CritiCal illneSS inSUranCe (Cii) has significant prospects for growth, says Jesse Slome, executive director of the american association
for Critical illness insurance (aaCiii),
westlake Village, Calif.
he estimates today only about 900,000
individuals have such protection.
Cii pays a lump-sum benefit generally
upon diagnosis of a covered serious illness
such as cancer, heart attack or stroke.
“most people are completely unaware
of how vitally important critical illness insurance can be to their family,”
says Slome. “the same can be
said for the majority of U.S.
insurance professionals, who
lack an understanding of this
relatively new form of financial protection.”
Cii, followed by true group
(23%) and individual (14%).
Slome believes Cii has far
more income potential for
brokers and agents than does
long term care (ltC) insur-
ance.
whereas he estimates the
market for ltC insurance is
no more than 15 million to 18
million policies, Cii has a far
wider appeal.
a recent study by aaCiii
reports 54% of men and 51% of
women purchasing individual
Cii policies last year were younger than
age 45.
the 45-54 age group was the biggest
segment of the market, accounting for 27%
of Cii sales to men and 29% to women.
women tended to buy Ci protection
at slightly older ages: 22% of female buy-
ers were 55 or older, compared to 18% of
males in that age group.
the study found 25% of male and 23%
of female buyers were in the 35-44 age
group, while 21% of male and 19% of female buyers were between the ages of 25
and 34. Just 8% of male and 7% of female
buyers were under 25.
aaCiii analyzed data for over 20,500
buyers of individual Cii in 2010.
most of the sales were for relatively low
face amounts, aaCiii found. among individual policies sold, 71% of males and 75%
of females bought face values of $30,000
or less.
“lower-priced policies, especially for
the younger employee, can help fill the
financial need without a large outflow of
money each month,” observes Clea Barth,
Distribution of Individual
CI Insurance Sales
By Benefit amount
(average %)
Male Female
$10,000
29%
$10,001
-$20K
20%
$20,001
-$30K
22%
$30,001
-$40K
$40,001
-$50K
voluntary group benefit, usually 100%
employee-paid, it recently brought out an
employer-paid group version. offered as
guaranteed or simplified issue, it is aimed
at employers moving employees into high-deductible health care plans.
Some employers have seen participation in such plans double when Cii is offered as an employer-paid benefit, Barth
says.
Chris haire, product performance
director for mutual of omaha, says that
his company has seen double-digit annual growth for Cii in recent
years.
“we plan to capitalize
on that momentum,” haire
says.
most of its Cii sales are
individual products, but
mutual recently released
a policy designed for the
worksite.
the company focuses on
sales of policies with a minimum $50,000 in face value.
over half of the individual
Ci policies it sells are val-
ued at $100,000 and up, says
haire.
he believes health care
reform could create new op-
portunities for Ci products.
“we’ve heard that pro-
ducers selling major medi-
cal are concerned their
compensation could be af-
fected by health care reform
and are looking to diversify,” he says. “Cii
is a natural extension for them.”
31%
22%
22%
3% 2%
13%
Cii can also be sold as a supplement to
disability insurance, he says.
“if you are disabled, your needs easily can go up over 100% of income,” haire
says.
advances in medical care are another
reason consumers are becoming more
attracted to the product, haire says. as
the chances of surviving serious illnesses
increase, Cii is “something people really
appreciate,” he says. NU
14%
$50,001
or more
13% 11%
source: american association for
Critical illness insurance
vice president for health risk products for
metlife inc., new York. “it’s a lower-cost
way to pay those out-of-pocket expenses
that may remain despite having health insurance and disability income protection.”
“a policy with a benefit of $10,000 to
$20,000 can make a difference in the financial health of a family,” Barth says.
