Kenneth A. Bloch, CLU

Q: What special initiatives is your agency/company undertaking to take advantage of Disability Insurance Awareness Month? What do you do to build on your DIAM momentum to help agents perpetuate DI awareness throughout the year?

Bloch
Income protection is promoted to our producers 24/7/365. During Disability Insurance Awareness Month, our agency holds an exciting day of learning and reward achievement at our DI Day. Each year at DI Day, we provide different agendas for our producers to keep knowledge and industry trends up to date. Solutions based discussions create innovation and presentations of real world examples of the value of disability insurance, such as “It happened to me.” Our carriers send top executives to support DI Day as well as participate in carrier panels. Panels of producers share sales ideas and presentation methods to provide easy and successful ways to present income protection coverage. After lunch, there is a “fun” golf tournament with prizes and a donation to a worthy charity.

Chittenden
This year we are doing something different. Rather than sponsoring a big DI Day, we are launching a series of small regional/office DI Days. The big seminar with speakers is very effective in some locales, but we have not found it to be beneficial for us. Nor have we found it keeps the interest going no matter how excited brokers are leaving the meeting. The problem we have found with the large annual meeting is that sales come from habitual behavior and habitual behavior is not created in a once a year rah-rah meeting. So we are bringing DIAM into our brokers’ offices. We are holding a series of smaller meetings during DIAM and then establishing ongoing one hour training sessions on a monthly or quarterly basis. This way we can help our brokers develop the habit of asking the right questions to identify the problems that are solved by DI. We help them identify problems and sell solutions.

Petersen
We try and remind insurance professionals that each year DIAM highlights the need for income protection to the public through numerous tools and outlets. It is an awareness, not a sales strategy. However, it is this increased awareness that makes it prime time to focus on marketing and talking to clients about the need for income protection for both personal and business needs.

Phillips
The biggest initiative we undertake for DI Awareness month is our DI Day event along with our partner agencies in the Plus Group around the country.

Truth be told we usually don’t make it a whole day, so perhaps we should label it our “DI Morning.” For three or four hours we’ll do presentations on the products that make up the DI marketplace, and have sales sessions to help advisors with ideas and tips to sell more DI to their clients and introduce it to their practices. Very often we’ll attach Continuing Education credits to the advisors as well.

This year, our event is tentatively set at our go-to venue for our DI Days, The Rivers Casino in downtown Pittsburgh on May 22. The Casino offers beautiful meeting rooms. At our first DI Day years ago, an advisor won $800 in the casino after the event! That’s a sure way to get a repeat attendee! Although we are trying to raise awareness for disability insurance, we still try and make the day as fun as possible for anyone who attends. That’s why organizers do usually try and plan a casino event afterward. Before this next event, some guests may want to take some time to brush up on their casino skills by looking into this mega888 download. This should ensure that people stand a better chance of winning. If people want more of a variety with their online casino playing, they can look to other sites that may have what they are looking for, for example, they may want to play on 918kaya apk, or similar, to brush up on their skills, whichever one they choose as long as they play responsibly they’ll have a lot of fun. Just make sure to check how highly any online casino is rated before you start using it – the best way to do this is to head over to casino-bonus.me.uk and read some reviews. Alternatively, they could conduct a direct search using specific phrases to find the best sites to play gambling games. If a person wishes to try his or her luck at Ripple casinos, websites such as Crypto Snack may be of assistance by recommending the best ripple casino sites available online.

For us DI Awareness doesn’t only occur in May. We are constantly offering training events and opportunities during the year. We have ongoing meetings, webinars, and broadcast emails that provide advisors the opportunity to learn about DI. Our meetings take the form of what I call our “Big Hotel Meetings in the Sky” where we’ll rent a room at a hotel and bring in an industry speaker or company rep to talk DI. We hope to get 50 or so brokers to one of those events.

