An insurance agent must always clearly identify his or her client's particular needs and seek to provide a product that fills such needs. A close look at the number of Critical Illness policies sold in the United States suggests that this has not been the case. Although sales of the product are steadily increasing, the number of policies sold in the United States lags far behind the number sold in other economically developed countries. Perhaps we as agents have failed to truly understand what an innovative and revolutionary product we have been given, or maybe the industry as a whole has failed to enlighten the public of the new tremendous benefits available through Critical Illness Insurance policies. The purpose of this article is to try to rectify the first of these problems by explaining how the product addresses and remedies some of the most important concerns of your clients. I also offer some fundamental business and sales strategies that you may use when introducing your clients to the Critical Illness insurance programs. It is my hope that once insurance agents recognize the importance of the Critical Illness insurance policy to their clients' insurance portfolios, the insurance industry will, in turn, respond with a national campaign of its own.

CRITICAL ILLNESS BASICS

The holder of a Critical Illness insurance policy is paid a limp sum benefit upon the diagnosis of certain named conditions discussed further below. The insured need not be disabled to claim. Unlike a standard disability policy, the insured is not limited to a fixed percentage of his or her income, nor must the insured wait 120 days or more for payment.

All Critical Illness insurance policies cover Heart Attack, Stroke, and invasive Cancer and payout 100% lump sum upon diagnosis of these conditions. Other medical conditions covered vary from product to product. Approximately 20 insurers offer Critical Illness policies in one form or another. The risks that each cover (aside from the three set forth above) seem to depend, at least in part, upon the insurers' risk model and the insurance company's philosophy. Simply put, some insurers favor a separate Critical Illness policy on a health model, using as their underwriting base morbidity rates. These are generally higher than those insurers that are linking the benefit to a term chassis, which uses mortality rates. Typically, in addition to the three conditions referred to above, other covered conditions can include a 100% pay out for renal failure, blindness, paralysis, major organ transplant, Alzheimer's Disease, HIV (if contracted by on the job medical staff), and terminal illness. Some insurers also include partial benefits/payouts in their policies. For example, certain policies on the market offer a 25% pay out for coronary bypass and a 10% pay out for angioplasty regardless of the risk model the insurer uses, upon positive diagnosis of a covered condition, the benefit is payable and the insured decides how, where and when to use the money.

CRITICAL ILLNESS MEANS HARDSHIP

Each year in the United States 1 million of the 1.5 million people who suffer a heart attack survive for at least 12 months, and three quarter of all male first time heart attack victims aged 35 to 54 survive at least five years; more than half of the 1.2 million Americans diagnosed with cancer will survive for at least five years; and 70% of the 500,000 stroke victims will survive for at least one year and 50% will survive for at least five years.

The above statistics are great news and reflect the advancements of modern medicine. Sadly, however, surviving a Critical Illness is only the first obstacle that a person and his or her family may face. Survivors of Critical Illness must also deal with financial hardships that result from their survival. Each year, fewer than 2% of all mortgage foreclosures are cased by the death of the homeowner, yet nearly 50% of all foreclosures are the result of the homeowner suffering a Critical Illness. The American Cancer Society informs us that two-thirds of all Cancer related expenses are for indirect, non-medical costs such as travel, childcare and lodging. A recent report released by the American Heart Association suggests that the indirect costs to victims of Critical Illness and to their families are estimated at $47.6 billion for heart disease and $15.8 billion for stroke. Simply put, the Critical Illness insurance policy enable Critical Illness sufferers and survivors to avoid this financial crisis and concentrate on recovery.

THE CRITICAL ILLNESS MARKET

Possibly the most important feature of the Critical Illness Policy is that it enables the survivors of a Critical Illness and their families to survive financially. We as agents are well trained in making our clients (current and future) aware of the expenses that will be incurred following unforeseen illnesses. We must, however, become better informed and more able to advise our clients about the financial burdens that they and their families may face after surviving a Critical Illness.

The amount of Critical Illness that should be purchased depends, of course, on the needs of a particular client, but I generally suggest enough to cover a policyholder's expenses for at least 12 months. When determining possible expenses that a victim of a Critical Illness may face, you should include not only existing expenses (e.g., lost wages, mortgage, unrelated insurance premiums, car payments, child care and educational expenses, etc.), but also the costs that may be associated with the illness but nay not be covered by medical insurance (e.g., deductibles and co-payments of medical insurance plans, home health care, travel and lodging, alterations to home or vehicle related to illness, experimental treatment, etc.). These contingency costs should always be accounted for when determining policy amounts. As you read through the costs that are incurred upon being diagnosed with a Critical Illness, I hope that you realize as I have, that the Critical Illness policy is equally beneficial for single people with no dependents as for married people. Perhaps for the first time, we as agents have a product that makes financial sense to them.

THE US MARKET

At CIIS, our Critical Illness operations are divided between individual and group sales. While agents have gotten good results in both arenas, a major thrust has been in worksite and, in particular, the voluntary employee market.

Working closely with specific enrollment firms we have been able to devise a successful method of distribution for the product and have tended toward blue-collar groups that are traditionally ignored by insurance agents. In that market, an average sale is a policy of approximately $50,000 for a monthly premium of about $35. For the individual market, an average policy is $150,000 and an average client about 38 years old. Interestingly, after closing an individual sale, an agent - is often able to sell an additional policy - to the insured's spouse roughly 50% of the time. We have written about $2.5 million in premiums for the current year (through August), an 800% increase over the entire prior year. I believe that this growth reflects the need for the product among clients and the opportunity for agents offering this type of product.

Be prepared to have claims. We have received about 11 in the last year. People are understandably cautious about new insurance products and the possibility (or, in their eyes impossibility) of payout. However, I can tell them that claims have been made and the real needs of my clients have been met. Interestingly enough, in the United Kingdom, where Critical Illness policies are well established, the average claimant is 43 years old.

CRITICAL ILLNESS FUTURE

If the experience in the rest of the world is any indication ,we can expect an explosion of business as clients learn of the policy and the very real needs that it meets. So how can you get a leg up on this opportunity? We have given seminars and the like around the country to agents, insurance companies and prospective clients. We follow up with our supporting agents and brokers and a successful patter is emerging. It's one of systematically introducing and explaining the tremendous benefits of the product, first to your existing clientele, then to their professional advisors. Then to their employers and/or employees. It is no less disciplined of an approach than the one you probably use in your day-to-day activities.

The fact that Critical Illness insurance is new is to your advantage. Even though the need that the product addresses is very real, it remains almost entirely unmet. We at CIIS view Critical Illness sales as exciting as universal life was in the late 1970's, and we firmly believe it will have a similar profound impact on the purchase of all future life insurance sales.