In the October 2024 issue of the Insurance Portal, sources predicted that critical illness insurance could make inroads with younger generations. In particular, many Gen Z individuals have no partners or children. Because of this, living benefits products could take precedence over life insurance for their protection needs.
Together with Millennials, Gen Zers form a population that also places a high value on flexibility, especially at work, as revealed in the 2024 Deloitte survey of over 22,800 respondents in 44 countries, of whom 14,468 were Gen Zers and 8,373 millennials. These young people place flexibility and work-life balance at the top of their priorities. At the same time, they continue to worry about the future. The cost of living remains their main concern.
Martin Labarre, Director Product Pricing and Development at Desjardins Insurance, praises the flexibility of the insurer’s offering. He explained that it “enables our advisors to offer critical illness insurance coverage tailored to customers' different needs and budgets”.
Budget choice
Young people could find flexibility at a reasonable cost with individual critical illness insurance products. An economical choice, 10-year and 20-year term critical illness insurance continue to take the lion's share in terms of the number of policies sold. Of the 114,861 critical illness policies sold in 2023, 43% (50,164) were term policies, according to LIMRA's Canadian Individual Critical Illness Sales Survey.
In terms of the number of policies sold, “Health Priorities term products are popular, particularly the T20 (20-year term insurance). These products offer good cost-effective protection and allow conversion for permanent needs. Clients can also save money by combining their coverage with life insurance, and thus qualify for the multi-protection discount,” explains Martin Labarre.
In terms of the number of policies sold in 2023, level and limited-duration critical illness insurance, such as term to age 75, followed term in 2023, with a 42% share or 48,728 policies. Permanent critical illness policies accounted for 15% of sales in 2023, or 15,969 policies.
Choose your terms
Mathieu Charest, Manulife's Head of Products and Pricing, Individual Insurance, told Insurance Portal that flexible plans with renewable and level premium options are among the most sought-after features in critical illness insurance. Charest also points to the ability to layer coverages to obtain a solution that best meets customers' needs.
“Policyholders can also have flexibility in paying their premiums,” Michael Van Alphen, Sun Life's Vice-President, Insurance Solutions, told Insurance Portal. He adds that customers can pay for their coverage more quickly thanks to its premium options, which allow payment to be limited to 10 or 15 years. “In addition, no other insurer offers the flexibility of paying premiums for 15 years on a T75 policy,” says Alphen of his Term to 75 product.
Equitable offers a 20-year premium payment option on its Term to 75 product.
The option of releasing the contract from premium payments is more widespread with permanent critical illness insurance, which takes the form of Term to 100 (T100). For example, BMO Insurance is introducing a version of its permanent critical illness insurance product called Living Benefit Plans (15-Pay T100). Under this version, the insured pays 15 guaranteed level premiums. The policy is therefore fully paid-up after 15 years.
Empire Life and Manulife also offer this 15-year payment option on their T100 versions: CI Protect Plus for Empire Life and Lifecheque for Manulife.
For its part, iA Financial Group has equipped its Transition product with options for quick payment, in 10 years or 20 years, on its T100 version.
Refunds and expectations
Optional additions to the basic policy, riders, are also a sought-after feature, “including return of premium”, notes Manulife's Mathieu Charest.
Empire Life values the flexibility offered by the return of premium option. “Return of premium on surrender or on maturity is a feature that has a lot of appeal. When an advisor’s selling it, he can say to his client: if you buy that rider, you can get the premiums that you paid back, if you never had a critical illness benefit claim. Return of premiums on death is another additional benefit that we offer,” said Mike Stocks, Vice-President and Chief Marketing Officer, Retail, Empire Life, in an interview with Insurance Portal.
For its part, Sun Life says it offers simple, easy-to-understand return of premium options. “Progressive Return of Premium on Death on Cancellation or Expiry benefits are available for all coverages, including T10. The Progressive Return of Premium on Death on Cancellation or Expiry benefit can be added at the time of conversion without underwriting,” adds Van Alphen.
Sales on target
In 2023, critical illness insurance sales had the wind in their sails, according to LIMRA's survey. In terms of premiums, they reached $150.7 million, up 12% on 2022. In terms of number of policies, sales rose by 4% compared with 2022, to 114,861 policies.
It's too early to say how individual critical illness sales will do in 2024, but they got off to a modest start in the first quarter of 2024, according to the only LIMRA survey available for the current year, at the time of writing. In terms of new annualized premiums, critical illness sales were down 1% in the first quarter of 2024, compared with the first quarter of 2023. In terms of the number of policies, sales of the product increased by 3% during this comparative period.
At Desjardins Insurance, Martin Labarre revealed the pace of its critical illness insurance sales. “Last year we had an exceptional year, with a 24% increase in written premiums. This year, our sales are also growing, and we continue to gain market share. Desjardins is now the third largest critical illness insurer in Canada,” says Labarre.
He believes that the insurer’s Health Priorities product will account for a significant share of premiums written in 2023. “It's an attractive product for business owners, because it offers the shareholder and the company protection against the financial consequences of a covered critical illness, while providing an advantageous premium refund if the insured person remains healthy,” explains Labarre.
This article is a Magazine Supplement of the October issue of the Insurance Journal.