We also have geographically oriented “DI hand-to-hand Combat Sessions” where we’ll do smaller, more intimate meetings in handy locales, with the intent of getting 5-10 advisors in attendance. These are more intimate sessions where we’ll peel apart products and provide ideas as to how to sell this stuff.

And, of course, we’re old fashioned. We still meet with brokers to provide training in their offices to themselves and their staff-often with CE just for them.

For us there is no “DI Awareness Month” it’s more like the “DI Awareness Continuum.”

Perry/Bowden
We participate in many of our general agencies’ DI Days providing presentations on the importance of disability and awareness of the products available to clients who are not able to obtain disability in the standard market. We also provide webinars throughout DIAM to educate agents who are not aware of the high risk products that are available and how to capitalize on the declined cases they may have received.

Schnittker
This year we are doing more agency meetings, road shows, individual sit downs, presentations to local financial associations, study groups, etc. We are more visible than ever, just in different capacities. We will continue to educate going forward.

During DIAM we will utilize different tag lines on emails and correspondence. We will send out more marketing emails to our brokers discussing DIAM, and offering sales tips, marketing facts, and bringing them up to speed on the resources that are available.

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.

Personal and business assets can be protected by evaluating all the complexities of the individual and business with proper and complete income protection planning.  The first thing that needs to be accomplished is a complete analysis of the individual’s income and current assets and liabilities for both personal and business situations.  Having all goals and details of any existing personal and business income protection help to begin this process.  

Recently a producer was discussing a family law attorney prospect.  The attorney was very interested in purchasing additional income protection and asked for recommendations and a comparison of several carriers to select the proper coverage.  The producer started to compare policy provisions when the attorney interrupted and indicated he wanted carrier A.  When the producer asked why the attorney wanted carrier A, the answer was short and to the point – it’s cheaper.   The producer contemplated just completing the application and moving forward, but instead indicated to the attorney he believed he was making  a “bad choice” selecting carrier A.   In this instance, this policy would not provide adequate protection and the producer included this in his comparison to show alternatives in quality and cost.

He knew that the attorney was driving a top of the line automobile equipped with several high end safety features.  Why did you purchase this automobile?  The attorney answered that he wanted to protect himself and his family in case he was in an accident.  The producer illustrated how the income protection policy he had recommended would provide the equivalent level of protection as his luxury automobile if he became incapable of working at his full capacity.  The cost to provide this level of protection is higher, but if ever needed it would provide the quality he deserved.  Recommending the highest quality coverage that the prospect can afford is the first step in income replacement and asset protection.

The attorney had group long term disability through his company, but knew very few details.  The producer requested a copy of the certificate to analyze his existing coverage.  The group LTD policy provided a benefit of 60 percent of income up to $10,000 per month after a 90 day elimination period.  After reviewing the policy details it was learned that, just like about two thirds of all group LTD plans in force, the policy had a 24 month “own occupation” definition of total disability, followed by an “any occupation” definition.  After 24 months, benefits continue only if the insured is unable to perform any occupation based on his education, training or experience.  Benefits are normally paid to the Social Security Normal Retirement Age (SSNRA).  The attorney was paying for this coverage with after-tax dollars and hence any benefits would be received tax-free.  As he was only an employee, he went to the human resource department at his law firm to discuss the quality of coverage.  The head of the department knew about this definition, but indicated that the partners decided on this coverage because of cost. 

The normal process would be to provide a quality buy-up individual policy to supplement the group LTD coverage, but this producer was concerned about the group LTD plan.  He also recommended that the attorney purchase specialized coverage that would provide additional benefits if the group LTD policy definition change impacted monthly benefits.  This policy does not change the definition in the group LTD policy, but does supplement coverage to provide additional protection should the group LTD prove inadequate.

