Continuing Education for Advisors

Transcription

1 Continuing Education for Advisors knowledge continuing training educate online awareness participate The critical illness insurance solution

2 Learning objectives By the end of this course you will be able to: Explain the need for critical illness insurance. Know which clients to target. Effectively present the critical illness insurance solution to clients. Understand some of the basic and market-leading features. Offer clients lifetime health insurance protection with the one decision sales concept. 2

3 It s time to talk to clients about critical illness insurance protection Every hour, an average of 34 Canadians will be diagnosed with cancer, have a heart attack or suffer a stroke.* Many people don t know there is a solution available to help them cope with the financial impact of a serious illness. Clients count on you for solutions to protect them from potential risks that can jeopardize their financial well-being. While most people readily accept the need for traditional life insurance protection, many don t realize that a serious illness is a very real risk that can dramatically impact their financial plans not only in the short-term, but also into retirement and beyond. It s a fact: men and women are more likely to be diagnosed with a critical illness and survive than they are to die prematurely. This makes critical illness insurance (CII) a vital part of a comprehensive protection plan. *Average derived from statistics reported by Canadian Cancer Society s Steering Committee: Canadian Cancer Statistics 2009; Toronto: Canadian Cancer Society, 2009 and Heart and Stroke Foundation

4 If a client is diagnosed with, and survives, one of the conditions covered in the policy, the CII solution provides a lump-sum benefit that may be used to: Pay for health care expenses not covered by employer and government plans Pay for additional expenses incurred due to the illness e.g. travel, child care Replace lost income for a spouse or parent to take time off to provide care Maintain mortgage and other debt repayment commitments Since there are no restrictions on how the payment can be used, critical illness insurance helps clients cover additional expenses due to an illness, while also helping to reduce or eliminate the need to withdraw from their retirement savings. 4

5 Target segments for critical illness insurance A CII policy can be owned by an individual or a business. Key target segments include: Individuals Parents & grandparents Business owners Men and women Single or married Up to age 55 To protect children or grandchildren using either a stand-alone child policy or child rider on an adult plan To protect key people To fund a buy-sell agreement Critical illness insurance isn t just for adults For every 100,000 Canadian children under the age of 19, there are 6.7 strokes Each year, about 1,500 new cases of childhood cancer are diagnosed Source: Canadian Heart and Stroke Foundation, 2010 ( Source: Childhood Cancer Foundation, 2010 ( 5

6 Presenting the critical illness insurance solution has developed a four-step sales process to effectively present the CII solution to clients: 1. Position the need by making it personal 2. Use summary statements to reinforce the need and introduce the solution 3. Handle objections before they are raised 4. Discuss the possibility of a rating or decline 6

7 Position the need by making it personal While statistics help to show the likelihood of being diagnosed with a critical illness, facts and figures don t bring home the realities of how a serious illness impacts the lives of real people and their families. Save the statistics for later and instead start the conversation on a personal note. If you have a personal story of how an illness affected you or someone you know, share it with the client. Also, encourage clients to tell their own stories by asking purposeful questions that show how a CII benefit can help. For example: 1. Who in your life has coped with a serious illness? 2. Did they have a family history of the disease? 3. How did the illness affect day-to-day life for their family? 4. How did they manage financially and did this change their lifestyle or plans for the future? 5. Do you think having less financial stress would have improved their recovery process? Try this opening statement to start a conversation with your clients about CII, I ve always done my best to help with your financial planning needs. But there s a very important need we haven t discussed yet: the need to plan for an unexpected illness. 7

8 Use summary statements to reinforce the need and introduce the solution Once you ve positioned the realities of coping with a critical illness, use relevant summary statements from the personal story to reinforce the need and introduce the solution: Since Jane had no family history of cancer, it goes to show that a serious illness can strike anyone, at anytime. It s unfortunate that so many people, like Jill, don t realize government-funded care won t cover all of their medical costs. I m sure you don t want to think about how hard it would be on your own family if you lost your home like Bob did. Give a quick introduction to the CII solution without getting into too many product details. Try a bridging statement like, Fortunately, I have a solution called critical illness insurance that can help protect you and your family from these types of risks. 8

9 Handle objections before they are raised By addressing objections before your client has a chance to raise them, you re less likely to get the response, I want to think it over. The following pages will demonstrate how to handle two main objections: 1 It won t happen to me. 2 The premiums will be too expensive. 9

