Life insurance industry growth is similar to patterns seen in the telephone business 20 years ago — everyone has a phone, profits are relatively flat and companies are scrambling to find new business.

Like the telephone industry’s foray into new services and features like call waiting, call display and voicemail — all made possible by new developments in fibre optics and computer chip technology — there are small signs in the insurance industry that the public is ready, and willing, to pay for new products, such as critical illness insurance coverage.

In a recent seminar at the IFB Spring Summit in Toronto, Rick Forchuck, director of sales and distribution at Empire Financial Group, said getting client appointments to sell critical illness insurance is like shooting fish in a barrel, if you do it right. Moreover, he says in an industry where people typically don’t go out of their way to buy coverage, CI is one of the first products with demand and relatively wide public acceptance.

Despite this, most carriers are selling less CI product today than they were at the same time last year. “Early adopters in financial planning are selling CI,” he says, but many advisors resist change.

“They’re not convinced it’s important, they’re already too busy, they don’t need to learn a new product, they’re not convinced it’s here to stay and they’re not convinced there’s an opportunity,” Forchuck said. Other objections — it takes too long to get paid, the underwriting is too severe, too many claims are turned down, the product is too expensive for many to afford and it’s too difficult for clients to understand the details, are presumptuous, he says.

“Who would’ve thought 10 years ago that people would pay $29.95 for Internet services? What if they’d said, like we do, that consumers can’t afford it, we’re not even going to show it to them? Most people who buy most things do so to fulfill a need other than for that which they are buying.”

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    In selling CI, he says the trick is not to bombard clients and prospects with a barrage of medical statistics or get caught up in the technical workings of the product — telling clients how to build a watch when all they really want to know is the time — but to sell the product by telling better stories.

    “The fact is we just don’t care what the facts are,” he says. Even though the Oscar-nominated documentary Super Size Me, about the disastrous effects a fast food diet can have on a person’s health was wildly successful, McDonalds’ profits still rose 3% in the year it was released. Last month the fast food chain posted record worldwide sales of 9%. There are millions of articles online, in magazines and on television, “good, solid, right information on how to live healthier lives,” but he says, “the facts don’t matter. People still do what they want to do. Information doesn’t make any difference to our behaviour.”

    Still, there are some important CI-related facts to consider: one in three women and two in five men in Canada will develop some form of cancer during their lifetime and in most cases life, health and disability insurance does not cover income lost while recovering from a critical illness and cannot protect family businesses, RRSPs, or other retirement income. The best way to grab a client’s attention is to find a story that they can identify with and avoid getting caught up in the intricacies of all the different products available, says Forchuk. “They’re all good. The ‘best’ policy is the one that’s in force when it’s needed.”

    To get started, Forchuck suggests finding articles featuring a family story about the effects an illness can have on finances. There are many variations on the theme where normally affluent people are forced to rely on friends, food banks and community resources to help their families in cases where they hadn’t planned for income replacement, or surprise medical, rehabilitation or homecare costs, and send the article to existing clients with a letter saying: “I saw this article. It made me think of your situation.”

    “This stuff is in the papers all the time. Take an existing article and mail it to your existing clients with a letter. Do this on a regular basis. You’ll only need to call three out of every 10 people. The other seven will call you.

    “It’s not the technicalities of a product that sells the product. It’s the story behind the story,” he says. “We’re a nation of TV watchers. We live vicariously through other people’s experiences. How would that work if it were me? We do people a great disservice by not telling the story.”

    Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com

    (06/06/06)