Advice for selling disability and critical care insurance

Disability insurance sales experienced a year-over-year quarterly increase during the third quarter of 2022, possibly due to increased awareness as a result of the COVID-19 pandemic, according to LIMRA. Critical injury insurance is also seeing a projected increase in growth.

With disability insurance (DI) and critical illness (CI) insurance both experiencing this recent growth, two industry executives shared some helpful hints for selling these two products.

The market for DI insurance

According to LIMRA, total workplace disability insurance new premium sales were $560 million in the third quarter of last year, a year-over-year quarterly increase of 3%. Long-term disability insurance premium drove overall growth in the quarter, up 6%, while short-term disability premium was up 1% for the quarter.  Overall, U.S. workplace disability new premium totaled $2.8 billion through September 2022.

There are several reasons for the increase in disability sales, said Patrick Leary, corporate vice president and director of LIMRA’s workplace benefits research program.

These include:

• An increase in employment throughout the year.
• Employees are more aware of the need for disability benefits (to replace income) due to the impact that COVID had on workers and their families in 2020 and 2021. “This is especially true for workers who have been impacted by long-COVID,” Leary said.
• According to LIMRA research, employer interest in adding benefits grew in 2022 as a way to attract workers, and employers see disability benefits as an important attraction tool. “In fact,” Leary added, “disability benefits (short-term and long-term disability) were cited as two of the top three insurance benefits employers are considering adding in the next two years.”
• More states looking to mandate paid family and medical leaves has spurred employers with workers in multiple states to look into offering disability benefits to all workers.

Selling DI insurance

To increase their chances of finding success in the DI insurance market, agents should explain how disability products work to their prospects and clients, as well as the importance they play in the overall financial wellbeing of employees and their families. “Many employees underestimate the risk of a disability and they do not understand what disability benefits are, or why they need these products,” he said.

Also, agents should help employees understand that the coverage offered by their employer or through the state plans may not be enough to cover their expenses, and a buy-up option/plan may be a good solution, he added. “As employees’ life stages change, that should prompt them to reexamine their benefit offerings,” he said.

The CI insurance market

The market for CI insurance is also on the upswing. A report by Allied Market Research said that the global critical illness insurance market generated $124.7 billion in 2021, and is estimated to reach $354 billion by 2031, witnessing a compound annual growth rate (CAGR) of 11.2% from 2022 to 2031.

The growth of CI insurance and other supplemental health products was driven by several factors, added Leary.

These include:

• Employment growth.
• COVID-19 increased awareness and concern about “critical illnesses” in general, leading to a higher level of interest in these products. According to LIMRA research, 52% of employees said they felt critical illness insurance was more important as a result of the pandemic. Many carriers have updated their CI products to be able to cover certain severe cases of COVID-19.
• The growing prevalence of high deductibles in major medical plans has been fueling interest in CI and other supplemental health products for quite a few years, since these products are often positioned as ways to help fill the gaps in high-deductible health plans, he added.

Helpful hints for selling CI insurance

 When it comes to selling CI insurance, awareness and understanding of critical illness insurance tend to be very low; so, it is important to educate employees about the basics of what this product is and how it works, advised Leary.

According to LIMRA research, among employees who are offered CI insurance at work, only 43% feel they understand it well, and understanding is likely to be even lower if this is a new offering. “Help employees understand how supplemental health products can work alongside their major medical insurance, particularly if they have a high-deductible health plan,” he added.

More steps to success in CI insurance sales

Agents should consider their own situation or that of someone who is close to them, said Alphonso Franco, CEO of Trenton Financial, and Top of the Table MDRT member. “If you had a heart attack last night, what would be your first thought today?” he asked.

Family, finances and health are some of the first things that would come to mind, he responded.  “Now, reflect on your own situation and find out if you have enough insurance coverage to tackle all the problems that generally follow a diagnosis of a critical illness,” he said. “It can be beneficial to crash test how this coverage would benefit your own life and to then present it to your clients. Remember that no one gets a critical illness at the “right time” – it is always unexpected.”

In addition, Franco said that chances are that most people do not have critical illness coverage. And if they do, it is usually inadequate coverage.  As a result, he said, “I highly suggest that if you are marketing critical illness insurance to clients, first see how it might be a positive addition in your own insurance coverage.”

Often, he explained, advisors can gauge how much coverage is best, based on their own personal experience. “As you decipher what is best for you in critical illness coverage, it becomes easier to break down what your clients may need. Your own belief in a product’s importance is paramount to its successful marketing,” he said.

Franco also pointed that CI insurance is not a financial windfall, but an avenue to protect ourselves from an impending financial ruin after a diagnosis of one of these covered critical illnesses. “Sharing this perspective with clients will help to clarify the purpose of the coverage and why it is crucial,” he said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].