10 OBJECTION: It won t happen to me. RESPONSE: Hopefully not, but here are the facts. Now is the time to use facts and figures to show the very real possibility of facing a critical illness. As mentioned earlier, statistics show men and women are more likely to be diagnosed with a critical illness than they are to die prematurely (see inset). On the positive side, medical advances have dramatically improved survival rates. For example, the Canadian Cancer Society and the Heart and Stroke foundation estimate the following five-year survival rates: Childhood cancer: 82% Breast cancer: 87% Prostate cancer: 95% Stroke: 85% Statistics like these help to reinforce the message that critical illness poses a significant risk. And as an advisor, it s your role to recommend the right type of protection. Incidence of death vs. critical illness: Males 50% 40% Incidence of death vs. critical illness: Females 50% 40% 30% 20% 10% 30% 20% 10% Critical illness before age 75 Dying before age 75 (not from a critical illness) 0% % Source: Munich Re, 2010: Critical illness statistics are based on population incidence rates. 10

11 OBJECTION: The premiums will be too expensive. RESPONSE: Actually, using your savings will cost you a lot more. Meet Paul and Danielle Chan Paul (age 49) and Danielle (age 46) are like many couples their age. Both have careers and earn a combined annual income of $160,000. Although they are financially comfortable, they currently have the added expense of post-secondary education for their children. Two are already in university and the youngest will be starting in the fall. As with many people who are part of the sandwich generation, they are also helping to take care of an aging parent. Since Danielle s mother has mobility issues, she and Paul spend several hours a week doing household chores and running errands for her. Paul and Danielle are looking forward to retiring at age 65. Currently, each has $150,000 in RRSPs and plans to contribute $10,000 per year until age

12 What would happen if Danielle or Paul were diagnosed with a serious illness? It s likely that the treatment and recovery process would mean time away from work, resulting in lost income. Under this circumstance, would the Chans be able to: Take as much time off as needed, without having to rush the recovery period? Stay home to provide support and care for the ill spouse? Pay for medical expenses not covered by the government? Seek alternative or out-of-country treatment? Hire temporary help for Danielle s mother? Keep up with their RRSP contributions and children s education expenses? 12

13 Assume Paul is diagnosed with a critical illness at age 55, which results in $150,000 in related expenses. If the Chans withdraw the money to cover these expenses from Paul s investments, at age 65 it will only be worth $192,695. This represents a decrease in the value of their retirement savings by almost $537,000! Instead, Paul and Danielle would fare much better financially if they use $4,832 of Paul s $10,000 yearly savings to pay the annual insurance premiums* on a $150,000 Sun Critical Illness Insurance policy. Paul then contributes the remaining $5,177 to his RRSP. Using your savings is expensive A) Annual RRSP contribution to age 65 of $10,000 with 6% annual return B) Annual RRSP contribution $5,177 CII yearly premium* $4,823 C) Withdraw $150,000 at age 55 to cover expenses incurred due to a critical illness Age A) $729,394 B) $675,320 C) 192,495 Since they won t have to make an * CII Plan Level T75 $150,000 with return of premium on cancellation/expiry at age 65 RRSP withdrawal to cover the costs associated with Paul s illness, his retirement savings would amount to a healthy $675,320 at age 65. *Based on current male, non-smoker rates at the time of publication. Rates are subject to change and individual client results will vary. 13

14 Discuss the possibility of a rating or decline Prepare clients for the possibility of a rating or a decline for those who: smoke have a family history of certain conditions (refer to the pre-underwriting guide at > Products > Critical illness insurance > Underwriting > Pre-underwriting guide for Sun Critical Illness Insurance) are diabetics under the age of 40 You should not submit an application for a client who is under medical investigation, is waiting for medical tests or has been referred to another doctor for consultation. Turn a negative into a positive. Use a rating to reinforce the need for protection and create a sense of urgency to take action now. 14

15 Understanding some of the basic and market-leading features In this section, we ll look at some of the common features of CII coverage offered by carriers in Canada. We ll also highlight some of the market-leading features that make Sun CII from stand out from other solutions. The basic and market-leading features examined on the following pages include: Broad-spectrum protection Coverage for acquired brain injury and loss of independent existence Conversion to long term care insurance Coverage for children 15

16 Broad-spectrum protection There are some policies that cover three to four illnesses. However, most advisors sell plans that cover a broad spectrum, including the following: An average of 24 full payout illnesses includes cancer, heart attack and stroke. Partial payout illnesses for some specified illnesses, a partial payout may be made and the coverage continues for the full payout illnesses; this may include early stage breast or prostate cancer, skin cancer and coronary angioplasty. Childhood illnesses if child coverage is provided, it may include cerebral palsy, congenital heart disease, cystic fibrosis, muscular dystrophy and type 1 diabetes mellitus. 16

