Your clients are willing to purchase heavy-duty insurance for their car, but hum and haw when it comes to coverage for their own health. You’ve heard the classic “Not more insurance!” or “I can’t afford this.” before you’ve even had a chance to open your mouth. Sound familiar?
Stéphanie Paillé, Regional Sales Director at Sun Life Financial, lets you in on some ways to get the conversation started, and persuade your clients to take a new look at critical illness insurance (CII).
Transfer financial risk to the insurer
Clients often underestimate the possible financial consequences of a critical illness. It may not be something they’ve ever thought about, so asking these questions might open their eyes:
- Do you have enough accessible cash to cover the costs if you are diagnosed with cancer?
- Would you be able to make up the lost income from an extended absence at work?
- Could you pay the additional cost of medications not covered by provincial or group plans?
Show them, by the numbers, that it could be better to transfer this financial risk to the insurer. Statistics on this topic speak for themselves. “Astonishingly, 35% of benefits are paid to clients in the first 5 years after the policy is issued,”1 says Stéphanie Paillé.
Consider monthly costs as a form of savings
Persuade clients to see things from a different perspective: the monthly premium for a CII policy is actually a type of savings plan. “If a critical illness strikes, no short-term investment could generate as much return as the payout of the insured amount,” explains Stéphanie Paillé.
Take the savings idea one step further. An optional return of premium benefit on cancellation or expiry (ROPC/E) can also be added to their coverage. Adding this option to the policy means that if a critical illness benefit isn’t paid out, and the policy is cancelled after the ROPC/E has reached maturity, the insured can then receive the returnable premiums — which could be a tidy sum.
Great option for mortgage loan coverage
Some families carry significant mortgage debt — meaning they need insurance coverage for the unexpected events that could prevent them from making their mortgage payments. But many people don’t know they have the option of taking out personal insurance rather than mortgage insurance offered by the lender.
“CII can be part of a mortgage protection plan including life insurance, and be an option to the temporary coverage from lending institutions — and sometimes on more beneficial terms,” says Stéphanie Paillé. With CII, it’s the insured, not the lender, who receives the benefit in the event of a covered critical illness. The client could then decide how to use the payout: continuing regular mortgage payments, repaying the mortgage loan completely, covering medical expenses or funding their children’s education are some examples. Plus, the client can take the coverage with them if they move to a different lender.
Start on the road to recovery without financial stress
The non-taxable benefit paid after one of the covered illnesses is diagnosed (insured must survive the policy’s waiting period) often helps clients focus on what’s really important — their health — instead of on their financial concerns. And when clients know they’re in good financial standing, it helps give peace of mind, so that they can focus on their recovery.
In any event, it’s not likely clients diagnosed with a critical illness would want to be forced to dip into their hard-earned retirement savings, or delay their plans for the retirement they’ve spent so long working and planning for. “The risk, however, is very real. For example, an estimated 45% of men and 41% of women will develop cancer during their lifetime,”2 points out Stéphanie Paillé.
On the flip side, research shows that although clients may not want to stop working, they may need to. The 2014 Sun Life Canadian Health Index revealed that almost 70% of retired Canadians did not stop working on the date they planned. Among those Canadians who didn’t retire as planned, 41% cited personal health as the primary reason for retiring earlier. This means some clients may lose some of their working (and earning) years due to personal health issues. This could have a serious impact on their retirement savings and income plans.
Advisors, you can help clients understand the many benefits of CII, and the role it can play in their financial plan. For more information about Sun Life Financial’s health insurance products, visit www.sunlife.ca/advisor or contact your sales director.
1 Sun Life Financial findings, based on critical illness insurance claims, 2012.
2 Canadian Cancer Society, 2009.