An expanded approach to protect assets is to add a catastrophic disability benefit to an income protection policy.  This coverage will provide an additional monthly benefit if the policyholder is unable to perform at least two activities of daily living (ADLs), or has a severe cognitive impairment.  ADLs include bathing, continence, dressing, eating, toileting and transferring.  This additional cash can help pay for custodial care in a variety of settings such as the home, a community organization or other facility. There will also be added potential expenses such as medical care expenses, home and automotive modifications and prescription costs.  Without this protection, personal assets could be decimated.   

A divorce can ravage personal and business assets in the case of a disability.  What happens when a spouse becomes disabled and is no longer financially able to pay their alimony or child support payments?  What would a disability do to support payments and assets?  What would happen to the child’s education and future opportunities?  This education provision is oftentimes included in divorce decrees.  There are two pieces to this puzzle and both can be protected with specialized income protection.  For recipients: Ensure support payments continue.  If the payor’s income has stopped due to disability, support payments could be reduced or even terminated.  For payors: Prevent the need to liquidate assets.  If the payor has significant assets, a judge could order these assets to be sold rather than modifying the support payments.  Either the recipient or the payor can purchase this coverage, but benefits should always be paid to the recipient.   Future education funds need to be put in an Education and Maintenance Trust to guarantee those funds are available for college and other educational expenses.  

Asset protection for business needs requires additional protection.  The business owner might have additional special needs.  Protecting the business owner’s income with “the best” protection is the first priority.  The second priority is to analyze business needs.  Depending upon the type of organization, size and scope, it might be determined that Business Overhead Expense (BOE) insurance is required.  BOE insurance provides for a reimbursement of covered ongoing business overhead expenses.  This policy helps keep the business viable until the business owner either comes back to work or can perhaps sell the business as a “going concern”.  Without this type of policy, the business assets would diminish and could seriously threaten the ongoing viability of the business.  A sample of covered expenses include the business owner’s share of those fixed expenses such as rent, utilities, lease payments, telephone and computer payments, salaries, fees, wages, and benefit payments made on behalf of any employees.  

Asset protection for a sole business owner can provide increased challenges and opportunities.  In the situation of a computer consultant with no employees, the value is the sole business owner’s asset.  There may or may not be any fixed assets, but there is proprietary knowledge that most likely is not transferable or even able to be sold.   We can obviously protect the business owner’s income and perhaps business overhead expenses, if applicable, but can we insure the value of his business should there be a long term disability?  There is a specialized coverage available to protect the value of the business in the situation where a business sale is not viable.  There are a number of different occupations and industries where a business might not be saleable in the situation of a long term disability.   Ask if their clients will flee to another source in case of a long term disability.  If one of his clients has a computer problem, will the client wait until he gets back from a disability to fix the problem or will the client find another source?  The answer is obvious.   

The third priority to protect the owner’s assets is through a buy-sell policy.  Most buy-sell agreements are designed and funded with life insurance only.  The buy-sell agreement should also provide for a transfer of business assets in case of a long term disability.  A business buy-sell agreement provides for the purchase of a business owner’s share of the business in the case that the owner becomes totally disabled and is no longer able to work in the business.  This could be a wonderful marketing opportunity as the majority of the existing buy-sell agreements do not provide a provision in case of a disability.  Most producers “stay away” from this because of a lack of expertise, so being an expert in this field will provide incredible opportunities.  The buy-sell insurance policy provides benefit payments in the form of periodic pay, lump sum, or a combination of both.  This policy provides a source of funds to help with the purchase of a totally disabled business owner’s interest under a buy-sell agreement.  Cross Purchase and Entity Purchase agreements are the two most common structures for buy-sell agreements.  Although most buy-sell agreements focus on the business owner being totally disabled for an extended period of time, there is the availability of coverage when the business owner is residually disabled and could be a drain on the ongoing operation of the business if the residual disability lasts an extended period of time.  The buy-sell agreement can also be amended to provide for a transfer of assets in the situation of a residual disability.  

Income and asset protection is not complicated if all aspects are examined and analyzed.  The solutions should be appropriate and the recommendations need to be of such quality that in the case of a disability, your consultation and advice will provide a financially secure environment. 