17 Coverage for acquired brain injury and loss of independent existence Acquired brain injury (ABI) is damage to the brain that occurs after birth. It may be caused by traumatic injury, anoxia (an absence of oxygen) or encephalitis (an inflammation of the brain). Loss of independent existence (LOIE) covers: Physical impairment a total inability to perform, by oneself, at least two of six activities of daily living (bathing, dressing, toileting, bladder and bowel continence, transferring from a bed to a chair and feeding Cognitive impairment mental deterioration and loss of intellectual ability requiring daily supervision is the only insurer in Canada to provide ABI coverage. ABI is packaged together with LOIE coverage, protecting clients for neurological impairments that would not qualify under LOIE but would change their lives nonetheless. Traumatic brain injuries occur more often than multiple sclerosis, spinal cord injuries and breast cancer combined. Source: Brain Injury Association of Canada, biac-aclc.ca 17

18 Conversion to long term care insurance As clients age, they face an increased likelihood of needing extended care at home or in a facility. Some carriers offer the ability to convert critical illness insurance to long term care insurance (LTCI) as a way to help clients meet their changing protection needs. The provisions for converting to LTCI vary among carriers. With Sun CII, clients have access to an LTCI conversion option that is unmatched in the industry. Guaranteed product availability and guaranteed conversion is the only insurer to guarantee an LTCI product will be available at the time of conversion. Clients can exercise the conversion option anytime between the policy anniversary following the insured s 60 th birthday and the policy anniversary following their 65 th birthday, regardless of health. There are absolutely no underwriting questions asked at the time of conversion. Choice of an unlimited benefit period The advantage of an unlimited benefit period is the peace of mind it brings to clients who are worried about conditions such Alzheimer s disease or other forms of senile dementia that have a much longer average claim duration. A significant portion of LTCI claims go beyond 5 years almost 20 per cent when the waiting period is 90 days*. *Source: U.S. Society of Actuaries, Long Term Care Experience Committee, Intercompany Study ! The conversion period on Sun CII is the optimal time to convert. It coincides with the time when people naturally begin to think about their needs in retirement and is also when the need for critical illness insurance starts to diminish. That is, focus shifts from protecting the savings they are accumulating while maintaining their ability to pay down debt, to protecting their retirement savings should they require long term care. 18

19 Coverage for children When a child becomes sick, it affects the whole family. In addition to the emotional impact, a serious illness can put the family s financial plan at risk while the parents focus on their child s care and recovery. Child coverage may be offered as a rider on a parent s policy or as a stand-alone plan. Sun CII offers one of the most comprehensive child stand-alone plans on the market, giving clients the best protection for their children or grandchildren. Coverage is available for children as young as 30 days and up to age 17 and can be designed to provide protection throughout their lifetime. When compared to a rider on an adult CII plan, the stand-alone Sun CII child plan offers these key advantages: Unlike riders, which expire by a certain age, our stand-alone plan provides guaranteed coverage for the life of the policy. This eliminates the need to submit future evidence of insurability. While riders often have restrictions on the face amount, issues child coverage up to $250,000 and as much as $1 million with special consideration ideal for clients in the affluent market. 19

20 Market-leading features of the Sun CII child stand-alone plan include: Automatic ABI/LOIE coverage This benefit is included at no extra cost. If the child is diagnosed with ABI or LOIE before the age of 18, they must wait to until they turn 18 to submit the claim. Long term care conversion option Clients can apply for the long term care conversion option when the child turns 18. This option gives them the ability to convert some or all of their CII to LTCI later in life, even if they are no longer insurable. Return of premium on cancellation or expiry The regular pay child stand-alone plan is the only CI coverage in the market that could pay up to two return of premium on cancellation or expiry benefits on the same coverage. If a CII claim is not made for a full benefit, the insured is eligible to receive: 1. 75% of the returnable premium amount automatically returned at the later of 15 policy years or age 25 (and the coverage continues); and 2. the accumulated balance thereafter is returned at the later of 30 policy years or age 40 upon cancellation or expiry of the policy.! Children are especially vulnerable to ABI. Since their judgement skills are still developing, they may not understand the dangers associated with certain behaviours and are more likely to engage in activities that put them at risk. 20

21 Access to expert medical information through Best Doctors services Best Doctors is an international medical referral network that connects the client and their physician with world-renowned specialists to help confirm the correct diagnosis and the correct treatment plan, without the client having to leave home. Many carriers provide access to Best Doctors or other services to clients with their CI policy. These services are usually non-contractual and can be withdrawn or altered at any time. Services that are typically provided include: InterConsultation Provides an in-depth review of your client s medical files including diagnostic test results and the retesting of pathology. Confirms the correct diagnosis and treatment recommendations. Fast and detailed turnaround of results. Can potentially reduce serious complications that result from a misdiagnosis. Helps your client and their treating physician determine the proper course of action. FindBestDoc Provides a customized search of the Best Doctors network of 50,000 specialists to find the specialist best suited to your client s medical condition. Gives your client the information they need to arrange referrals, 1 appointments and accommodations if out-of-town travel is necessary. 2 21

