LifeHealth.com : Living benefits resound with multicultural markets - Accident and health products help to provide solutions

Living benefits resound with multicultural markets - Accident and health products help to provide solutions

Verónica Torralba Lozano and Bob Clancy

Verónica Torralba Lozano is Vice President of Strategic Marketing for AIG American General. She can be reached at Veronica_Torralba@aigag.com. Bob Clancy is National Director, Accident and Health Sales and Training at AIG American General. He can be reached at Bob_Clancy@aigag.com.

Multicultural markets continue to be some of the most rapidly growing segments of the total United States population, particularly the Hispanic and Asian-American markets. The fact that these markets are increasing in size as well as in levels of affluence is not news. What is news, however, is that many insurance-based advisors are experiencing increased success in these markets in the accident and health arena, particularly with Critical Illness Insurance (CII).

Numbers Speak for Themselves

The Asian population in the United States has grown 72 percent between 1990 and 2000, which far outpaced the U.S. total population growth of 13 percent. Over the next 15 years, the Hispanic population is expected to increase by 24 million, more than twice the number that will be added by the majority group.

The economic influence of the Hispanic market is growing even faster than their population. Nielsen Media Research estimates that the buying power of U.S. Hispanics will exceed $1 trillion by 2008, a 55 percent increase over 2003 levels. Similarly, 22 percent of Asian-American households earn $100,000 or more annually compared with 14 percent of all households. In addition to having a direct effect on their influence in terms of buying power, this represents an opportunity to provide individuals in these markets with services matched to their financial needs, including wealth protection in both life and death.

Family First

"Family first" is a motto that can certainly be applied to these markets. Those in the multicultural markets are more likely than the general U.S. population to have elderly parents or relatives living with them and are also more likely to live in households with children. This family-centric lifestyle is often the driving force behind many of their financial goals and concerns.

Living Benefits

The factors outlined above, growth in numbers, increased wealth, and a desire for stability in their family's financial future, are reasons why solutions involving accident and health products, particularly CII, seem to resonate within the multicultural community.

These "living benefits" provide a lump-sum payment in the event of a diagnosis such as a heart attack, stroke or cancer. The payment is paid upon diagnosis directly to the insured with no restrictions on its use. For example, the lump-sum payment can be used to help ensure the family has adequate income if the insured is out of work, to help cover mortgage payments, to help fund their children's college education or for any other expense.

Education is the Key

According to LIMRA, educating the multicultural market on insurance products and how they can offer financial protection, as well as help achieve specific financial goals, is paramount. Utilizing a strategy of education as opposed to selling a product, will help agents build trust with their clients, but particularly so in the multicultural markets.

Segments within the Multicultural Markets

One fast-growing sub-segment within the multicultural markets where employing the strategy of education will be especially productive is that of small business owners. The Small Business Administration reports that small business ownership among Hispanics grew 18 percent between 1982 and 2002.

The economic influence of the Hispanic market is growing even faster than their population.

However, many small business owners cannot obtain disability coverage. Even if they could, those benefits are normally only a percentage of the owner's income and can take anywhere from 60 to 120 days to be realized after a triggering event. Additionally, for many small business owners in the multicultural markets (e.g. two-thirds of Hispanic small business owners), the small business is the only source of income for the family. As such, the effects of a critical illness on the individual, their family and their business can be just as devastating financially as it can be physically. With CII, the lump-sum payment can be used as part of an overall plan to help keep the business operational during the owner's recovery, pay business expenses or replace personal income.

And with only one bread-winner in an often large family, this statistic helps make the case for another ideal candidate for CII within the multicultural markets: full-time homemakers. Disability insurance is typically only available to traditional wage-earners, but as any stay-at-home parent will tell you, while they don't necessarily earn an income, their contribution has enormous intrinsic value. Should that person undergo a serious illness that hinders or eliminates their ability to care for the family, costs would quickly add up. A critical illness policy, in this case, would provide a lump-sum benefit to help cover the costs of child care, home modifications and/or medical expenses incurred by the illness.

Other tie-ins with segments within the multicultural market that are ideal candidates for CII include highly paid professionals who often can't get enough DI coverage due to income replacement limits. And as mentioned above, with 22 percent of Asian-American households earning $100,000 or more annually, many are increasingly in need of insurance products to round out financial portfolios that will help protect their wealth.

Helping Build a Sound Financial Plan

The multicultural market is open to receiving information about a variety of insurance products that can help address their specific financial goals and concerns. Those who explore the solutions available through accident and health-based products that provide living benefits, including CII, are poised to not only positively impact the lives of those in their book of business, but also to increase that book of business through word-of-mouth referrals, one of the best business builders there is, regardless of the market.