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Eugene Cohen

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Eugene began his insurance industry career in Cleveland, OH, with a company that specialized in disability income protection. In 1981 Cohen founded the Eugene Cohen Insurance Agency, Inc., Skokie, IL, which specializes in DI, life, LTCI, fixed annuities, and impaired risk cases. The agency is a member of LifeMark Partners, NAILBA, the IDIS and is a founding member of The Plus Group. Cohen received the W. Harold Petersen Lifetime Achievement Award from the IDIS and NAILBA’s Douglas Mooers Award for Excellence. Eugene can be reached at Eugene Cohen Insurance Agency, Inc. Telephone: 800-333-4340. Website: www.cohenagency.com. Email: eugene@cohenagency.net.

Ability Insurance

You may have noticed that words are chosen very carefully in our insurance world.  If you review the language of any insurance policy, you’ll see that companies are quite deliberate with their use of language. 

There have been many articles written and studies conducted that have suggested that consumers, not familiar with our industry, misunderstand the term “disability insurance” (DI) until it’s explained to them by their advisor.   

There are various ways to describe disability insurance and we know that the name, in itself, can’t be changed, so that is why we focus on what disability insurance can do for our clients.  Of course, each policy is different and a client needs to be eligible for claim based on the contract that was bought. In addition, a disability policy may not replace someone’s income in full as there are issue limits and so forth.   But, when a client does qualify for a claim, that policy can be their financial lifeline to help them get through some tough times.  

Concentrating on ways that disability payments can help is another way to explain the importance of this product.   Dis-Ability, or lack of ability to work, also causes a lack of ability to earn money to pay for our monthly expenses.    

Let’s take a look at some “abilities” payments that a disability claim may help a client pay, partially or in full:    

  • The ability to continue paying monthly mortgage payments—which gives the client the ability to continue living in their home.
  • The ability to pay property taxes, homeowner’s insurance and monthly homeowner’s dues.
  • The ability to pay for common regular utilities and other expenses such as a cell phone, internet service, cable TV, home gas, electric service.
  •  The ability to pay for their required medical treatment(s), personalized health care (home care, respite care) and personal upkeep (haircuts, nail care, beauty care products, cosmetics).
  • The ability to pay insurance premiums (car, home, medical, life, LTCI).   Note: Most individual disability insurance policies have waiver of premium benefit.
  • Emergency repairs or unexpected medical expenses that need to be done (car, home, pets, family members, dental expenses). 
  • Emergency travel to see a sick relative or a funeral.
  • The ability to pay for basic home maintenance such as landscaping, snow plowing, house cleaning and extra costs that may be incurred in order to live in a house designed for someone that’s disabled. 
  • The ability to help pay for a child’s education (private schools and/or college). 
  • The ability to continue to pay credit cards or other debt that was incurred before the disability occurred such as college loans your client has been paying.   
  • The ability to have some relief that money will continue to be received while on claim.  The mental stress caused by financial pressures can be a challenge for even healthy clients.   
  • The ability to provide for one’s family, such as:  Music lessons, gymnastics, school supplies, new school clothes, shoes, food, medical care, Boy Scouts, Girl Scouts, Little League, school tutors, test preparation classes, swimming lessons, ballet, religious school, summer camp, etc.
  • The ability to have cars:  Car payments, car insurance premiums, gas, car registration, repairs and maintenance.
  • The ability to maintain dignity and pride that the provider can still provide in some capacity.  The ability to not feel that they made a mistake by not insuring themselves and becoming a possible financial burden on family and friends.
  • The ability to watch their savings be maintained instead of being possibly depleted by not having insurance. 

What would you add to the list?   

Everything starts with you, the advisor.  Educate your clients on the need for disability insurance.  What’s your client’s plan?  Take a few minutes to walk through how that conversation will flow with your client, client’s spouse, or your client’s adult children.

Disability Insurance: Insuring Peace Of Mind

When discussing individual disability insurance (IDI) products with a prospective client, you could share many real-life examples of how IDI policies have protected families from financial ruin. 

For example, from the website www.lifehappens.org, there's the story of Dr. Valerie King, a single mother with three young daughters. After Dr. King had a series of surgeries to treat her ulcerative colitis, she found herself disabled and unable to do the work she loved. Fortunately, years earlier, Dr. King was protected with the IDI coverage she unexpectedly now needed—ensuring a bright financial future for her young family.

What about the IDI policy owners who never had to make a claim?  How have they benefited from their IDI policy?  Has their money been well spent?  As you know, an insurance company has to manage it so that there are more people that never make a claim than those that will. 

So, let's consider an incredibly important benefit every IDI policyholder enjoys—whether they make a claim or not—the benefit of peace of mind. This psychological benefit pays every minute of every day the policy is in force.  From personal experience, this is a benefit that can't be underestimated.

Over the years we seen clients use their policies, but we’ve seen more not use them.   Thankfully, we’ve never needed to make a disability claim on our policies.  For all of us though, we’ve received tremendous benefit in knowing the policy was available and actively protecting our income.   That knowledge has been priceless to us and all of the policyholders that have bought disability income protection.    

Conversely, we dread to think how we would have felt if we had been disabled and we did not have IDI coverage. The psychological toll would certainly have been as devastating as the financial toll—perhaps even more so. 

In life we have all kinds of safety nets in place like DI products. These safety nets may never be used, but they regularly give us that priceless benefit of…peace of mind. 

If someone skydives they usually have a backup parachute, which you’d think would be vitally important.  While rarely used they do have substantial value.  If you have a client that enjoys cruises, could you imagine paying less for a cruise without lifeboats?  Would one even consider taking a cruise if there were no life vests or lifeboats attached?   Would you buy a car without airbags or safety belts?  These are worthwhile investments and wouldn’t even be contemplated by most clients.   

While we have never jumped out of an airplane, we certainly would not skydive without a backup safety parachute. We do take cruises and we drive all over the country. Knowing there are airbags in our cars makes us feel safe—as do the lifeboats on the cruise ship. They allow us to travel with peace of mind. Knowing we are doing our best to protect ourselves puts us at ease. We are more relaxed.  We personally value the feeling of knowing that we have prepared for the unpredictable—the feeling of being able to do as much as we can, ahead of time, to prevent something tragic.    

Taking the cruise and car analogy further, if someone offered you a discount cruise on a ship that had no life vests or lifeboats, would you board that boat to save money? How about if someone offered you a discount on a car without airbags and other safety equipment? Would you take the deal? Better yet, would you put your children or spouse on that cheaper boat or in that less expensive car? 

Disability insurance products give responsible, successful, caring clients the incredible opportunity to protect their incomes from stopping and the devastating effects that can have on their families.   Yes, the financial benefits of IDI protection will be there if needed but, whether a claim is made or not, peace of mind will always be there for the life of the policy. 

Disability Insurance: True Value Versus Perceived Value

Value perceived can influence  the buying decision for many clients. We were always taught the miracle of insurance: That you can pay pennies for the potential dollars received.  When we present life insurance, we talk about the annual premium for the total death benefit received.  Say, for example, we have a 40 year old who is being presented $1 million of 20 year term insurance for about $600 per year.  The value…$600 for $1 million is pretty clear value.   It’s the pennies for dollars classic example.   

Now take the same 40 year old and who is being presented disability insurance.   Say the illustration shows that he can buy $5,000 per month of coverage, payable to age 67, for a premium of $2,000 per year.  This is the way disability insurance is typically presented, and for some consumers this presentation does not emphasize the true value of the policy. These policies are so valuable that it’s important that the presentation doesn’t de-emphasize the true value.   Think about it, we are presenting a monthly benefit and quoting an annual premium.   

So what is the potential monetary value of that disability policy?   If the 40 year old above gets disabled a year and a half after buying the policy, so that the elimination period is satisfied on the 42nd birthday,  the yearly payment could be $5,000 a month, times 12…or $60,000 a year.  If the disability lasted to age 67, then that could be 25 years of payments, or approximately $1,500,000.   So that $2,000 per year in premium would have the potential to be as much as $60,000 per year or, depending on when the claim starts and the elimination period is satisfied, $1.5 million…which brings us to the pennies for dollars.  

