MassMutual Introduces New CI Coverages

Massachusetts Mutual Life Insurance Co. (MassMutual) is introducing new insurance coverages to help working Americans protect their finances and savings against critical illnesses and accidents. The critical illness and accident group insurance policies are available through employers, either directly or through MassMutual’s BeneClick!SM integrated benefits exchange. The coverage is voluntary, which means that employees pay the full cost of the coverage offered through their workplace, or it can be made available on an employer-paid basis. The policies cover employees and, where available, spouses and children as well.

MassMutual’s introduction of these policies comes at a time when critical illness (CI) insurance is becoming more popular in the U.S.

Advisor Today recently interviewed James Ocampo, assistant vice president, BeneClick!, to learn more about this product and what is fueling its growth.

Advisor Today: What is the size of the CI insurance market in the United States?

James Ocampo: In 2015, CI insurance sales totaled $490.59 million. The product has demonstrated double-digit growth for each of the past five years. The year 2015 was the largest year for sales and saw the largest, year-over-year increase (a 25 percent increase from that of 2014).

Market penetration in the U.S. is relatively low. Only 26 percent of employers in the U.S. offer CI insurance. Since 74 percent of all employers in the U.S. do not offer CI insurance to their employees, the available market for this product is largely untapped.

AT: After a slow start, CI insurance appears to be growing rapidly. What is driving this growth?

Ocampo: CI insurance is growing in popularity as more employers recognize that their employees need to improve their financial wellness. MassMutual’s 2015 Employee Benefits Security Study found that 40 percent of working Americans say personal financial issues distract them at work. CI insurance provides cash when many people need it the most — when they are fighting a covered critical illness such as cancer, a heart attack or another serious illness.

Growth is also driven by two primary factors that are driving a huge portion of the medical and group-benefits market:

1. Healthcare reform and the policy around medical loss ratios have cut medical producers’ compensation by 50–70 percent, causing producers to work two to three times as hard as they used to for the same revenue.

2. The continued rise in medical insurance premiums has forced most employers to move to highdeductible plans, which exposes employees to more financial uncertainty.

The result is greater interest from medical insurance producers to offer voluntary solutions to offset their revenue loss and provide employers with creative alternatives to offset their employees’ exposure to high-deductible plans. CI insurance has been the best answer to both of these challenges. In response, sales of HSA-compliant CI insurance plans have increased each year since 2011 and are on pace to break another record in 2016.

(Note: MM’s critical illness product is fully HSA Compliant.)

Sales of HSA-compliant CI insurance plans have increased each year since 2011 and are on pace to break another record in 2016.

AT: How does CI insurance fit into a consumer’s overall retirement planning?

Ocampo: On the surface, most people seemingly have their financial houses in order. Our research finds that 77 percent make it a priority to understand their personal finances and benefits. Yet, 38 percent of working Americans say they know little or nothing about their employer-provided benefits, such as healthcare, life insurance, 401(k) retirement plans and other benefits.

At MassMutual, we believe that in the age of benefits consumerism, employees need simple solutions to make sense of all their employersponsored benefits so that they can focus their attention on taking care of themselves and their families now and in the future. Our tools engage people, help them make better choices and incite them to action.

Approximately half of all Americans have little or no savings. CI insurance provides financial liquidity at a time when many people are faced with a large financial burden and when they are fighting an expensive critical illness. Having a source of cash from a critical illness policy can dissuade retirement savers from taking a hardship loan or withdrawal from their 401(k) or other retirement savings.

CI insurance is a lump-sum benefit paid upon diagnosis of a critical illness. What makes CI insurance unique is that the insured is entitled to the benefit regardless of treatment, as well as to out-of-pocket expenses. This benefit provides the insured and the insured’s family with the freedom to make treatment decisions (type of treatment or no treatment)without having to worry about the financial burden.

AT: Who are the best prospects for CI insurance?

Ocampo: Working Americans who want to protect their family finances, including retirement savings, are a good prospect for CI insurance. Considering that many employers now offer healthcare coverage with high deductibles, having another source of cash to help defray the cost of a critical illness can benefit many people.

Other good prospects are employer groups with 100 or more employees. Cancer, heart attack and strokes are catastrophic illnesses that affect people in all walks of life and in all regions of the country. CI insurance resonates with all levels of employees — from the entry-level employee to those in the board room — regardless of gender.

AT: How do you approach clients about CI insurance?

Ocampo: The most effective way to introduce CI insurance to an employer is to listen to the employer’s challenges and concerns. Every employer that is struggling with the cost of medical insurance and worried about transferring too much cost to its employees has a legitimate need for CI insurance.

AT: What are the most effective strategies you have used to address common objections to critical illness insurance?

Ocampo: Objection: “We already offer medical insurance.”

Addressing this objection: The average out-of-pocket expense for cancer is $750 per month with medical insurance.

Objection: “We are a healthy group.”

Addressing this objection: Have the employer ask the employees to stand, and have each person who has had cancer or knows anyone who has had cancer sit down. Then, ask the same question for heart attack and stroke. Nearly everyone, with the exception of one or two employees, will be sitting down. This demonstrates the need very effectively.

AT: What three things should govern an advisor’s thinking as he attempts to sell CI insurance to his prospects and clients?

Ocampo:

1. Am I helping the employer save on the cost of medical insurance while adding protection against life’s unforeseen events for the employees?

2. What is the best benefitscommunication strategy to educate employees about the value of CI insurance and other voluntary insurance products from both the health and the financial perspective?

3. Which carrier will provide me with the best tools and support to ensure that my employer groups are enrolled and serviced with the same care I give to them?

By Deb Newman,