Agents can open doors and find tremendous sales opportunities discussing executive disability insurance needs. Too many professionals and executives have a false sense of security when it comes to disability insurance. The time to discuss how much disability benefit a client will receive is now, not when he is hospitalized.
If what your prospect has been told he has, or thinks he has, is 60 percent of salary, you may need to help him think again. Never accept the 60 percent answer. Here is why. How much of his salary is really covered? Does the 60 percent benefit have a maximum limit or monthly cap? Is the 60 percent taxable? Is incentive pay (bonuses, pension contributions, health insurance, etc.) covered at 60 percent also? What is the definition of a disability (just 2 years in my occupation)? What if he is only partially disabled?
You owe it to your clients, and to their families, to explain exactly what they will receive and for how long if the client becomes disabled!
The answer to this question in many cases is an executive disability insurance policy—one that supplements any disability insurance shortfalls that a client may have through his employer. A client can purchase this policy personally for a very reasonable cost since it will supplement existing coverage rather than having to purchase the full amount on his own. Benefits received from a personal disability policy are income tax free. If an employee can convince an employer to pay for such a policy, the benefits would be taxable unless the employee elects to pay tax on each premium. If he so chooses, then the disability benefits will be received income tax free.
In many cases the employers themselves fall into this category; therefore, it is reasonable to suggest that the employers sponsor such a plan for the highly compensated employees. By doing so, premium discounts and, in many cases, guaranteed standard issue underwriting are available and provide disability protection to employees that would otherwise be declined or rated up through traditional individual underwriting. Here is where you really have something very important and attractive—high quality disability insurance, at a discount, with liberal underwriting, providing employees with pre-existing conditions full coverage even for their pre-existing conditions. What a powerful combination and benefit!
Executive disability insurance policies themselves have significant benefits over employer-provided group long term disability insurance also. For one, the premiums can never be increased and the policy is fully portable, meaning that the employee can take the policy with them wherever they go and the price will always stay the same until retirement age. Unlike group disability, the disability benefits do not reduce with social security, worker’s compensation or any other disability benefits. Your client is also protected in his occupation for the entire benefit period! Features like partial disability, residual disability and inflation increases are also common, providing for better protection than what group disability insurance provides.
Providing an income for your clients and their families is too important to be taken lightly. I have seen many disabilities—some with no disability insurance and fortunately many with disability insurance. The differences are life changing. Just a 24 month disability can have lasting consequences without proper disability insurance. I strongly suggest reviewing your clients’ existing disability insurance protection. Employers should be encouraged to make sure that their highly compensated and valued employees have the proper disability coverage. Supplementing a group LTD plan with an executive disability insurance plan is recommended.
By addressing this need, not only will agents find large multi-life cases, but they can avoid the lengthy and aggravating disability underwriting process through guaranteed standard issue underwriting. Not to mention the opportunity for individual insurance sales and financial planning for each highly paid executive. Other executive benefits such as deferred compensation planning can also be addressed. Working hard is a key to success, but focusing on executive benefit disability sales opportunities is working smart!
