Although the bank-owned insurers continue to rack up sales of critical illness insurance, mostly in conjunction with mortgages, the insurance industry per se is still struggling to get into the game.

“It’s a shame, in our business, that we cannot, together, sell as much as one single bank is selling,” says Alphonso Franco, CEO of the Critical Illness Insurance Centre in Victoria and founder of the World Critical Illness Insurance Conference, to be held in Toronto on April 28 to 30.

Franco says that the situation mainly a matter of education. CI is still a relatively new product in Canada, and it’s going to take time — and the support of insurance carriers — to make sure that advi-sors understand the product completely so that they can pitch it properly to clients. Once advisors who are knowledgeable about the product share that knowledge with clients, he says, it’s not a hard sell.

But this might be easier said than done. Canadians are indeed becoming more aware of CI insurance, thanks, in many cases, to the coverage they are offered at their banks when they take out a line of credit or a mortgage, says Jennifer Kirby, certified financial planner and chartered life underwriter at Kirby Financial Group in Calgary. And more employee benefit plans are including CI elements, as well, she adds. Yet, only a fraction of her clients have CI insurance.

One of the main reasons clients are not purchasing the product is because they don’t believe anything will happen to them. Introducing a sense of reality without fearmongering takes a delicate touch.

The more pressing issue is that clients aren’t always convinced that the benefits justify the cost of the plans. The optimum is $2 million in coverage, with most people opting for far less. Some companies have promoted CI as a way to fund alternative therapies or out-of-country treatment for those who fall critically ill. But Kirby has a few doctor clients who have laughed out loud at that notion; U.S. hospital bills can easily run up to $300,000 or more — coverage that requires hefty premiums with which many clients simply aren’t comfortable.

Short of sporting T-shirts with messages such as “Ask me about heart disease” in public, advisors must find other ways to persuade consumers that CI insurance is worthwhile. Here are some ways to do that:

> Make It Real. When Franco sits down with clients, he’ll give them pens and paper and ask them three questions. First, he’ll ask them to rank the top three things that would concern them if they had had a heart attack that morning. Next, he’ll ask them what they would value most if they were diagnosed with cancer.

“It always comes back to the same things,” he says, “family, finances and their jobs.”

Finally, he’ll ask them to do a third ranking exercise: what if they had suffered a stroke that morning? Seconds later, he’ll interrupt their efforts and point out that the chances are quite high they wouldn’t be able to write. “What do you have in place to protect you and your family?” he’ll ask.

Retirement planning, pension planning and the like go out the window when a critical illness hits because families are forced to dip into their savings to cover costs.

For her part, Kirby taps into the personal stories with which everyone is familiar. “I usually start the conversation with ‘Do you know anyone who’s had cancer?’” she says.

Everyone does — and almost everyone has the same “the last person you’d expect” reflection to share. Although discussing these painful topics generally does little to sway younger clients, it often works for clients 35 and older — especially those with families, she says.

Sean Long, senior living benefits consultant with Montreal-based Desjardins Financial Security, says that there’s no sense tiptoeing around the subject. He knows people who have lost their homes, and he’ll share that kind of story with clients and prospects.

“People are in denial,” he says, adding that this state of mind is something advisors have a responsibility to address as aggressively as necessary.

All of us know someone who has suffered one of the three main critical illnesses — heart attack, stroke or cancer — he says: “Chances are one in three it will happen.”

Clients need to be reminded of these cold, hard facts.

> Don’t Overdo The Fear Factor. It’s well and good to promote CI insurance as a protection against the financial drain and stress caused by serious illness, but there’s no sense going overboard.

“Fearmongering isn’t necessary,” says Gerry Anthony, CLU and senior consultant of product development with Standard Life Assurance Co. of Canadain Montreal.

It used to be, for instance, that insurers would sell CI as a way to pay for prohibitively high medical expenses. But this is a tired line that doesn’t resonate with most clients, he says. Instead, it makes more sense to have an open discussion about what could happen in the event that a client becomes ill. What would be the impact on the individual and the family? Would a spouse want to take time off work to help out around the home?

> Find Some Balance. CI is one of many financial products competing for clients’ dollars. Advisors must recognize this and draw up a complete financial plan, indicating how CI insurance fits into each client’s financial puzzle, says Mark Halpern, CFP and founder of illnessPROTECTION.com Inc.

“I don’t speak about CI insurance when I meet with someone for the first 45 minutes of our conversation,” he says. It only comes up as part of the solution once a financial picture is taken.

If course, the higher the payout, the higher the premium — and it’s not always necessary to aim high. Clients paying off debt, paying down their mortgage and saving for the future may balk at additional costs.

But more modest CI benefits can be just what the doctor ordered, says Anthony. It used to be that advisors would come up with a CI benefit figure by matching it to the client’s mortgage, as was long the custom with life insurance. So, a client with a $250,000 mortgage would be encouraged to protect him- or herself with $250,000 in life insurance and $250,000 in CI.

But a more practical approach might be to encourage the clients with a $250,000 life insurance policy to get $25,000-$50,000 of CI coverage to help them look after their mortgage payments and other incidentals while their health improves, he says. (In the event the policyholder dies within a specific period of becoming ill, typically about 30 days, the claim is not paid out.)

“These contracts are not meant to be financial windfall products,” Anthony says. “They’re primarily designed to help and to remove stress.”

> Put Your Money Where Your Mouth Is. Although Franco doesn’t tell his clients how much he has wrapped up in CI — premiums for a $2-million payout might put some off — he does make it clear that he has a solid plan in place. Yet, he still runs across advisors who sell the product without having it in their own financial plans.

“Unless they don’t qualify based on medical conditions or age, it ought to be a crime to sell it and not own it,” he says. “If we believe in it, we need to own it — and lots of it.”

Advisors should also be taking every opportunity to educate themselves further about the product, in order to serve their clients better. The industry is changing and advisors need to stay on top of it.

“Go to meetings,” Franco says. “Read up on it, meet with like-minded people.”

> Get It In Writing. When a client decides against a CI policy or chooses to opt for an amount lower than you recommend, it’s a good idea to get the client to sign off on these facts. Halpern also recommends that advisors send an information letter to each client, asking them to review the information and sign off on a waiver of responsibility. Besides protecting the advisor from potential litigation down the road, the request is a sales tool.

“Nobody wants to sign away his or her health liability,” he says. It can also be brought out when a client is waffling. “I’ve found it a very neat way of saving a dying sale.”

Long takes it a step further and sends his clients a copy of the letter they signed soon after their meeting. Some want to revisit the option upon receiving the letter, he says: “It’s a second chance really to think this out.” IE