Estate and legacy planning present a multitude of challenges when consulting with a family with a special needs child. It is estimated there are approximately 6 million children under the age of 14 who receive some type of special education or participate in specialized programs. According to the “Disability and American Families” US Census Bureau report, one in every 26 American families reported raising children with disabilities.

Examples of special needs treatments and conditions include speech therapy, physical therapy, occupational therapy, behavioral therapy, severe learning and/or cognitive disabilities, treatment for physical or chronic disabilities, Autism Spectrum Disorder, Down syndrome, or other developmental disabilities. The planning for a possible disability event with a special needs child is especially important due to the family’s lifestyle adjustments. How will parents be able to pay for the children’s education and future care for a special needs child if there is a disability event? Moreover, will families be able to find and fund education in private schools in jacksonville fl, or nearby places that can accommodate children with special needs?

The need for specialized training in working with special needs families have been recognized by the American College. It provides a specialized designation known as a Chartered Special Needs Consultant – ChSNC. There are also programs designed specifically for special needs families by insurance carriers to assist in educating their advisors about the special needs environment and streamlining the planning process.

What kind or type of insurance can provide for future education needs or maintenance for a special needs child? The most common solution is life insurance. This is a time tested solution, but income protection designed to provide additional benefits to pay for children’s education and/or special needs can provide an additional solution should there be a disability event. A child’s education and future opportunities should not be limited by an income loss due to a disability. There is peace of mind knowing that in the event of a disability, the future financial maintenance expenses of a special needs child are protected. These funds can also be made available to any other children’s education needs.

Another potential issue in working with the parents of a special needs child is their mindset. Parenting a special needs child brings physical fatigue, stress, anger, loneliness, guilt, rejection, confusion and continuous anxiety as well as pride and joy. The additional stress also can have a negative impact on caregivers in regard to the well-being of their marriage.

A divorce involving a special needs child creates additional planning challenges. It is imperative to protect alimony and child support payments if a disability should occur to the ex-spouse as these support payments may be terminated. It’s crucial to research into spousal support in Texas, or spousal support wherever you are based, to be informed on what you and your child are legally entitled to after a divorce. The fact that the alimony and child support is most likely the only income available, a disability to the ex-spouse could be devastating. If the alimony and child support payments stopped due to the inability of the ex-spouse to make these payments, the financial and future well-being of the special needs child is threatened. This coverage is available in addition to the special payments for education and maintenance and also not subject to traditional issue and participation limits. Disability payments should be paid directly to the family receiving alimony and child support. If you find yourself in a divorce and are thinking about this, you may want to get in touch with a divorce and family law firm similar to peters and may who may be able to help you ensure that alimony and child support payments are protected.

A caregiver is likely to spend more than 40 hours per week providing care. It is estimated that in over 50 percent of these families, a spouse or other family member was forced to quit a job to care for the child with special needs. Family life dynamics change as they dedicate their life and family resources to that child’s well-being. Some caregivers may have to choose a part-time position to allow the time to provide specialized care. This of course has a serious impact on finances. There are many hidden financial costs of parenting a child with special needs. Families tend to experience three types of expenses: higher routine care costs, higher health care costs and reduced employment income. In some cases, there is an additional cost of renovating a bedroom, bathroom and/or entry way. Purchasing a wheel chair van for transportation may also be necessary. Also consider that there are may be additional costs associated with a special needs child with the amount dependent upon the level of care required and resources available.

In severe cases, there are special schools and institutions that help children learn to interact with others, communicate their desires and needs to others, and learn life skills. These schools and institutions have qualified special education teachers who are trained in behavior management, educational assessment and intervention, and successful strategies for the classroom. The need for special education teachers is growing because advances in the field allow for earlier diagnosis of learning disabilities, which means more children are receiving a diagnosis. The high cost of educating students with special needs is falling on traditional public schools, while other students are increasingly opting for alternatives. In addition to special education in the public school systems, there are over 140 special schools catering for particular types of special needs and disability. There are schools for the special needs children who have mild to moderate learning disabilities, for the visually and hearing impaired, and for those with physical disabilities. There are also a small number of schools for the emotionally disturbed.

