In less than 15 years, critical-illness insurance has grown to become a mainstream protection product with sales of almost 800,000 new policies last year. Yet most people still do not understand what it is or why they might need it.
Take young adults, for example. In the past, this group has seen little that has attrac-ted it to seek financial advice. Starting a pension makes sense but is a decision that is still too often taken later in life. Investments are something that only appeal to people who have funds to invest. For many, debt is the biggest financial issue, including getting that all-important first mortgage.
For anyone without dependants, there may be little point in having life cover although a mortgage lender may insist a borrower takes out cover so it can get its money back without having to sell the home if the borrower dies.
Private medical insurance might be important to some young people, especially if it covers sporting injuries, and income protection should be high on anyone's priority list.
Similarly, critical-illness protection should be a key priority. Yet many young people are not aware of it.
Think back to the days when you were young and ask yourself whether health was an issue to you. The chances are you had more important things on your mind, not the least of which was going out and having fun. But think what might have happened had you been involved in a major accident or hit by a serious illness. It is not unheard of for young people to suffer serious injury, cancer, meningitis or even heart attack or stroke.
A female aged 20 is three times more likely to suffer a critical illness than die before age 65. For a male aged 30, the incidence is slightly less at two-and-a-half times more likely.
One of the benefits that medical science has brought about in recent years has been its success at treating cancers in young people. Thirty years ago, childhood leukaemia was usually a killer but young people are now generally stronger and more able to survive a serious illness, provided they get treatment quickly, so the prognosis for many will be good.
The main attraction of critical-illness cover is that it provides a cash lump sum at a time when it is most needed, to be spent in any way the insured wishes. So student loans could be paid off, together with any other loans, mortgages or debts. A new car or expensive holiday may mean more to someone who has never had the chance to enjoy either, while cash can help set up a business or even fund taking a year or two out.
From a business development perspective, today's young client is tomorrow's business leader, professional contact or entrepreneur. Prospecting for younger clients follows the model used for older clients with only minor differences. Although empathy is important, if you are in your 50s or 60s, joining the club culture may not be the best route to meet young people. Prospecting ideas for younger clients could include:
Affinity groups such as sports clubs.
Children and relatives of existing clients.
Sponsorship of events aimed at younger people.
Advertising in media read by younger people.
Mailshots to lists of younger people, targeted at their values and needs.
Internet websites, keeping the message simple, targeted and short.
Today's critical-illness policies cover a wide range of illnesses and, thanks to the work of the ABI, the industry is moving towards common illness definitions. Coupled with the new ABI code of practice, this means clients can feel more confident than ever that the product will meet their needs.
For young people, an added attraction of critical-illness insurance is that they pay much less for their cover. That means protection is affordable to more people and they can consider bigger sums assured.
For older clients, the limitation is not how much cover they want but how much they can afford. With younger people, that is less of an issue. Even combined with income protection to provide a comprehensive package, it provides a lot of protection for remarkably little.