Download Critical Illness

Critical Illness – Part 2
Conference 2013 Elite
Paul Prosser B.Comm, CFP, RHU
Regional Vice-President (Prairies)
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A partner you can trust.
Agenda
Origins
Death vs. Critical Illness
Perspective
Tough Sale?
Product Line-Up
Sales Idea
The elephant, symbol of our 100 years of strength and longevity.
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Impacting People Every Day
In Canada
Every 2 minutes someone is diagnosed
with cancer
Every 7 minutes someone has a heart
attack
Every 10 minutes someone has a stroke
Many will survive.
But survival has a cost. $$$$$$$$.
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CI – A Unique Beginning in 1967
Critical Illness Protection
– The ultimate “Gap
Filler”
“Not because you are
going to die,
but
because you are going to
survive!”
- Dr. Marius Barnard
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Dr. Marius Barnard
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From 1983 To Present
– 54 Countries
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Not because you are going to die...
226,584 Deaths in Canada in 2004
52.4% of all Deaths caused by:
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•
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Source: CBC.ca
Cancer 29.5%
Heart Disease 22.9%
Because you are going to survive!
Age
Deaths per Year
Population
Percentage
25-29
1,265
2,529,239
0.05%
30-34
1,541
2,598,289
0.06%
35-39
2,177
2,344,872
0.09%
40-44
3,874
2,138,891
0.18%
45-49
5,828
1,674,153
0.35%
50-54
7,937
1,339,902
0.59%
55-59
10,878
1,238,441
0.88%
60-64
13,269
1,190,217
1.11%
Total
46,769
15,054,004
0.31%
Total Population
230,132
28,120,065
0.82%
Source: StatsCan
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Critical Illness – Heart Attack
- 1 in 4 Canadians will contract some form of Heart Disease.
- 75,000 Canadians will suffer a Heart Attack each year.
- The rate of death among patients hospitalized for Heart
Attack has decreased by half, from 16% to 8%.
- 1 in 2 victims is under age 65.
Living with Heart Disease:
Age 20 – 49
Age 50 – 64
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1.3%
6.9%
Critical Illness – Heart Attack
Every 7 minutes…a heart attack!
Every year 70,000 Canadians will have a heart attack
•
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82% of victims survive their first heart attack
1 in 4 Canadians will develop some form of heart disease during their life
1 of 2 heart attack victims is under age 65
Source: Stats Canada
Critical Illness - Stroke
- 50,000 Canadians suffer a Stroke each year.
-
75% survive the initial event.
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Stroke is the leading cause of neurological disability.
- 1 in 3 victims are under Age 65.
- 75% of victims are left with a disability:
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15% of victims die.
10% recover completely.
25% recover with minor impairment or disability
40% left with moderate to severe impairment
10% require long-term care for severe impairment
Source: Heart and Stroke Foundation of Canada
Critical Illness – Heart Attack & Stroke
80% of Canadians have at least
one risk factor for Heart Disease
or Stroke:
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•
•
•
•
•
•
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Smoking
Alcohol
Physical Inactivity
Obesity
High Blood Pressure
High Blood Cholesterol
Diabetes
Critical Illness - Cancer
Each week in 2009, 3300 Canadians will be
diagnosed with Cancer
30% of these new cancer cases will occur in
young & middle aged adults (aged 20-59)
Cancer incidence is rising in young women aged
20-39
Nearly half of all Canadian males and 40% of
females will be diagnosed with cancer at some
point in their lives.
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Source: StatsCan
Critical Illness - Cancer
An estimated 166,400 Canadians were diagnosed with
Cancer in 2008.
1 in 3 Canadians will develop Cancer in their lifetime.
Three types of Cancer account for the majority of new
cases:
Men – Prostate, Lung, Colorectal
Women – Breast, Lung, Colorectal
Mortality from Cancer is declining for both Men and
Women under Age 70.
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Leading Types of Cancer & Incidence
Three leading types of Cancer in males
1. Prostate Cancer – 1 in 7 men will develop prostate cancer
2. Lung Cancer – 1 in 11 men will develop lung cancer
3. Colorectal – 1 in 14 men will develop colorectal cancer
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Source: StatsCan
Leading Types of Cancer & Incidence
Three leading types of Cancer in females
1. Breast Cancer – 1 in 9 women will develop breast cancer
2. Lung Cancer – 1 in 16 women will develop lung cancer
3. Colorectal – 1 in 15 women will develop colorectal cancer
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Source: StatsCan
Critical Illness – Cancer,
The Greatest Risk
Every 2 minutes…a new diagnosis!