Now, the actual total payout would be based on the client’s age at the time of claim, elimination period, and benefit period.   Also, if a policy has an automatic increase, cost of living rider, catastrophic disability or other riders, then the total payout can be even higher.   For example, if that 40 year old also bought a $10,000 a month catastrophic disability rider then a qualifying claim could potentially triple the payout amount.  $5,000 per month base benefit + $10,000 per month of catastrophic disability would be $15,000 per month x 12 months x 25 years—up to $4,500,000 of payout.  Again, the actual payout would be based on the elimination period and age at claim.  

If you look carefully at many of the company provided illustrations, you may be able to find the total potential payout.   We have found that some companies will calculate the potential payout based on the base policy only and some will calculate the total potential payout by taking into account the catastrophic disability rider and/or the cost of living rider (COLA).    

Make sure to emphasize to your client the potential annual benefit and potential total benefit of the contract.   In describing the monthly benefit, it may also help to quote the premium in a monthly amount as well.  Having aligned dollar amounts and units can help clients understand the true value better than misaligned dollar amounts.   

The miracle of insurance is that a client can transfer risk for fractions of the true cost of replacement.   The ratio of premium to potential payout needs to be identified for your client so that the real value can be presented correctly.   The miracle of insurance…paying pennies for dollars.

Paycheck Protection Month – DIAM – And It All Starts With You

The month of May is Disability Insurance Awareness Month and it is a great time to reach out to new, old and prospective clients about their disability insurance planning.  It’s also a time to review your personal planning.  What’s your plan?  How are you going to protect your paycheck and your client’s paycheck this month?  

Take Inventory
When was the last time you did a disability insurance inventory for all your clients?   Reaching out and making sure you know the coverage they have is important  Peoples lives are constantly changing and making sure their coverage is up to date is important. What you’ll find is that most of your clients do not own disability insurance. This gives you a great opportunity to discuss their plan if their paycheck stops. What is their paycheck protection program if a sickness or injury keeps them out of work for an extended period of time?   Recently, we were talking to a dentist who was talking about his personal claim.  He said he bought some coverage in his 40s, but it wasn’t until a different agent asked to review his coverage years later that he felt under covered and bought more disability insurance.  

Plant Seeds
Take this month to add a link to your email signature about disability awareness by going to http://disabilitycanhappen.org or https://www.lifehappens.org/awareness-campaigns. Both of these organizations have incredible awareness pieces that can be used in dozens of marketing scenarios.  Get the word out.   

Ask Your Clients Questions
Individual disability insurance questions:  Tell me, what is your plan if you can’t work?   What is the longest vacation you’ve taken and why did you come back to work? If today was your last day of work and you had to survive on your savings, how long would you last?  Walk me through how you and your family would cope.

Business overhead expense questions:    If you were told you couldn’t work for one to two years, will you be able to pay  all of your office expenses?  How would that affect your personal savings?   How many of your employees could you let go and then rehire once you are ready to go back to work?   How much and long is your office lease and what other business loans do you have?

Disability buy-out questions: Does your partnership agreement have a disability clause? When was the last time you reviewed your partnership agreement?   

Set Goals and start in May
How many clients have you helped to protect their paychecks?  How many conversations have you had?   Set a goal to have at least one conversation per day about disability insurance planning. The more conversations you have with your clients, the more awareness you will create with yourself. It starts with you. Have the conversation every day. If you have clients, then it’s a fair question, “What type of planning have you done if you can’t work?”

Whenever you drive by a car accident or hear about someone getting ill, say a prayer for their well-being, think good thoughts for them and their families, and hope that they worked with someone like you to protect their income. People that can’t work due to an extended illness or injuries from an accident  have so much on their plate—and hopefully an income problem is not one of them.  

At the end of the day,  Disability Insurance Awareness Month starts with you.   When you are relaxing during the Memorial Day weekend and you look back at the month of May, will you be satisfied when you reflect on your DIAM efforts?

Disability Insurance, The Key To Making Prospects Into Clients

For many advisors, life insurance recommendations will come before disability insurance is recommended. There are countless reasons to advise clients to buy life insurance, from accumulation to estate planning to income replacement…dozens of reasons.  When discussing life insurance with clients that are either single with no children or married with dual incomes, but still no children, the overt need for life insurance may not resonate with these clients.    As advisors we can recite emphatically the reasons these clients should buy life insurance, but the ultimate decision rests with our clients.  

We find that more times than not, for these clients, disability insurance tends resonate more consistently.  The facts are there… One out of four individuals in the workforce will become disabled for 90 days are longer before turning age 65.    In a meeting we just attended, an advisor stood up and stated:  “I have an easier time discussing disability insurance to my younger clients, that do not have kids, then talking about life insurance.  A disability can affect them personally as opposed to passing away.” 

The Market
We can make the argument that everyone who works needs disability insurance. There’s no doubt about it.   We find though that certain markets have a tendency to buy more frequently than others. The buying plane tends to follow a trajectory with one’s income. This is not to say that the need is any less in the lower income markets, nor to say there are not products that can be designed for the lower income markets.   It’s more of a function of affordability and comfort for a client to buy disability insurance in addition to their other fixed monthly expenses. You want to create a list of your clients/prospects and then rank them by the estimated Income, highest to lowest.  Then list their occupations next to the estimated income.   We tend to see a higher buying response when you have clients that have higher incomes ($75,000+)—they are self-employed or a professional (accountant, attorney, dentist, physician, etc.) and are between ages 30 and 55.   There are clients that are outside of these parameters that make great disability cases.  In addition, many clients outside these parameters have tremendous need for disability insurance as well.     

Understanding the nature of fixed expenses
If you accomplish anything in your discussion about income protection, it’s important to have your client understand and acknowledge that there are fixed expenses that need to be paid every month.   Fixed monthly expenses are an interesting topic as most clients, regardless of income, have some similar fixed expenses.  The utility companies, grocery store, car insurance company, and many other expenses are not a function of income, but of usage.   Therefore, if you had your client run through their monthly fixed budget, it’s very hard to find one less than 2,500 a month. Depending on the geographical area, the average may be much higher—closer to $4,000 a month or more.     You can find a monthly budget calculator on websites like Life Happens (www.lifehappens.org) or the Council for Disability Awareness (www.disabilitycanhappen.org).

The best way to do this exercise is to start with yourself.   What is your monthly fixed budget?   I’m guessing it’s more than $4,000 or  $5,000 a month, and probably much more.  

Once your client understands their fixed expenses and the necessity to have these paid every month, regardless of whether someone works or not, it becomes easier for them to understand why people buy insurance to protect their income.   It’s up to you how you present this product.  The natural method for many advisors is not what we find to be the most successful method.  

Start with need—why other clients buy this product. Discuss why we all work, concentrate on the fixed expenses we need to pay every month, and then move to the products. There are many individual disability insurance products in the marketplace, but a client has to understand the need first and why this product is such an important planning tool.  

Your success in this market starts with you.

Individual Disability Insurance: The Need Sells, The Illustration Quotes

When recommending disability income insurance to a client, many advisors are confronted with one or more of the four basic buying objections: No Need, No Confidence, No Hurry and No Money.  Usually the most challenging objection to overcome with a client is the No Need objection, when to the advisor, the need is so obvious.   Let’s explore more about how to address the No Need objection.

There are many things that people need to buy and certainly there are many things people want to buy.  I want to buy a new TV or a round of golf on the weekend.    Disability income protection insurance is a product that most clients need to buy and don’t necessarily think about buying it until an advisor recommends the product.

Income is a need, as we all need money to pay for our day-to-day basics such as food, rent, taxes, utilities, car payments, clothing, etc.  In fact, if you calculate a monthly budget, most of your clients will have fixed expenses of thousands of dollars every month.  Some will have more than others, but the number is substantial.   

It may help a client to visualize a bridge with all the above needs being held up by the supporting beams.  If the supporting beams break, crack or become unsteady, the bridge, and everything on it, will eventually collapse.  Your client’s paychecks are the supporting beams of any budget and financial plan.  If the paycheck were to disappear the bridge would collapse. This would be a catastrophic event for your client and your client’s family.

