Introduction

CRITICAL ILLNESS INSURANCE

I am going to open this discussion with two questions:

1. Do you know anyone who has survived a serious illness such as a heart attack, a stroke, or cancer?
2. Did that illness have an effect on their lives or on the lives of those close to them?

I wish I could pause now and let you consider those two questions. Since I cannot, I will return to December 3, 1967: the day the world’s first heart transplant took place. I was personally more impacted by the Salk/Sabin Polio vaccines as I am a polio survivor, but the world’s first heart transplant was far more of a world shaking event. A doctor had removed a heart from a recently deceased person and implanted it into the body of someone else – and saved that person’s life. I remember the newspapers running “line scores” showing how long the recipient survived. They got longer and longer until they became almost meaningless. Medicine had performed a miracle and it was now almost part of our routine life. The only events in my lifetime that I can compare with that are the collapse of the Iron Curtain and the invention of the Internet.

I repeat: “Medicine had performed a miracle and it was now almost part of our routine life.” We now survive health issues that killed us not very long ago.

However, that survival comes with a price. It has a significant effect on our lives, our careers, our families, on those we love and on those who love us. It was one of the doctors who performed that first heart transplant, Dr. Marius Barnard, who saw these impacts and developed the concept of Critical Illness Insurance to help us deal with the impact of surviving one of those illnesses. We have always had Life Insurance, which deals with the impact of dying. But today medicine is allowing many of us to survive an illness.

This product has existed in Canada for almost two decades, but it has never really become as popular as it should be. Why is this? In my professional opinion, it is because the insurance industry did not do a good job of launching the product. There were at least four major mistakes made in the launch:

1. Far too much emphasis on statistics: “1 in 3 people are diagnosed with cancer.” We all know that a lot of people get cancer, but this sounds like a scare tactic. Further, and frankly, it is far too easy to react “Well I will be one of the two who is not diagnosed.”
2. Far too much emphasis on Term to Age 75 and Permanent products. People have budgets, which is why so much Term Life Insurance is sold. Because we know clients (particularly those in the “growth” stage of their lives and most in need of this protection) have many demands on their cash, we know that not everyone can afford permanent insurance. Based on the Insurance Journal, it took until August, 2009 for the industry to discover that clients have budgets.
3. Far too much emphasis on Return of Premium (ROP). If you need ROP to sell this product, then you do not truly understand the need for this product. ROP is for the wealthy and for corporate clients.
4. Finally, forget using CI to purchase care from the private system or outside of Canada! There are far more effective (and lower cost) ways of doing that. If you think $100,000 CI – and then think “provide for care” – your instant reaction will be “$100,000 will do almost nothing for me”. Buy the care insurance independently. Because it pays bills and not a lump sum to you, it is MUCH cheaper! Virtually no one needs large amounts of CI. If you survived a heart attack, $25,000 or $50,000 or $100,000 would allow you to significantly reduce your bills, and your stress, and allow you to concentrate on recovery.

There will be a new post to this blog every three weeks. I will, of course, respond to questions and comments almost immediately.

Some of the topics I will be dealing with include:

• Types of products available
• Conditions covered
• Return of Premium on Death
• Return of Premium on Expiry/Surrender
• Why smokers pay so much
• Underwriting of CI
• Corporate CI
• Child CI

Click these for more information on the respective topics :
Long Term Care Insurance
Disability Insurance
Critical Illness Insurance
Life Insurance
Mortgage Insurance