The family dream is to provide the opportunity of higher education for all their children and to be able to provide some financial assistance for their children to attend college, but parents of a special needs child are consumed by unanswered questions: What will happen to my special needs child when he is 5 years old? 10 years old? An adult? Will college be available? Will he or she have a loving relationship? What is going to happen?

Many parents are also simply terrified about finances. Although families may receive financial assistance through government or private programs, the parents still face an incredible resource burden, especially in an era where government budget cuts are prevalent.

Group long term disability is a common source of income protection for many families. Group long term disability coverage can vary from low to high quality and may provide inadequate monthly benefit amounts. An individual income protection policy can provide additional protection. However, this combination is most likely not adequate for protecting the family with a special needs child. Normal issue and participation limits hamper adequate income protection planning.

There are solutions to solve these complex issues in the case of a disability. With additional income protection planning, additional benefits can supplement existing disability coverage to provide the extra money needed to cover the additional costs associated with a special needs child.

Documented expenses for day care, private school, college and education, and maintenance expenses for a special needs child can be covered to provide the extra money to continue these valuable services. The coverage can be designed to provide monthly benefits and then transition to a lump sum payment. The lump sum payment is deposited into an irrevocable education and maintenance trust. The trust agreement needs to identify specific provisions. For example, it should provide provisions for distribution upon the child’s death, completion of education, or failure to attend college or complete education. In the situation of a special needs child, the trust should have provisions to protect the assets of the trust for the benefit of the recipient.

The elimination period and benefit period can be adjusted to provide income protection that matches the specific needs of the family and special needs child.

A case sample: a parent with a child who has cerebral palsy became disabled and was no longer able to pay for immediate therapy and treatments needed for the child. Following a 90 day elimination period, a monthly benefit of $2,500 was available to care for the immediate costs related to the illness. After 9 months, the policy provided a lump sum benefit of $500,000 that was deposited into an irrevocable education and maintenance trust for the future benefit of the special needs child. This additional money allowed the child to continue these much needed treatments and provide for future care, treatment, and maintenance. This benefit is in addition to any other disability benefits payable.

Estate and legacy planning involving a special needs child provides a challenging environment for all concerned. A forward thinking planning approach can provide peace of mind regardless of a death or a disability. There is nothing more rewarding.

Kenneth A. Bloch,  The Bloch Agency

Eugene Cohen, Eugene Cohen Insurance Agency, Inc.

George G. Davidson, Secura Consultants

Cindy V. Gentry, Life Happens and BBA Life Brokerage Agency

Barry Lundquist, Council for Disability Awareness

Thomas R. Petersen, Petersen International Underwriters

Thomas Petsche, Sr., International DI Society and Brokerage Solutions

Raymond J. Phillips, Jr., The Brokers Source, Ltd.

Q: What advice do you have for brokers on how to take advantage of Disability Insurance Awareness Month?

Eugene Cohen: The best kept insurance  secret is disability income protection. I ask myself, “Why?” It is such an important part of financial planning. Most advertisements for financial planning are geared toward income for retirement years, not taking into consideration that many individuals may be forced to retire before age 65 due to disabilities.

Brokers should take advantage of Disability Insurance Awareness Month (DIAM)by calling their policyholders and telling them that the month of May is DIAM, and follow that up by asking their clients questions such as:

 • “What is the longest vacation you have ever taken?” Most will respond, “Two or three weeks.” You ask why that is the longest and the response will usually be, “I have to work. Who can afford to take a longer vacation?”

 • “If you were to have an illness or accident and you were out of work two or three years, would you have an income problem?” If the answer is yes, you respond, “We have to talk.”