Your client has to understand the importance of their income. In most cases, it’s their most valuable asset.  Who is protecting your client’s paycheck?  For most clients, if there is no paycheck, then they will experience a lot of hardship.   It’s hard for a client to go from having income to pay bills and expenses to having no paycheck to pay for the same bills and expenses.  In addition, for many clients with health issues, they will actually find their fixed expenses increasing due to additional health care costs and higher deductibles.  It’s a full blown conundrum–more expenses are coming in, but there is no paycheck or income being produced.

It’s essential to only present the actual disability income insurance product presentation when you are fully convinced your client understands why this product is needed.    You never want to discuss a solution to a problem…that a client doesn’t understand is actually a problem.

Asking questions—the right questions—uncovers the need.

 

How important is your earned income?
In most cases, you will find that future earned income is the clients most important asset. For example, a thirty five year old earning $100,000 a year without any increases or inflation factors would earn, in a 30 year period,  $3,000,000. As we know, a sickness or injury could wipe away that income and that is a problem.

 

What is the longest vacation your client has ever taken?  How long do they normally take?  How long have you taken?
Most clients will answer two weeks, maybe three. When questioned why they only take a two week vacation most answer that they have get back to their job or business.  If an injury or illness were to take them away two or three years, or longer, that of course would be a problem.

 

If you have no income, what expenses to you plan on eliminating first, second, third…etc?
One of the most important questions on a mortgage application is: What is your income? Mortgage companies do not want foreclosures. They require you to pay your mortgage whether you are working or not and whether you are in good health or not. When your income stops due to sickness or injury, the mortgage and other bills must be paid.

Go to www.LifeHappens.org to see stories of real people and the events that have changed their lives. Please click on the  videos and disability stories.  Hearing these real life events is so important for advisors.  It’s amazing how many clients have been helped because their advisors recommended disability income protection in their financial plan.

One story that has resonated with so many in our office was the story of Bill, who was 32 years old when he became disabled.  Bill was on his way to his mom’s house when a car crossed the median and hit Bill’s car head on.  Bill suffered body traumas as well as chronic short term memory loss which made it impossible for him to return to work. Bill was very fortunate that his advisor understood the need for disability coverage and was able to show Bill why he needed to buy coverage at such a young age.   

The story resonates with many because he was so young when he became permanently disabled. He was fortunate to have an advisor who recognized that young adults who are just starting the wealth building process have a dire need for disability insurance. 

As an advisor, it’s important that you too have disability insurance.  What is your plan if you can’t work?  Who is going to pay your bills?  We know the importance of disability insurance, as being in this industry has shown us to expect the unexpected.   It’s important to plan for the twists and turns that tomorrow can bring.    

Remember that bridge we discussed in the beginning of this article?  When questions are asked and you have discussions with your clients, your clients will become more aware of the need for disability income protection. 

You have the solution to keep that bridge sturdy and your client’s financial plan strong.

Price is what you pay, Value is what you get. – Warren Buffet

We love this quote because it rings true in so many ways. When you buy anything, you are judging and weighing the cost of the product with the value you receive. If you perceive the value to be higher, then you may be willing to pay a higher price for that product or service. We humbly admit that we are not handy men around the house or cars, and when it comes to hardware, or even tires, we are completely relying on the sales clerk that is helping us. Who knew that for tires you need to choose a type, treadwear warranty, speed rating, wheel size and brand. There’s Bridgestone, Goodyear, Hankook, Kumho, Nitto, Sumitomo, Toyo… and the list goes on. The prices vary as much as the names of the companies, and each company has different styles, quality, and prices… exhausting for us to try to figure this out on our own.

We can easily just choose the lowest priced tire, but with my family in the car…we want the best. Tires can be complex on the surface, but a salesperson can be trained to understand and explain the difference so they can recommend the best tires-it just takes some education and training.

As advisors, we know people get disabled and some of them will miss a little work and some will never be able to work again. As an advisor, your client is looking to you for your recommendation. Which tire are you going to recommend? We’ll explore the world of disability insurance with you through the course of these columns. While these articles are a good starting point, we strongly recommend that you work with a disability insurance wholesaler to further your knowledge and ability to understand this marketplace.

One of the first products we’ll start with is long term disability (LTD), which is used in the group insurance world. Individual disability is usually known as IDI, while group coverage is known as LTD. There is also STD, for short term disability, but we are going to focus on LTD.

There are four “no” states of mind that can influence any buying decision: No Need, No Money, No Hurry, and No Confidence. Most buying decisions come down to one or more of these four states of mind. When (or in most cases “if”) the subject of disability planning is broached by an advisor and a client says, “Don’t worry, I have coverage at work”-for many, this is the end of the conversation. Time Out! When a client has LTD this is the start of the conversation not the end. Remember, “Price is what you pay, Value is what you get.” For most people, the company will provide the LTD coverage and the employee pays nothing-and the coverage itself can vary greatly. As an advisor, you need to insist on seeing the benefit booklet and as much material as your client can provide (certificate, premium if any, coverage amounts, class information, etc.). Usually their HR department can provide the information.

If you ask any the following questions, people will usually give you just a blank look:

  • Do you know what percentage of income is covered?
  • Do you know the monthly cap?
  • Do you know the definition of disability and if it changes the longer you are on claim?
  • Do you know if the insurance company cancels the group LTD, or if you leave employment, what your options are?
  • Do you know what income will reduce your benefits, such as social security, worker’s comp, and other retirement programs?
  • Do you know which disabilities will reduce your benefits, such as ones that can be attributed to depression, anxiety, back, soft tissue, subjective diagnosis and others?
  • Do you know what counts as income (bonus, commissions, pass-through income)?

If a client loses the ability to work due to an illness or accident, their disability insurance policy can become a lifeline. Disabled clients tend to go into financial lockdown and the definitions of that disability policy become paramount. How many times have you read your actual car insurance policy? All of a sudden when someone gets into a car accident, that car insurance policy becomes very important-every word gets analyzed and studied. Words like “and” and “or” can be the difference between a claim and not a claim. This is the same thing with disability insurance contracts. You can get the help of insurance brokers like Staveley Head, who have experienced policymakers to better understand the wordings of your insurance document.

It’s well known that individual disability insurance (IDI) contracts can provide very comprehensive coverage and, in many cases, more comprehensive than group coverage. Individual policies can lock in premiums, policy language, and coverage amounts for a certain duration. Individual policies can be portable and follow your client regardless of where they work. Your client doesn’t need to be locked into a job or company solely due to benefits. The monthly benefit on individual policies can be set up so that it’s not taxable, while group LTD is often taxable to the employee. Why is this?

When someone applies for IDI, the insurance company gets to fully underwrite that individual. They get to ask medical questions, obtain medical records, and, if necessary, order standard insurance medical tests. This allows the company to be selective in their risks, which, for the most part, allows more comprehensive policies to be offered. Which brings us back to tires. Which tire are you going to put on that car? Which IDI company and/or product will you recommend for your client? There are a lot of companies and products to choose from and, based on your client, you need to find the one that is the better fit.

We look forward to being your co-pilot in your learning adventure about individual disability insurance.

DI Forum

Question: What challenges do you see in the DI market for the coming year?

Cohen
The challenges we face are not just in the coming year but extend into the future as well. We have to motivate  advisors to teach their clients the importance of protecting their greatest asset—their income.  A long term disability is devastating to not only afflicted but their family as well.

Another challenge that we are faced with is educating our advisors that disability income policies are underwritten differently than life insurance policies.  Disability policies are often issued with exclusion riders which exclude certain conditions.  This is the nature of the beast.  Advisors need to understand this and be able to explain it to their clients in a positive presentation so that their clients accept the rider knowing that there are a multitude of other medical conditions for which they will be covered.

I find another challenge is exposing the advisors to all the potential clients whose occupation is  not just in the medical market. Tradespeople, salespeople, business owners, etc., need to protect their incomes just as much as the professionals.  When the paycheck stops, everyone’s savings disappears.

My challenge is to educate our advisors that high income clients who have employer-paid group coverage may need individual disability income protection to supplement their group coverage.  This is a situation that many advisors walk away from. 