173,800 new cases of cancer (excluding about 75,500 non-melanoma skin
cancers) and 76,200 deaths will occur in Canada in 2010.
Leukemia
Melanoma
3%
3%
Oral
Pancreas
2%
2%
Melanoma
3%
Men 90,000
Kidney
Non-Hodgkin 3%
Ovary
3%
Pancreas
3%
Leukemia
2%
Women 83,900
Non-Hodgkin
lymphoma
4%
lymphoma
5%
Prostate
28%
Bladder
6%
Thyroid
5%
Breast
28%
Body of Uterus
5%
Lung
14%
Lung
14%
All other
20%
Colorectal
14%
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All other
22%
Colorectal
14%
Critical Illness – Cancer
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in Young Adults
Cancer is the main cause of early death among young
adult females:
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Almost 2/3 of young adult Cancers occur in females
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Breast cancer is the most common.
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More young adult females than young adult males are
diagnosed with Lung Cancer.
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30% of new Cancer cases will occur in young and
middle-aged adults – ages 20 to 59.
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Critical Illness - Statistics
‒ Of
10 Healthy Males 3 will have a Critical Illness before
Age 65.
‒ Of
10 Healthy Females 2.7 will have a Critical Illness
before Age 65.
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Source: www.criticalillnessinsurance.com
Critical Illness before Age 65
Critical Illness
Incidence
Percentage of
Illnesses before
Age 65
Critical Illnesses
before Age 65 per
Year
Heart Attack
75,000 per Year
50%
37,500 per Year
Stroke
50,000 per Year
33%
16,667 per Year
Cancer
130,000 per Year
35%
45,500 per Year
Total
255,000 per Year
137,167 per Year
Source: Heart and Stroke Foundation, Canadian Cancer Society
Canadians are 3X more likely to be
diagnosed with a Critical Illness before
Age 65 than to Die!
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Statistics
“Everyone will die, but I won’t get sick”
Possibility of death vs. probability of critical illness
Male - Before age 65
25%
20%
15%
10%
5%
0%
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Age 35
Age 40
Age 45
Source : MunichRe
Age 50
Age 55
Age 60
Statistics
“Everyone will die, but I won’t get sick”
Possibility of death vs. probability of critical illness
Female - Before age 65
25%
20%
15%
10%
5%
0%
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Age 35
Age 40
Age 45
Source : MunichRe
Age 50
Age 55
Age 60
The High Cost of Getting Sick
Canadian Dollars ($)
Private nursing (per hour)
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33 – 55
Treatment at Mayo Clinic (Rochester, Minnesota)
Coronary artery bypass; 1-4 vessels, hospital stay 5-7 days
74,900 – 90,950
Modified radical mastectomy; one breast, hospital stay 2-3 days
23,647 – 28,890
Radical prostatectomy, hospital stay 2-3 days
37,664 – 43,870
Radiation therapy for cancer for 6 weeks
Kidney transplant (living donor), hospital stay 5-8 days
53,500 – 74,900
149,800 – 246,100
Heart transplant, hospital stay 2-4 weeks
Housekeeper (per hour)
Home care bed
Home renovations
Ramp
Stair lift
Non-Covered cancer treatment drugs
Handicap Van Conversion
283,550 – 449,400
25 – 30
1,000 – 8,000
Costs for treatment at Mayo Clinic have been converted from US dollars to Canadian dollars assuming a
conversion rate of $1.07 Canadian to $1.00 US.
1,000 – 10,000
3,500 – 18,000
20,000 - 65,000
12,980 – 16,980
The Steep Cost of Surviving
• 151,712 Canadians filed personal
Bankruptcy/Consumer proposals in 2009
• The average household debt is greater than
$90,000.
• The total debt to disposable income ratio has
increased to 145% for 2009.
• The ratio of consumer debt plus mortgage debt
climbed to 127% of disposable income in 2008
• Spending and debt have risen much faster than
incomes
• Annual savings are smaller and average net worth is
also less.
