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The improvement of the underwriting process enhances the accessibility to disability insurance


Susan Yellin

21 June 2017 07:00

Neil Paton

If the disability insurance is often perceived as complex to sell, the improvement of the underwriting process, technological innovation and new products are helping to encourage Canadians to obtain this protection.

According to figures drawn from the survey entitled Annual Health Insurance Benefits in Canada Survey conducted by thecanadian Association of insurance companies of persons (CLHIA), the number of Canadians who have a disability increased by 15.5 % between 2005 and 2015, now reaching 11.9 million people. At the same time, the premiums, or the sum of premiums for individual and group disability short-or long-term, grew by 51 %. On the claims, they have increased by 59 %, rising to $ 7 billion over the decade.

More simple and faster

The pressure to that obtaining insurance is easier and faster comes from all over milléniaux to babyboumeurs who are trying to avoid passing the medical examinations with a view to accelerating the establishment of their insurance. People whose employer has slashed its budget for social benefits in terms of removing the disability insurance in addition to applicants for insurance. Just like those who seek to compensate for the inaccessibility to a disability insurance as long as they have not accumulated a degree of seniority with their employer, explain the various experts interviewed by the Journal of insurance.

«Disability insurance is now faster and easier to obtain. It thereby responds to the expectations of the client who wishes to settle things easily and quickly and then move on to something else, » says Micah Neale, specialist, living benefits at Desjardins.

Many of the current products have been the subject of a reduction of the associated risks, so that insurers can offer high-quality programs without rejecting 40% of the requests as in the past, finds Neil Paton, president and CEO of The Edge Benefits. As a result, it is no longer necessary, as formerly, to wait for four months before you know if you get a disability insurance. The customers who ask for a disability insurance that covers only injuries have access to guaranteed issue. The police is sent home within five days, approximately, he said. If they want to add illness to injury, they can submit to an underwriting process that has been simplified and which usually lasts for less than a month, does it.

Alliance distribution strategic

Earlier this year, Edge Benefits has begun an alliance of distribution strategic commitment of five general agents in order to increase, in Canada, the number of financial advisors to address benefits such as disability insurance. Since then, Edge has seen its ability to handle subscription requests in-line increase to the point of representing about 75 percent of its sales, while 30% of the advisors used by the remote system, lists Mr. Paton.

In general, the underwriting process for disability insurance has improved greatly in recent years, some schemes allowing ceilings monthly higher than before, remember David Szalkai, vice-president and partner, division of insurance life and disability personal, to the society Bedard Co. Life, in London, Ontario.

It is reported that some insurers propose adjustments to self-employed workers who are entitled to tax deductions or income splitting, which allows you to increase coverage from 70% to 80% of the income. Thus, in the case of a coverage of $ 100,000, the monthly income maximum was previously $ 5,000 per month in the event of an individual disability, and some insurers have now increased this amount up to approximately $ 5,400 per month, shows Mr Szalkai.

A wide range of new products

In recent years, the arrival of innovative products — including insurance liabilities in the case of disability — has attracted a new clientele, » remarked Micah Neale, Desjardins.

It is an Open secret that Canadians are heavily indebted. However, if a disabled person is deprived of income, it will not be able to honour its obligations and the risk of being in trouble, according to the financial institution with which it does business.

There is a plan that does not take into account the income of the person, but of his occupation. This new product has just been launched. This disability insurance plan covers debts, for example mortgage, credit cards and the car loan up to a maximum of $ 6,000 per month, » explains Mr Neale.

In addition, the spouses who remain at home can now receive disability insurance. Because even if these spouses have no income to replace, they participate fully in family cohesion. Their absence can cost a pretty penny to the rest of the family. This group now has access to a disability insurance up to $ 500 per month, says Mr Neale.

Protection of future income

Products aimed at high net worth individuals are also emerging, is Ken Hunter, general manager of the firm of Hunter McCorquodale.

One of the products addresses the loss of future income. For example, a young professional, illustrates Mr. Hunter, who would invest his time and money in his training, student loans, and maybe even the purchase of a cabinet. It is expected to have a day of pretty good income, but this may take a few years. By then, it should to protect himself in case an injury or illness chavirerait his plans, preventing it to achieve its financial objectives. A medical specialist can anticipate to earn between $ 400,000 to $ 1,000,000 per year once well established, but it is not currently possible to receive to 5 000 $ to 6 000 $ per month in disability benefits. The future plans of income protection will take account of this gap, » said Mr. Hunter.

Originating in the United States, this disability insurance plan «has been developed to meet the needs of young professionals by adding to what is already traditionally accessible such as income replacement,» he says. Hunter McCorquodale is part of the american product. His advisors currently offer disability insurance in Canada at the same time as its other specialized solutions.

Despite the arrival of new products and the improvement of technology, many advisors — life insurance all qualified to sell disability insurance, and other benefits — tend to avoid doing so, noted David Szalkai. Disability insurance can be a complex product with which it is easy to lose the thread says it : the rate of reduction of the coverage is higher, and exclusions such as additional premiums are more frequent than in the case of life insurance. «It is also difficult to fully know the field if we do not deal with on a daily basis and that we don’t specialize in there «, he adds.

Advisors life insurance should, however, be more comfortable discussing the disability insurance as a component of the overall income of a customer, said David Szalkai. Micah Neale believes that it is up to the advisors life insurance to see if they cause «disability insurance» with their clients. It is only under these conditions that the subject will be part of their usual routine. «If the advisors speak, the sales will follow. «

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