Mohr
The only challenge is getting agents and advisors to recognize the importance of presenting income protection solutions. Advisors just do not understand the risk until they have a client disabled. There are some very disabling viruses, illnesses and accidents that occur daily. I know of claims where the claimant is collecting on both a disability and long term care insurance policy at the same time. That should be “Priority One” for an advisor, to make sure their clients will have an income whether they can work or not. Promoting the importance of disability insurance will put advisors in front of high income clients and lead to more life insurance sales and other sales of financial products.

Petersen
More carriers, more options! This sounds good, and it really is, but it also adds more to the frustration which some producers feel about which carrier and which options for which client!

Schmitz
A shortage of trained life and disability insurance salespeople.

Baby boomers are getting toward the end of their DI purchasing lives.

Millennials prefer to buy online, which is great when buying a toaster, but maybe not the best option for buying DI. DI needs to be sold. There needs to be education and conversation. 

Phillips
One of the biggest challenges will be the sheer lack of carriers in the market.   Quietly, the number of carriers available to the independent producer has shrunk.    There simply aren’t many carriers to access.   I suppose one could spin that to a positive—there aren’t many carriers to learn! 

In addition, the upcoming year brings the age-old challenge in that it is a market dominated by “dabblers.”   Far too many producers are “one hit wonders.”   They’ll sell one or two, and that will be it.   It’s a market where sales are far too reactionary (client asking for it, or starting the conversation) and far too few that are done in a strategic manner quarterbacked  by producers.  

 

 

Question: What opportunities do you see that could/should attract producers to DI sales?

Cohen
The opportunity to attract advisors to sell disability income protection abounds.  Everyone is selling life insurance and very few are selling disability income protection.  There is very little competition in this arena. If only the advisors would ask their clients how long they can survive without a paycheck, they will see the look of interest and potential for a sale.  

When an advisor opens the disability income protection door, he/she will be amazed at the array of policies that the companies offer: A policy to fund a disability buyout, a policy to pay overhead expenses, and a rider to pay a business loan are but a few examples of what is available.

Some of our best sales have been funding a disability buy/sell agreement.  By asking the question, “If one of the owners were to become disabled, do you have a buy/sell agreement?”  This one question should create enough interest to explore this policy. I believe that this policy is one of the best kept secrets.

Mohr
First, just the desire to help and to do what is best for your client. Many clients are relatives, friends, community leaders and business associates; how would the advisor feel if one of them became disabled and the advisor never brought up the need for disability insurance? Second, income! The commissions and vested renewals that an agent can earn selling disability insurance are unmatched by any other insurance product. Third, referrals. Once you sell a disability policy you have a reason to talk to other business associates or people who work at the same job or in the same profession about income protection. 

Petersen
The same as my last answer—More carriers, more options! This means the value of the brokerage outlets becomes even higher! Brokerage outlets and new products are making the selling and administration of disability insurance easier than ever. GSI is having a record year by all carriers. Excess GSI is through the roof! Business DI programs are the most liberal and easier to use than ever before.

Schmitz
A more streamlined underwriting process. Easy access to medical information and financial documentation would generate tons of new business. In the meantime, lots of great true stories of satisfied claimants. This would be immensely helpful in our endeavors to get people to think about the need, and eventually realize income protection can be the best solution to eliminate some of the risk to their loved ones and/or business partners.

Phillips
A major reality of the DI market that should attract producers to it is that few are in it!  Competition is unusual except in the most developed market space (e.g. medical, high-income).   

Carriers are poised with an abundance of marketing materials and support for those who want to engage.  Brainsharks, pre-approach letters, seminars, mailers, email templates and the like  abound on every carrier’s website.   I don’t recall a time in my career when there have been more resources available for the informed producer to approach this market in a strategic, professional way.  Use them!

Another attraction to this market for brokers is that it can support and lead to other sales in other insurance and investments.      Gain an understanding of the client’s income, and it should  lead to conversations on life insurance and investments.   Have other product lines in-force and it will provide funding to perhaps maintain the insurance and investments that are already in place. 

Likewise, as a client’s income increases—and it will, sometimes substantially—so too will the opportunity to provide additional coverage by way of a new sale or exercising a “future purchase option” on their existing plan. 

Finally, another reality of the DI market is the “R” word.  Renewals.  For the most part, the more premium one does, the higher the renewals earned.   It is great way to build meaningful recurring revenue in an agent’s practice.  

 

Question: What is your view of agent responsibility to present DI and what consequences, if any, do you see affecting agents who continue to avoid this market?

 

Cohen
I believe that it is an advisor’s responsibility to offer disability income protection to all of his/her clients.  An advisor never wants to get a phone call from their client’s spouse with the news that their client has suffered a stroke. The spouse wants you to put in a claim for benefits for the disability. The advisor has three responses that he can make:

1). I am so sorry to get this sad news.  I will report the claim to the company and when you are ready we will review the policy; Or, 

2). I am so sorry to get this sad news. However, your spouse and I never discussed a disability income policy; Or, 

3). I am so sorry to get this sad news.  When your spouse and I discussed disability income protection, your spouse was not interested in purchasing this coverage and, yes, there is a signed form in the file with his/her signature stating that he/she was not interested in pursuing disability income protection.

Mohr
If I had an advisor that I relied on for financial advice, products and protection, and then I became disabled and had no disability insurance, I would be extremely upset—especially when I learned that income protection insurance was available to me and my advisor never suggested it. I believe that the advisor should be morally, ethically and possibly legally liable to present income protection insurance. The financial and emotional consequences are so great that advisors should have clients sign waivers that they have been shown the need for disability and long term care insurance and they chose not to purchase.

Petersen
While there is no legal obligation for a producer to talk about disability insurance, there should be a personal sense of responsibility (moral, ethical, emotional, or whatever you wish to call it) to tell clients about disability insurance. This is coming from a guy whose grandfather literally lost the family farm due to a back injury. This is also coming from a guy who has had two bouts of severe disability mishaps inside my immediate family. The first time, the absence of disability forced the liquidation of a small business. The second time, having disability insurance allowed us to keep the family home!

The consequence of this? Lost sales to the producer and underserved clients! 

By the way, if my grandfather did not lose the farm, my fathers “calling” into the disability insurance world in 1948 might not have ever happened! 

Schmitz
As I observe the aging of the salesforce, I also observe an aging of their client base. A recent inquiry was from an agent whose client was interested in DI for her grown children; both children earning six figure incomes. Many of our agents haven’t had a young client in a long time. The agent is focused on old retired and semiretired clients and their investment portfolios. Unfortunately, many new, seemingly captive advisors are focusing on investment portfolios exclusively as well. Maybe someday some advisor will be sued for not protecting an income, but it hasn’t happened or we would make a big deal out of it, like Chisolm Ice Cream.

Phillips
My view is professional agents need to understand they have clients—not customers.   Walmart has customers.   Much like due care is expected from a doctor by his patients, producers must recognize the obligation of due care to these clients.   

My observation has been that the quality agent is not on a sales call, he’s on a mission.  A mission to make sure that, should the worst case scenario occur, his clients are properly protected within the context of their budgets, needs and goals.  

Imagine having a client becoming disabled, having their income compromised, and the subject of income protection had never been broached. What view of the planner would the disabled client have, let alone the guilt feelings the advisor might have? 

Agents need to save themselves from these uncomfortable possibilities by discussing the need for DI with all of their clients and prospects.

 

 

Question: What tips do you have for agents to find success selling DI?

Cohen
My tip is for advisors is to have an organization behind him/her that is knowledgeable in disability income protection, holds regular teaching classes in disability income protection and keeps their advisors up to date on changes in the market place.  It is also important for advisors to have an organization that can teach advisors how to sell disability income protection.  An advisor needs an organization that can steer him/her through the entire process from taking the application through the placement of disability income protection policies.  Advisors need an organization that has staff that is always available to them and dedicated to their success in selling disability income protection.

Mohr
Bring it up time and time again. Bring it up to the right people, those with high incomes. Everyone needs disability insurance and there are products for all incomes. Have the income protection discussion with everyone. If people say that they are covered at work, let them know that they just have half a plan at work and that they still need a supplemental plan.