22 FindBestCare A full concierge service to help make all arrangements such as medical appointments, hospital admissions, translation services, hotel accommodations, ground transportation, etc. 2 Best Doctors strives to work within the Canadian healthcare system but will access hospital and doctor discounts if out-of-country care is necessary. Ensures that vital medical information is sent to the medical specialists involved. In addition to InterConsultation, FindBestDoc and FindBestCare, Sun CII gives clients access to these enhanced Best Doctors services: Best Doctors 360 A navigational tool that helps clients take control of their own health care. Available regardless of your client s medical condition. Provides information about local community programs and services and ongoing one-on-one support. Offers a wide range of health related information such as wait times, drug funding programs, and health assessment tools. Family access to Best Doctors services Unlimited access to Best Doctors services at no charge for the client s spouse or dependent children if they suspect they have a serious medical condition, 3 even if that condition is not covered under the CI policy. Your client and their family can use the services any time while their coverage is in place. 1 Access to a Canadian specialist requires a referral from your client s treating physician. 2 Expenses associated with medical treatment, travel and lodging relating to the FindBestDoc and FindBestCare services are your client s responsibility. 3 Excludes mental, nervous and chronic pain conditions. BEST DOCTORS and other trademarks shown are trademarks of Best Doctors, Inc. Used under license. 22

23 One decision. A lifetime of protection. Checking-in with the Chans You ll recall that critical illness insurance offered the Chans a valuable financial protection solution during their working years. But if Paul or Danielle needs care during their retirement years, LTCI can help: Cover the cost of care in a facility or at home. Prevent placing the burden of care on the healthy spouse or other family members. Preserve retirement income and estate value. While Paul and Danielle should consider purchasing LTCI today, they don t have the financial resources to pay the premiums for both individual CII and LTCI. What do these numbers stand for? 95% 96% CII LTCI Your opportunity in the health insurance market Only 5% of the CII target market currently owns a CII policy and 4% of the LTCI target market currently owns an LTCI policy. Source: Munich Re, December 2010 Solution The Chans choose to add the LTCI conversion option and return of premium (ROP) benefit to their Sun CII policies. With this one decision, they have protection if they make a CII claim. If they don t make a CII claim, they have a return of premium benefit and lifetime LTCI protection. 23

24 How ROP can be used to cover the cost of LTCI premiums Assume Danielle has been fortunate to enjoy good health and does not make a CII claim. At age 65, she: 1. Cancels her CII coverage 2. Exercises the LTC conversion option The ROP she receives on cancellation of her CII policy is $70,509. Danielle uses this to purchase a life annuity with a 10-year guaranteed period. The annuity provides $389 per month after tax, which she uses to pay her LTCI monthly premium of $382.* The $150,000 CII amount that Danielle converts would provide her with a LTCI benefit of $750 per week if she later becomes unable to care for herself. * The annuity income and cost of the long term care insurance are based on current rates at the time of publication for a female, non-smoker at age 65. Rates are subject to change and individual client results will vary. 24

25 Summary of key learnings 1. Critical illness insurance is a vital part of a comprehensive financial plan that can help clients cover additional expenses due to an illness, while also helping to reduce or eliminate the need to withdraw from their retirement savings. 2. The primary target markets for the CII solution include married or single men and women up to age 55, parents/grandparents and business owners. 3. Following a clear process to position the need, introduce the solution, handle objections and prepare the client for a rating or decline will help you effectively present the CII solution. 4. Sun CII offers clients market-leading features and advantages such as coverage for ABI and LOIE, a unique LTC conversion option, comprehensive child stand-alone plans and unlimited access to Best Doctors. 5. The one decision sales concept is a way to help clients who are reluctant to purchase separate LTCI get lifetime health insurance protection. 25

26 Why partner with? 1. Brand, strength and integrity 2. Competitively designed and priced products 3. Sales strategy tools 4. Expert, accessible underwriting 5. Regional support 6. VIP treatment via Strategic Partner Program Visit us around the clock to check out our broad range of tools and support services, including our proprietary sales concepts, Financial Advisor bulletins, case studies, needs analysis software and full product guides. Want to know more? If you already work with you can contact your regional distribution office to arrange for face-to face case assistance, or consultation on advanced tax estate planning issues. Call SUN/4786 option 5. If you don t currently work with call SUN/4786 option 3, 1 to inquire about contracting. knowledge continuing training educate online awareness participate Sun Life Assurance Company of Canada,