns
Education/Awareness by both producers and consumers
Evolving Medical Technology Future of US Health Care
The Future?
Embedded benefits, Optional riders Product Evolutions
More triggers Unique payouts Conversion options
Packaging Mortgage, DI, LTC
More carriers entering the market with ongoing product development