 • “Do you have a plan if, due to an illness or an accident, your income should stop?”

 • “Would you agree that your greatest asset is the ability to earn an income?”

It is my belief that if brokers asked their clients these questions, the clients would see the need for disability income protection.

George Davidson: While many organizations and carriers support the Disability Insurance Awareness Month initiative, it does not matter if financial professionals don’t embrace the concept, utilize the tools, and launch a campaign to reach their clients and prospects.

However, the first order of business should be a review of your own disability planning! As I was recently reminded, you sell what you own. Many financial professionals are woefully underinsured themselves, and you can’t preach the message if you don’t heed your own advice.

Cindy Gentry: The easiest way is to let someone else do the heavy lifting for you. Life Happens (formerly LIFE Foundation), which is the nonprofit organization that coordinates the national DIAM campaign each year, has free turnkey tools for brokers and agents to use during DIAM—and beyond. There is really nothing that you have to do from scratch. You can find the DI tools and resources at www.lifehappens.org/industry. (The sidebar gives you some concrete examples.)

Success with the campaign, however, lies in consistency. Plan ahead, choose the resources that you’d like to use, distribute them and then be sure to communicate about DIAM and DI on a consistent basis. In my business, besides a monthly newsletter, we also send out two weekly emails with sales ideas, marketing resources and product information. This consistent drip of information is invaluable. If you want them to sell it, they have to hear about it and know more about it.

Barry Lundquist: A broker’s responsibility is to help people protect what is most important to them. We know from research conducted by the Council for Disability Awareness that consumers, brokers and employers all agree that the ability to earn an income is a wage earner’s most valuable financial resource; income is what pays the bills, pays for housing, food, clothing, transportation and other living essentials, as well as giving breadwinners an opportunity to save for retirement, a new home, a child’s education, or just for a rainy day. Disability Insurance Awareness Month  gives a broker a reason to contact prospects and clients and start a conversation about the importance of income to their financial security, about the risk of income loss related to illness or injury, and about solutions that can help them protect that most valuable resource. It’s also a great time to remind those clients who have already purchased disability insurance how important it is and to suggest a checkup to make sure that the income protection they have remains appropriate. For those brokers who do not talk to clients about protecting their income, DIAM is a great reminder to them of what being a trusted advisor is all about. After all, their responsibility is to help people protect what is most valuable to them, and for most working Americans, nothing is more valuable than their income.

Tom Petersen: Disability Insurance Awareness Month is just as the name implies—awareness. Disability insurance does not sell itself like many other forms of insurance. It has to be sold. It is also difficult for the average person to picture himself disabled much beyond a cold or flu. DIAM does an enormous job of marketing and spreading awareness at both the consumer and industry professional levels. Groups such as CDA, Life Happens, and IDIS have great tools to help make marketing DI easier. But don’t start in May! Start in April! May is when the blitz to the public happens, and it is best to have all the resources going at once!

A side note: When May ends, the need for disability insurance doesn’t! Hopefully, insurance professionals recognize that DI can be sold, should be sold, and should be part of our everyday sales activities.

Thomas Petsche: We need to start ASAP getting emails, mailers and brochures sent out to brokers and clients just to get DI on their radar.

Ray Phillips: Invest in the tools available from Life Happens. Invest the time to know what is on their website. Invest the money in those marketing pieces that might help spread the word about disability income insurance.

Use the benchmark reminder of Disability Insurance Awareness Month as a reason to start a conversation with clients about DI.

For clients who have purchased DI, use this as a time for brief review of the client’s situation to confirm that benefit amounts are accurate; review the definitions and features of the plan so the client knows what he has and can expect if a claim arises. Provide a brief overview of the actual claims process—how to file, what happens, etc.—in case a claim does arise.

Q: What tools, process or technique do you recommend that brokers make use of to engage clients in a DI discussion?