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IA Sales Numbers
Life Policy Sales ’12
- 136,000 policies
CI Policy Sales ’12
- 19,000 policies
Life Policy Sales ’11
- 136,000 policies
CI Policy Sales ’11
- 17,000 policies
We sell 8X more Life Insurance policies
than Critical Illness policies!
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Some Perspective
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Two Questions?
? Who do you know that has suffered:
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Heart Attack?
Life Threatening Cancer?
Stroke?
? What would a little bit of money have meant to them?
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What makes CI insurance a tough sale ?
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The Price is High
Complexity of Product
Declines for Claims
The Refusal Rate is High
Many Cases with Extra Premiums
Long Underwriting Periods
More difficult underwriting when a Life and CI
application is submitted at the same time
Average Face Amount - $95,000 per policy
2005 Sales Breakdown for Products with Guaranteed Premium Rates
Product
Average Face Amount
(per policy)
Renewable Term (T-10, T-20)
$89,725
Level Pay (T-65, T-75)
$96,101
Permanent (T-100)
$99,712
Other
All Guaranteed Premium Rate Products
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Source: Munich Re’s Critical Illness Survey 2006
$105,739
$94,558
Average Family Income in Canada
Median Total
Income
2007
2008
2009
2010
Canada
73,420
75,880
75,320
76,950
Nova Scotia
66,670
69,910
70,490
72,350
Ontario
76,510
78,350
77,060
79,050
Manitoba
69,410
72,190
73,250
74,440
Saskatchewan
73,830
78,830
80,080
82,230
Alberta
89,720
94,170
91,590
93,820
BC
71,880
74,070
72,820
73,190
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Source: Stats Canada
IA Stats – Declined Claims
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Approx. 600 claims to date
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Approx. 100 claims were invalid
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Remember CI is a living benefit, claims for death and
uncovered illnesses don’t qualify
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Approx. 500 valid claims
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56 refusals
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Approx. 10%
Causes for Denied Claims
According to Swiss Re
The most common causes for claims denial are:
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•
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20% - 90 day exclusion for Cancer
20% - Cancer In Situ
20% - Heart Attack did not meet definition
40% - Misrepresentation
Source: Swiss Re - 2001
What makes CI insurance a tough sale ?
Critical
Illness
Life
Insurance
Issued Standard
61%
79%
Issued Extra-Premium
13%
4%
Refused
15%
9%
Not Taken
11%
8%
Average age
34
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Current Techniques for Sales
Clients have limited funds…need to
take care of their Life Insurance,
RRSP, RESP, TFSA, Disability
coverage first.
Why doesn’t this work?
Clients needs & demographics
changing
Clients risk is living too long not dying
too soon.
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Current Techniques for Sales
Need $$ to access healthcare outside of
Canada – Wait lists are increasing!
Ability to jump the Queue.
Why doesn’t this work?
Many people don’t want to leave “home” during
a period of Critical Illness.
To purchase the amount of coverage required
– could be prohibitive.
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Current Techniques for Sales
CI provides a magic “pot” of money
so you can do “whatever” you want
to do with it!
Why doesn’t this work?
“Anything you want” – does not provide
a value proposition.
What CI benefits can do is not as clear
as what Life Insurance does.
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Current Techniques for Sales
People with $$$ have no need for CI
Why doesn’t this work?
Wealthy people understand the value
of insuring risks.
Why use your own money if you can
use someone else’s?
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Current Techniques for Sales
Sell CI for the “Investment”
component…aka Return of Premium.
Why doesn’t this work?
Former product design and pricing is
not sustainable.
The odds of a claim are high.
Adding ROP increases the cost – may
eliminate potential buyers.
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IA Product Line-Up
Transition – Full Product
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T10, T20, T75, T100
25 Covered Illnesses
Flexible premium options
Ages 0-65*
Prevention +
$10K - $2M face amount
* Age at issue varies by term
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IA Product Line-Up
Transition Evolution
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T100
ROP built in
25 covered illnesses
$10K - $2M face amount
Transition Simplified Issue
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T10, T75
Non Medical
4 covered illnesses
$10K - $100K face amount
IA Excellence Product Line-Up
Cancer Guard
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Guaranteed Issue
Non Medical
No MIB
Up to 6 covered illnesses
Up to $100K face amount
Simple Sales Process
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