Petersen
Every client is a potential sale! Executives and professionals? No problem! Blue collar and gray collar workers? No problem! Athletes, pilots and entertainers? No problem! Also, if you have an established block of business of any sort (life, medical, etc.) you already have DI sales leads! One thing I hear often is, “Where do I find clients?” Existing clients from other sources of sales is a built-in lead system. Just talk to them! It sounds too easy, and it is, but it is amazing how many times I see a producer try to make it difficult.

Schmitz
In CA, State DI can pay $5000 per month ($1,173/week maximum). Look for people who do not have State DI, or those who earn substantially more than the limit. It helps if they are married and/or have children. The best prospect has L.O.V.E. (Love, and/or Obligation, and Verifiable Earnings). It is easier to motivate these people, and the premiums are bigger so you will earn more per case. 

Our top producers get their leads and referrals as members of the Chamber of Commerce, Rotary, Elks, Lions, and Networking groups. They are writing books, and teaching classes and volunteering in the communities where they live and work helping others. 

Phillips
This isn’t that difficult:  Just ask about the client’s current income protection.   It is easily integrated into any fact finder or in-force policy review done for other product lines.   It is a product line that is one of the least commoditized purchases in the fixed insurance markets.   A client needs to be told about the opportunity to protect their most valuable resource—their earnings.   Bringing up the subject in a consistent, methodical way is bound to have positive results.

Disability Insurance Awareness Month Planning Panel

Q: DI Day events are popular with BGAs active in the DI market.  What does your agency do to attract agents to your event and/or aid and encourage them to utilize DIAM to engage their clients in the DI discussion?

Cohen
May is Disability Insurance Awareness Month. The Eugene Cohen Insurance Agency held a disability insurance  event in May, 2016, that attracted over one hundred advisors. Their comments were: “Very informative and motivating.”  The attendees were advisors specializing in life insurance, casuality insurance, health insurance and financial advisors.

In preparation for the event this year, we are giving attendees websites to watch for their benefit as well as for their clients. The Council for Disability Awareness is one and LifeHappens.org is another. Both sites are educational and Informative.

This year’s agency disability insurance awareness event is scheduled for May 12. The theme is The NEED and the IMPORTANCE of Disability Insurance.  Acclaimed and knowledgeable speakers in the field will make presentations.  The keynote is a nationally known speaker who will have the attendees eager to tell their clients about the most well kept secret in the insurance world—disability income protection. They will leave feeling anxious to have discussions about disability insurance with their clients as soon as possible.

Petersen
DI Day is a trademarked name for the Plus Group, a nationwide network of some of the top disability brokerage outlets. There are also other similar programs offered through other brokerage outlets as well as NAIFA and NAHU chapters. Regardless, these educational days are a producer’s single best source for finding out about what is new in the disability markets as well as picking up ideas that work for marketing, sales, field underwriting and even handling a claim. 

As an underwriting company, our role is to provide products and services to BGAs to solve their clients’ (producers) needs. As such we place a lot of resources into print advertising with ideas. We also produce numerous articles and other written communications frequently throughout the year and, lastly, we get in front of insurance professionals with ideas to sell more and strengthen their positions as insurance advisors. 

Mohr
DI Day is a registered disability insurance training event for Plus Group offices across the United States. Plus Group offices such as ours (Diversified Brokerage Specialists) generally conduct a DI Day event during the Disability Insurance Awareness Month of May. Last year we held two, one in May and the other in September. We advertise this event to our existing brokers and also use the event to raise awareness of the importance of disability insurance sales and marketing to a broader agent audience. Attendees are always very complimentary, coming away with knowledge and education that will allow them to better understand disability insurance needs and how to better protect their clients. They also learn how, through disability insurance sales, they can enhance their own income and careers 

Schmitz
Our agency holds a DI Day during DIAM. We look for a variety of speakers in order to develop an agenda which includes education in at least three of the following areas: sales ideas, product knowledge, industry outlook, claims, legal, and tax issues. We emphasize value that can transfer to the client and help make a sale. The event is free and scheduled to avoid traffic.  

Schnittker
Getting advisors/brokers to attend a DI Day event is quite challenging.  It is difficult to get people to take half a day out of their schedule to dedicate to an income protection event.  So, we have a keynote speaker that people will truly enjoy and creates a buzz that people will talk about for months to come.

 

Q: Disability income protection should be a year round focus—how do you build on DIAM interest to help agents develop DI awareness and focus throughout the year?

Cohen
I was introduced to disability income protection insurance in 1963. For the last 54 years I have been making consumers and advisors aware of the need for disability income protection.  I have seen how this product has financially helped people during life’s disruptive unexpected events.  

It is most important that advisors are knowledgeable about the product and that they are comfortable presenting it to their clients.

Sixty-one percent  of Americans say most people need  disability insurance but unfortunately only 26 percent have it. (2015 Insurance Barometer Study, Life Happens and LIMRA).

LifeHappens.org is a professional resource for advisors and consumers. There are many and varied videos showing how disability protection has helped individuals survive financially during a disability.  

Advisors need to be trained to think about what would happen to their clients if an injury or illness rendered them unable to work. They need to ask the right question to their clients: “Is your income protected if you became injured or sick and could not earn an income?”

Advisors need to be able to overcome the four objections that clients give to them: 1) No need; 2) No hurry; 3) No confidence; and 4) No money.

The most important job of the advisor is to uncover the need. The way to do this is by asking questions. The goal is to have the client understand that his/her most important asset is future income. Once the client understands the need for disability income protection they will find the dollars and will be ready to purchase.  Need motivates decisions.

In the Eugene Cohen Insurance Agency we have disability income specialists. It is their job to talk to advisors all day long about disability income.  We are spreading the word and making advisors comfortable with the uncomfortable

Petersen
Disability insurance is a year round need. What DIAM does is add subtle as well as direct information to the general public. This is done through magazines and public service announcements focused on the general public. The key is the awareness!

Throughout May the public is being bombarded with stories about the need for disability insurance. Producers can take advantage of these messages by focusing discussions on this vital topic. Now, since May sets the stage, the remainder of the year makes the discussion of disability insurance a bit easier. 

PIU helps producers realize what DIAM actually does and we try and explain that this is a great time to market these programs harder.

Mohr
We continue to reinforce the concepts presented at DI Day throughout the year. We have a full time staff committed 100 percent to the marketing and selling of disability insurance cases. In addition to new sales and agent training, we follow up all future purchase options and new employee additions to our multi-life accounts. A book of disability insurance is like a freight train rolling down the track. You cannot stop it. Even if you try it will take a long time. We just keep throwing coal on the fire by adding new sales each month and building on our book by growing  our disability producers and our renewals.

Schmitz
Yes, income protection should be a year round focus. We are always reminding advisors that they have clients who do not have enough invested assets to generate an amount of income sufficient to pay all the bills which will continue after a disability. Quite a few advisors seem to be focused on the investing while neglecting the protection. Wealthy clients have larger bills that need larger protection.   

Schnittker
A true challenge—to keep DI on the shelf at all times with advisors/brokers.  DI products pay the very best renewal compensation and most carriers have structured their renewal payout around volume, so it is important to constantly remind the producer what kind of renewal compensation they can earn with volume and persistency.  Some companies provide the ability to demonstrate “what if” models that can be very good motivators to the producer who has committed to writing regular business.

Q; What steps can you recommend for agents to prepare for and take advantage of DIAM to engage clients in the DI discussion?

Cohen
Make the most out of Disability Income Awareness Month!  Put Disability Income Awareness Month on your website. Tell your clients it is Disability Income Awareness Month.  Talk to your clients about disability protection.  Ask questions to find your clients’ needs.  Use all resources available to you to make this year the year you become a disability income protection advisor.

Petersen
The beauty of DIAM is that there is a lot of subtle messaging taking place to the general public on this subject. All producers need to do is talk about it! Insurance producers are frequently reluctant to talk about disability insurance due to fear. Fear of losing a sale on the life insurance. Fear of scaring off a sale by sounding like they are trying to sell too many things. Fear of the lack of expertise on their own part. This is exactly where the professional brokerage outlets come in handy! They can make any producer an expert in a short time. As to the other fears, these are their own self-generated fears and not the reality. As professional insurance advisors they should advise on all aspects of insurance, not just the part that is easy!

