Advisors make mistake with CI choices

by Nicolas Heffernan26 Oct 2015
Advisors looking to get the very best critical illness coverage for their clients have been frustrated by high prices, underwriting issues and many outright declines.

But the simple option can get clients what they need.

“One of the things I strongly suggest, critical illness can be sold in two or even three stages,” says Tim  Landry, from QTR Solutions. “You get guaranteed issue CI, easier issue where they cover a limited number of conditions, and then you get the full.”

Many advisors seem to have cut their losses on critical illness with declines and high prices leading consumers to shun the product.

For example, if a client has a family history of multiple sclerosis, it’s extremely unlikely they’ll qualify for traditional issue CI.

“But I’m not going to have a problem getting CI that doesn’t cover MS,” says Landry. “Remember, the four conditions that easy issue CI covers is 80% of the claims; it’s cancer, heart attack, stroke and sometimes coronary artery bypass. Then once you’ve got that, then try and get the major ones.”

And advisors are going to have to accept ratings are the nature of the beast with critical illness.

“To me if you have a rating, you have to reduce your coverage so it fits what you can pay,” he says. “Ratings, yeah they happen and you should be able to live with those. All they’re really saying is you’re fully covered and here’s a fair price for it.”

The problem is that it sometimes requires a decoder to understand what insurance companies are saying. That poor communication has trickled down to carrier’s marketing efforts around CI, leading to a confused client base and many uneducated advisors.

“The insurance companies have to learn how to market these products,” said Landry. “They don’t know how. They honestly don’t know how. I think what they should do is sit down with the people who understand it and find out what they need to do to get these products off the ground.”


  • by Peter 2015-10-26 2:23:52 PM

    While I know that Tim is a very knowledgeable person in the area of Living Benefits, the article fails to mention that a Guaranteed Issue CI policy has a double whammy:
    1. the cost is significantly higher than a standard fully underwritten policy, even one that has limited covered conditions
    2. the conditions of a Guaranteed Issue policy are quite limited
    And many such policies may also have various limitations and even pre-existing conditions.

    Tim also suggests that if you have MS, you can get a standard policy with an MS exclusion. Chances of that happening are few and far between as MS can lead to numerous other complications.

  • by 2015-10-26 8:05:26 PM

    Some C.I. coverage is better than none at all.

    Here are two (2) Critical Illness products that are a great alternative to a fully underwritten product ...that might otherwise result in a potential decline or rated policy; plus they both offer excellent coverage at affordable premiums.

    Option # 1: Wawanesa Life's Quick Issue C.I. policy: only 8 qualifying questions - no medical underwriting, issue amounts: $10,000 to $100,000, 15 covered conditions, issue ages: 18 to 60 years, 3 plans: 10 Year Term Renewable to age 75, Level to age 75 and Level to age 75 with Return of Premium. Very competitive premiums.

    Option # 2: Edge Benefits: Guaranteed Issue up $25,000, additional $75,000 with good health (no family health questions), 21 covered conditions, 2nd event rider; issue age: 18 to 64. . Better than coverage to age 65, ONLY provider (to my knowledge) to offer coverage to age 70. In some age bands, the premiums are lower than level to age 75 offered by some insurers. Includes a 24-24 pre-existing condition limitation.

    Ken MacCoy, CHS

  • by Tim Landry 2015-11-05 11:08:28 AM

    Peter I was not saying anything specific about MS exclusions (or ANY exclusions). I was just saying - based on a presentation I heard many years ago at one of the first CI conferences either in Vancouver or Victoria that a client is better off starting with a basic coverage (and I certainly recognize the weaknesses - both from a coverage and price point of view) and then building from that. It is far more important to have SOME coverage for the conditions which represent the VAST majority of claims than to have none at all. Once that coverage is in place feel free to build on it - and possibly eventually replace it