When sean david’s application for critical illness insurance was denied, his insurance advisor called him simply to say he was sorry. The advisor offered no explanation, other than that David, 47, was “too high-risk.”

David’s case is not unusual: CI insurance applicants have a relatively high rate of rejection compared with other insurance products. Nor is his case unusual in another way. The service he received from his advisor was inadequate: his advisor failed to explain the approval process, raised his expectations and did not provide him with
sufficient reason for the denial of coverage.
In fact, David’s case epitomizes the state of CI insurance education among advisors.

“There is virtually no education,” says Adeline Thomson, life marketing specialist with CUMIS Group Ltd. in Calgary, who has responsibility for the Alberta and British Columbia regions. Instead of stepping up to the plate to educate advisors, insurance companies have done very little, she says.

Sean Long, a Toronto-based professional who teaches advisors and their trainers about CI insurance, agrees: “Typically, there is no communication with the underwriters, so most advisors do not understand what goes into the approval process and, therefore, cannot provide proper advice.”
Long also operates an online education Web site at www.criticalillnesslearning.com.

That is probably the reason David’s advisor could not explain why David was denied CI coverage — but David is only guessing. He still doesn’t know exactly why he was denied insurance; he doesn’t believe his medical condition warranted rejection.

“After our meeting, the advisor told me I had a good shot at getting a Canada Life [Assurance Co.]policy because it had the most lenient conditions,” says David. “I completed an application and gave what I believed were honest answers to a series of questions about my health.” He fully expected the next step would be a medical examination, but he was rejected before it even got that far.

A knowledgeable agent, says Long, would have been able to determine up front whether a client would be denied coverage — or would, at least, be in a position to explain why coverage is not granted.

It seems insurers are leaving advisors to their own devices. “The average advisor receives a lot of printed material from the insurance companies, which, in many cases, [he or she is] not physically capable of reading,” says Tim Landry, director of living benefits with MSA Financial Services in Montreal. “The emphasis of insurance companies is not on training, and advisors are largely left on their own to educate themselves.”

Thomson adds that insurance companies basically offer CI seminars that are product-oriented, with no training on what the information in their product guides means. They maintain Web sites that offer mostly company-specific product information. “Agents typically do not know the features and differences among different company products. There is no road map of how CI fits into a financial plan or criteria for selling the product,” she says.

The consensus view among advisors is that selling CI insurance is unlike selling term or life insurance, in which terms and definitions are relatively standard. Insurers have developed their own preferred CI definitions, general conditions and exclusions, giving rise to confusion as to what is eligible for a claim.

“The need for standardization of definitions is critical,” says Alphonso Franco, president and owner of Victoria-based Trenton Financial Services Ltd. and founder of the World Critical Insurance Conference. With no standardization of the medical definitions in the CI policies offered by different companies, there is room for misinterpretation among advisors that can only be overcome with proper training.

“The general state of CI education leaves much to be desired,” says Long, who adds that most managers are compensated for recruiting advisors who deliver results based on product sales and commissions.
Most of these sales executives have little experience in CI insurance and lack the knowledge to provide training. “The focus is primarily on a company’s product, not how to sell the product based on need,” adds Long.

Despite this bleak picture, there are ways for advisors to cope. Bill Hamilton, a senior advisor with Manulife Financial Corp. in Markham, Ont., spends a lot of time educating himself about CI. “Eighty per cent of what I know about CI is my own education,” he says. “I cannot depend on product information provided by insurance companies.”