Throughout the year producers should take added educational steps in learning more about these essential coverages. I come from a family that lost businesses and even a house because of the lack of disability insurance. I also come from a family in which a home was saved because of having disability insurance. There is no one who can tell me it will never happen!

Business owners today are even more in tune to what happens when a financial impact adversely affects the business. 

Did the rainmaker (keyperson) stop generating cash flow because he or she became disabled? How long will this be before the bottom line is impacted?

Partners frequently set up buy-sell arrangements which account for a death contingency, but what if they don’t die? A disabled partner still has a voice but is more worried about getting money than building a business. Without a disability buy-sell a company will have to self-insure this contingency. Do they have the cash to withstand a multi-million dollar payout without paralyzingly the company? 

Many businesses take added liability with bank loans yet rarely protect against the possibility of severe difficulty paying them off because the owner becomes disabled.  It can, and does, occur in the real world. 

How do you make these types of sales? Listen! A sales call is not a one sided conversation, but an exercise in asking questions about the person, the company and the plans for the future—and then listening! What are their dreams and goals? How can you as the insurance expert make sure those dreams and goals happen? 

Insurance is the only financial assistance available to someone when they need it the most and are in a situation they cannot get it from anywhere else! What an amazing product! You are all superheroes! 

Mohr
Producers should ask, ask, ask and disturb, disturb, disturb! Whether during DIAM or all year long, advisors must ask every client that they work with if they own enough disability insurance. A review of a client’s disability insurance is every bit as important as a life insurance or investment review. I have seen clients’ fire advisors and switch to our broker advisor simply because their existing advisor never approached them about the importance of disability insurance.   

Confidence in the product and knowledge of the business applications for disability insurance can make all the difference. This is why attending DI Day is so important. The education and the sales tools provided, especially when it comes to business disability insurance needs, are invaluable.  DI Day will help advisors understand the many needs for business disability insurance. Most mirror the same needs for life insurance, such as income replacement, key person, overhead expense and buy-sell needs. The fact of the matter is that through disability marketing and discussions, the DI producer will also sell tremendous amounts of life insurance at the same time! The difference is that by leading with disability insurance needs you are setting yourself apart and opening doors to high income earners that a life-only agent will never open.

Schmitz
DIAM is another marketing tool. It is an opportunity to remind brokers and clients that DI exists and may be available to them to protect their largest asset – their ability to earn an income. Take advantage of the nationally recognized month. You have an excuse now to bring up the subject of income protection. The number one reason people don’t buy DI is because they were never asked to buy it. The Council for Disability Awareness (www.disabilitycanhappen.org) and Life Happens (www.lifehappens.org) are excellent resources with links you can use with clients.

Business owners may be the least protected. They often opt out of Worker’s Comp, and are under the delusional impression that the company will continue to pay them indefinitely should they become disabled. Yet, when asked “what is the longest vacation you have taken?”, the answer is usually something like “I rarely take a vacation” or “I took two weeks, but brought my laptop so I could check in regularly.” Some questions to ask the business owner: How long could your business operate if you could no longer perform your role?  What would happen if your partner stopped coming to work? How would you pay for expenses after a life-changing diagnosis or surgery?  What would happen if your business partner could no longer afford the purchase payment? Does your executive team value a stable income and a supportive work environment? How would you pay for your regular expenses if tomorrow was your last day of work? 

Schnittker
It depends on the producer (agent/advisor/planner) as you are tailoring your recommendations around supplementing their regular business approach with income protection.  They need to put income protection in their tool bag and we need to challenge the producer to consider the opportunity for income protection for all of their clients.  

Bottom line—you need to have a broker that is willing to consider and introduce income protection solutions for their clients. Many times the broker is not aware of the business solutions that are available to their clients, so we need to be diligent in our education and training.  We encourage brokers to push the bar and ask very direct questions like, “If you were sick or hurt, what would you like to happen to your business, your employees, your partners, etc.?”

DI Forum: A Panel Of DI Experts Looks At The Disability Income Market And What Can Be Done To Increase Consumer Acceptance Of DI Protection Solutions

Question: What is your view of the state of the disability income protection market today?

Cohen: The need for this product is tremendous. There are so many people who are not protecting their income. It would certainly be advantageous if we had more companies manufacturing this important product-that is where there is a shortage. The market is wide open and our job is to get more financial advisors to offer this product.

 I went to a wedding recently and was talking to another guest. He asked me what I did for a living. I told him I was in the insurance business and my main job is working with financial advisors getting them to offer disability income protection to their clients.

 He proceeded to tell me his story. He said, “Your product is extremely important. When I was 26, I began my dental practice. At 31, I asked a friend if he knew anybody who could offer me disability income protection as no one had ever called me about this product. At 32, I sought out and bought my first policy for $5000/month with benefits to age 65. At 51 I sought out an agent and bought additional income protection for another  $5000/month. At 53, I was driving home and noticed that the vision in my left eye was impaired. I found out I had Central Retinal Vein Occlusion in my left eye. My vision became so badly impaired that I was forced out of my dental practice. I began a new career teaching. While I was getting a teaching salary, my disability income protection policies were paying me $10,000/month because I was insured in my occupation of dentistry.”

When we talk about the state of the industry I find it amazing that this dentist  had to seek out an agent in order to buy disability income protection. He should have been approached by his life agent or casualty  agent.

When it comes to your most important asset—your ability to earn an income—and your ability to protect that asset, there is a drastic shortage of individuals who are educating consumers about this product.

On DI Day in May 2016, we had over 95 financial advisors attending our event. We also had a speaker—an individual who did not check the box for disability income protection. He proceeded to tell us his story about the most tragic mistake he made, and how his mission is to keep others from making the same one he did.

 Periodically, I go to the website (lifehappens.org) to read the Real Life Stories about the individuals that disability income protection has helped. I encourage everyone to go read these stories and to see just how important and crucial this product really is.

I believe the industry is making great strides. I foresee more manufacturers getting into the market for disability income protection.

Bloch: The state of the industry is fine.  The remaining carriers writing disability income protection have been adjusting rates, products, underwriting techniques, and systems to enhance results.  The carriers are working hard to increase market share and making it easier for the targeted consumer to purchase this important coverage.  I am surprised, however, that additional carriers have not entered the market with new exciting products.  The industry needs a new bold approach with basic benefits at affordable rates with a streamlined underwriting process to attract new policyholders who cannot appreciate or afford today’s high quality products.  

Chittenden: It remains an under-penetrated market, yet remains as vital to the financial well-being of every working person as it always has been.  Those of us in this market have been screaming, promoting, teaching, pleading and explaining this fact for years.  Resistance from many financial advisors, as well as traditional insurance agents, to embrace the income protection products, however, seems to remain fairly strong.  This is a double-edged sword.  Because of this lack of penetration, consumers are hurt.  They are not made aware of the need or the solution to protect their income.  On the other side of that sword, those brokers that do promote income protection products have a fairly untapped market.  The problem is not availability of product.  Even with the recent exit of a leading major carrier from the individual market, there is still a plethora of very good products available from excellent carriers to meet both the individual and business income protection needs.  The under-penetration comes from the lack of client education and promotion on the part of the advisor community.   

Phillips: I’m confused and concerned by this market but also very optimistic.  

With the recent departure from IDI by a major carrier in the white collar space, there are  a very limited number of carriers who distribute their product through independent brokerage agencies. And, like IDI’s sister product long term care insurance, there just don’t seem to be many carriers clamoring to get into this space.   This confuses me, as the little information I get on returns on investment for IDI seem to be solid for insurance companies.   Maybe my perception is wrong on that.   

We are in an environment where it is costly for carriers to put business on the books, and carriers must maintain their inforce blocks that were priced and underwritten in a totally different market environment.  I think we underestimate the herculean effort it must take these carriers to juggle this dynamic.  

So we have very few outlets for white collar business, we’ve got a tenuous market environment, and yet there is still excitement in the DI business.  Product enhancements, technological advancements and marketing programs still abound.  Almost daily I’m presented with an exciting case or opportunity.   It’s like some sort of paradox.  

Also, it seems that more producers and planners are looking to expand efforts into the IDI market.    I suppose that’s a function of the likely regulatory changes in the  investment and annuity markets,  as well as the changes that have occurred in the health insurance business.     While it’s a little disappointing that it has taken upheaval for this product that is so fundamentally important to a client’s financial well-being to be brought up as part of the conversation, it’s apparent that it is being brought up more and more.  That has to be a good thing for the market over the long run.  

Petersen: The market for disability insurance is the most robust we have seen in well over a decade. Yes, MetLife stepped out of the individual disability markets, but that should have little impact on the market as a whole. The key players are still in there. There has become more awareness of GSI plans which are being used as primary as well as secondary and excess disability coverages.

Bottom line is there are more opportunities in the Disability market than ever.

Schnittker: The marketplace is better than it has ever been with so many income protection solutions—key man, business loan completion, retirement completion, one person buy-out, and student loan, in addition to the traditional personal disability, business overhead expense and buy/sell.  Great time to be in this marketplace.

Mohr: We are very pleased with our disability insurance sales production this year. Disability sales continue to be a big part of our overall sales and revenue. Retirement planning products are certainly increasing in popularity due to the baby boomers, but there will always be a huge population of working professionals and business owners that need income protection. Most insurance agents just still do not realize the importance of selling disability insurance and the impact on their income both first year and renewals. Disability insurance is not just critical for their client’s financial security, but for the agent as well. What financial planner can say he did a financial plan for a client if he did not guarantee his client an income whether they can work or not?  

Some consumers think that they are covered at work. We train our producers to advise these prospects properly by telling them that most employer plans only provide about 50 percent of what you are eligible for, so you have half a plan through work. That is great, because now you just need to buy the other half! 

The market has never been better for disability insurance sales. There are plenty of great products and underwriting programs. Whether selling to individuals or executive groups, pricing, discounts and underwriting are all aggressive. 

Schmitz: There are fewer advisors being trained by carriers, so financial education is not happening like it used to. High schools should be requiring at least a rudimentary level of financial education and include the concept of insurance in the curriculum.

The market needs more carriers, and Met Life leaving was a big blow, but not a nail. There is a huge number of self-employed people and small businesses that have not pursued protection for their largest asset. The number of employers hiring employees at 30 hours per week so that they are not required to offer benefits continues to increase. Getting the word out that disability insurance exists is our challenge. 

 

Carriers offer more flexibility in underwriting, including guarantee issue individual policies for small groups. Home offices are genuinely proactive in seeking information from the field to take back and develop new products and processes.

Question: What advice do you have for brokers who don’t spend much time pursuing DI sales to their clients? 

Cohen: Roger Sweeney spoke at my agency’s DI day in May, 2016. He said the biggest mistake of his life was not checking the box for DI protection when the corporation he worked for offered it to him.  He is a young man and is  disabled due to  a series of severe health issues .  He stated, “I was the All-American guy.  Perfect job, beautiful family, great income and then it was all gone.”

My advice is for every broker to know Roger Sweeney’s story and to take the time to read Real Life Stories at www.lifehappens.org. 

Once a broker understands how DI protection can save a person’s financial life, that broker should never feel that he does not have the time to pursue a DI sale.

My advice to financial advisors, agents and brokers: You have the responsibility of being entrusted with your clients well being.  You must explain the need for disability income protection. As you read Real Life Stories, you will become aware of the thorough and responsible job brokers did for their clients.  

Bloch: My advice to producers who are reluctant to discuss income protection with their clients is to pursue a partnership or other relationship with another producer who specializes in income protection insurance.  We have a number of producers who realize the importance of this coverage and split cases with income protection experts.  Their clients truly appreciate their professionalism.  On larger or more complicated situations, our agency is asked to develop strategies and implement them. 

Chittenden: Make sure they have a strong E&O policy.  It has always amazed me that brokers will spend all the time and effort to build an amazing financial plan to meet the hearts and dreams of their clients.  They will make sure retirement is funded.  College education for the kids is funded.  Maybe the dream vacation home or the travel dreamed about is funded.  For sure they address the catastrophe an early and unexpected death might cause.  But, they refuse to address the risk their client faces if their ability to fund the entire plan is interrupted by an illness or injury that prevents them from continuing to work and earn a paycheck.  Some brokers have a million excuses.  They don’t want to be a “policy peddler”, or there is only “so much” premium to go around.  They are worried a “complicated” IDI sale will ruin all their other sales, etc. All are simply invalid excuses.  To not evaluate the risk management part of the financial plan fully, meaning to protect the funds (income) that makes the complete plan work, is simply bordering on negligence.  My advice to all of our brokers not promoting income protection is to make sure their E&O plan is in place and strong, and that they very clearly inform their clients what services they do provide and which ones they do not provide.  If there are parts of the total financial plan they are not going to address then they should be identified, and an alternate avenue should be presented to get those aspects addressed.  Not many people can be proficient in all aspects of financial security but everybody can be part of a team that covers all the bases.

Phillips: My first piece of advice would be to make sure they understand their own situation and exposure for disability, and, if they don’t already own coverage or if it hasn’t been updated in years, to get an appropriate IDI policy for themselves.   Work with an agency that specializes in DI to really understand the differences in definitions and the many types of DI products that are available (ID, BOE, Loan DI, Retirement DI, etc.) as a consumer first, then take that knowledge to their own clients.    

I’d also simply announce to inforce clients that DI is now a product that they will be pursuing, and then “just do it”.   Ask inforce clients if they have DI coverage (they probably don’t).  If they have coverage , ask if they understand it (they probably won’t).  If they have had it for awhile ask if it’s been updated with their increased income (it probably hasn’t).  I’ve always been a proponent of learning by doing.   Do it by picking up the phone or meeting with a client and simply asking about their situation.

Petersen: There are several things:

To life and medical sales professionals who do not also promote disability insurance I have one thing to say—shame on you!

People are relying on us as professionals in the insurance industry to advise. If we spend our time saying things like “protect your assets”, “estate planning in case you die”, “business protection”, we better be including not just if you die—but if you live! Protecting your assets begins with income planning. You cannot have income planning without a program to protect the income. This is just as true if you live as if you die.

If we spend our time saying things like, “cover large bills from doctors and hospitals” we better be including some mechanism to cover all the bills, not just the hospital. People worry about medical insurance because they fear large bills from the hospital and doctors. Think about this: In most people’s lives, the largest purchase they ever make is their home. Do they have $500,000, $1 million or more to buy a house outright? Not usually. However, thanks to a mortgage, they can make payments. The caveat in all of this is that they have some sort of cash flow that allows them the ability to pay these big bills and big debts. If a person did not have medical insurance and the bill was $1 million, they could still pay it provided there was some source of cash flow.

Professional insurance producers who neglect disability sales when they actively sell life and/or medical insurance are not helping their client 100 percent. Could this be considered malpractice?

From a personal perspective, these producers are leaving thousands of dollars of commissions on the table.

Lastly, they are setting themselves up for another producer to take over the case and do a better “full service” approach.

Schnittker: You owe it to your client to at least ask them what would happen to them if they became sick or hurt and could not work.  There are numerous income protection specialists that a broker can affiliate with to provide the best solutions for their client’s needs/wants.

Mohr: Pretty simple—you are missing the boat or should I say yacht!

Schmitz: Be careful. Fiduciary liability/responsibility is a hot topic. You must address the issue of income protection within the financial plan or risk management plan. If you are not comfortable addressing the income or asset protection need, find someone to work with who can help you without disrupting the relationship you have developed with the client. Several MGAs now offer “in house” experts who are able to work directly with your client and pay you a referral fee.

Question: How have hybrid/combo products affected the income protection market? 

Cohen: From my observation hybrid/combo products have not affected the disability market.  An individual policy is more comprehensive and will do a better job protecting one’s income.

Bloch: Over the past five or so years, our agency has developed a number of income protection specialty products to solve unique situations for producers who work with our agency.  A couple have had mixed results and others have generated incredible enthusiasm and sales.  I do feel that the the income protection industry will be changed as we target unique specialty solutions, consumers, and other industry professionals. 

Chittenden: I do not see much impact within our market, unlike the LTCI market where the Life/LTC or even the annuity/LTC products have made a big impact.  For the most part, the advancement in the products in the income protection marketplace have focused on improvements for meeting evolving societal needs—such as older issue ages and riders for student loans—or product design to allow maximum flexibility. 

Phillips: In my experience, I have not seen much impact of hybrid products on the income protection market.  But we’re just at the start of this evolutionary use of death benefits helping address living needs.    At one time, acceleration of death benefit was limited to a terminal illness situation.  Recently carriers have expanded into access being granted for chronic illness/long term care situations.    More recently there has been liberalization to allow access for critical illness situations.   It certainly seems that the natural progression might lead to accessibility due to a disability (that might not be because of a chronic or critical illness).   

I’m not sure how the market would accept such a structure.   It seems to me that the acceptance of the ubiquitous chronic illness/LTC design is as much a result of the tumult in the long term care insurance markets as anything else.   

And while critical illness sales are on the upswing, it is not a mature market—there haven’t been generations of planners dedicated to the sale of CI.   There aren’t as many firms with roots as deep in the critical illness market as in the DI market, so it seems that acceptance of CI as a linked benefit opportunity might have less of a barrier than a DI design might.  

Call me old fashioned,  I can rationalize the linked benefit design as a strategy in some long term care planning situations or as a way to get something for critical illness exposure.   But the risk of death, the risk of long term care need and the risk of disability are three entirely different exposures.    In a perfect world, insurance to address these with individual products specific to those risks would be  most efficient.   Especially, it seems to me, the risk of losing one’s ability to earn a paycheck.

Petersen: We haven’t noticed any significant changes. Ultimately combos, like GSI, may just help the sales and underwriting process.

Schnittker: We have not seen much affect.  There are products like critical illness which are excellent supplements to income protection that can be really beneficial for the client, and can make your broker’s recommendation to his client more meaningful. 

Mohr: Most hybrid products have to do with Life and LTC combination coverages. I do not see where these impact disability insurance sales at all.

Schmitz: I would like to see a hybrid/combo product that includes DI. I would like to see a simplified issue hybrid CI/Accident-Only DI with cash value to market to millennials.

Question: What can agents, BGAs and/or carriers do to increase consumers’ acceptance of disability income protection solutions?
 
Cohen: Being a BGA, my job is to make every day disability income protection awareness day.  
 
We make our  brokers comfortable with the uncomfortable and we teach our brokers the questions to ask their clients to uncover the need for this important product; selling disability income protection is accomplished by asking questions.
 
I believe that the way to increase more consumer acceptance of disability income protection is for BGAs to educate the agents on the importance of this product.  The more agents that are educated, the more consumers will be educated.
 
The carriers who are manufacturing the products have developed good sales material which, if used, will result in more consumer awareness.  It is out there for the taking.  Every BGA and agent should familiarize themselves with the wealth of material that is available from the carriers.
 
Bloch: Over the years, the carriers and producers have jointly developed incredible income protection policies  geared mostly to the professional as they have been the preferred target market.  They demand Incredibly high quality definitions and protection guarantees.  Business owners and executive types may have different needs including disability business solutions.  I recently visited a physician’s practice and noticed their parking lot looked like a Mercedes dealership.  The patient’s parking lot, however, was filled with less expensive, practical transportation.  Our challenge is to educate the consumer and producer that an affordable solution is a better choice than one they cannot afford.

Chittenden: The biggest thing is for brokers to talk to their clients and educate them about the need.  Start a conversation with them.  Talk about it as income protection, not disability.  Ask some very simple questions to introduce the subject of protecting their income.  There are many easy transitions and opportunities to raise the subject.  For example, when delivering a life policy after placement, congratulate the client on their selfless action to protect the family he loves, but ask what happens if they don’t die but instead get sick or injured.  What would their plan be if they were simply too ill or hurt to continue to work and earn a paycheck?  The life insurance is of limited help to the family at this point.  Another example for financial planners was mentioned in an early question.  What happens to the great financial plan if there is no income to fuel it?  There is no reason for the broker to get into policy definitions and technical jargon.  Simply, the issue is educating the client on the risk of not protecting their ability to earn a living and, as with life insurance which protects the family financially from a premature death, income protection policies protect the family financially from the premature loss of work based income.  Both are needed!
 
Phillips: I was taught a good lesson years ago by an “old DI warhorse”. He lived in the northern tier of Pennsylvania and had a team of producers spread across the mountains and woodlands that sold only DI—primarily to blue collar clients.  
 
I was bemoaning the fact that our business overhead expense sales were lacking.   He listened as I griped about how I couldn’t get any broker to even quote—let alone sell—BOE. 
 
He looked at me and slowly spoke, “Well, Ray…it’s been my experience that if you don’t talk about something nothing will happen with it…have you been talking to brokers about BOE?”   
 
“Uh…come to think of it, Jim,” I said, “I guess I haven’t.” I went back to my office, started talking up BOE to anyone who’d listen, and guess what happened?  We made some sales. What a concept! Talk about it!  
 
I think simply a BGA needs to talk it up.  Discuss IDI more and more. Consumers suffer from less than stellar financial literacy on the whole.   Within that context, understanding of the exposures to disability, understanding the design of DI plans, understanding of the claims process and what triggers a claim is woefully lacking.   
 
BGAs must educate the broker populace that this should not be viewed as a niche opportunity.  It should be a foundation product.  It should be understood for what it is—the basis of every good insurance and financial plan.  It funds every other part of an efficient plan, allowing for continued timely payment of all other insurances in force from life insurance to homeowners insurance.   
 
BGAs must educate planners to not settle for their clients providing them with the old, “Oh, I have that at work” response.   Group LTD plans must be vetted.   Shortcomings of the group plan definitions must be discovered and pointed out.   For high-income earners the potential shortfall of the group plan’s maximums must be realized.   Is the group plan enough on its own or should it be supplemented by IDI to cover the income gap?  
 
DI is sold.  This is not a commoditized process. It takes thoughtful discussion, planning and education to help a client navigate the decision to purchase (or not to purchase) a DI policy.   An informed, educated and conscientious broker is needed for a client to decide the proper fit of an income protection product.   

Petersen: BGAs and carriers primarily interact with the retail producer and not the consumers. Thus the message and education needs to transmit to the insurance producer and motivate the producer to take action with the consumer.
 
Constant and consistent messaging is important. Many marketing pieces designed by carriers are “sales” focused. Today’s consumers often see this. What helps them most in considering the products is education information.
 
“What would I do without an income for three months?” does not impact me. I can easily rationalize and justify any response and then I am turned off by any further attempt. “Let me tell you about Joe, who is working today and looks pretty good.  But did you know Joe lost his entire business 10 years ago because of being out of work for six months?”  Now you have my attention!
 
The potential to lose some or all is what is at stake—not just “time off work”.
 
Bottom line is this: There is no magic bullet. It’s not quick and at times not easy, but that is how most things start!
 
Schnittker: The broker needs to ask the client what they would like to happen to their income stream, or their business, if they were sick or hurt and could not work.  Consumers don’t want to be sold.  They want to understand the need, find the best solution and be able to sleep at night. 
 
Mohr: Keep talking about the importance of income protection. I think that the carriers could do a much better job of communicating to the field and the public about the disability claims that they are paying. We have very little information on our claimants. From time to time I will hear from an agent about a claim that we paid or are paying. On one hand it is good, because I am not hearing about problems with claims. They seem to be handled and go smoothly. It would be nice to have more real life stories to help motivate people to own and producers to sell more disability insurance. 
 
Schmitz: Disability awareness. More claims stories. Salespeople need stories to make it real and to keep the prospect’s attention. Believe it or not, DI is not an exciting subject to most people. They really do not want to talk about it, and they are in denial about the probability of incurring a long term disability and the inability to access social/community benefits. Sales increase when consumers have real stories about nice people, who are grateful, and who have been paid large sums by friendly insurance companies.