Cohen: I recommend asking clients questions to engage them in the mindset of disability income protection. Ask them how important their earned income is to them. Ask them how they would fund their retirement plan if they were to become disabled. Ask a small business owner how he would pay his business expenses if he had a disability.

Selling disability income protection is easy when the need is established.

Davidson: The important news is that you don’t have to “reinvent the wheel.” There are ample materials provided by Life Happens and the Council for Disability Awareness. Take a few minutes to find the tools that fit your practice style and put them to use.

Gentry: Increasingly, one of the most effective means of connecting with people on a very personal level—especially with Gen Xers and Millennials—is through social media. None of us really seems to have the time necessary to devote to these new channels of communication, but the truth is that we ignore them at our business peril. Again, free resources from Life Happens can make it much easier. They have pre-written “compliance neutral” content about DI, including images and “info-statistics” that you can literally copy and paste to share. You can also follow them on the Life Happens social media channels, such as Facebook and Twitter, and simply share the new content that they post several times a day.

Lundquist: From knowing and observing hundreds of brokers over the years, I have tried to discern what differentiates those who are highly successful from the others. I have observed four traits common to the best of the best:

 • They are dedicated, lifelong learners. They never stop learning; never stop striving to be more educated and professional.

 • They are passionate. For them, selling is not about commissions, it’s about doing the very best job to protect their clients and best meet their most important needs.

 • They tell stories. They share stories from their personal and professional lives; stories from which, for many, their passion derives; stories about how important it is for people to protect themselves from the most catastrophic risks.

 • They ask great questions and then they shut up and listen. Clients don’t want to be sold, they want to be listened to, they want to be educated, and then they want to make their own decisions based on advice from someone they trust.

So I think the answers to this question are apparent from these four traits. There are no silver bullets. Clearly, being the best requires hard work. But those who dedicate themselves to learning, who are passionate, who have stories to share, and who have great questions to ask will be successful.

Some good questions to start a conversation about income protection include:

 1) If you were sick or injured and couldn’t work, how would you pay your bills?

Know what all the responses might be and have answers prepared. For example, if the person says, “We’d live on my spouse’s income,” what would your response be? What follow-up question would you ask? If the person said, “I have disability insurance,” that’s an opportunity to ask about their protection and to help them determine whether it is enough.

 2) What is your most valuable financial resource? What is it worth?

When they respond, they may talk about their home, their retirement nest egg, etc. Use the Earnable Income Quotient calculator, which is a great tool made available by the Council for Disability Awareness, to help them estimate the value of their income. It is typically a very large number, much larger than the value of their home or 401(k) balance.

 3) What are your odds of experiencing an illness or injury during your working career that will prevent you from earning a paycheck for three months or longer?

We know that most people dramatically underestimate their odds of becoming disabled. Use the CDA’s Personal Disability Quotient calculator to demonstrate that their risk is higher than they think. The good news? Solutions are available.

The key is to ask the question and then let the client talk

Petersen: There is no one way to engage someone. Some people are visual. Some are analytical and need statistical information. Some people empathize with stories, and others feel a need to protect their family or business. And finally, there is a group that buys because they are told they need it (usually by an attorney, friend, parent, business partner, etc.). As a professional salesperson (it doesn’t matter if you sell insurance, refrigerators or widgets), you need to be able to engage people on their level. Do you have a story to share? Do you have statistics? Do you have pictures? If not, get them! Life Happens, CDA and IDIS all have great tools to help.

One other source that is not to be overlooked is your local disability insurance brokerage outlet. These are the experts in many areas, all on DI. They have tools, they have knowledge, they can help with marketing, and they can help with sales calls in some cases. Most DI brokerage outlets represent several carriers so that they can provide you an assortment of products to solve insurance needs.

Petsche: I have my three questions:

 1. If your car were stolen or destroyed tomorrow, how quickly could you find another car to drive?

 2. If your house burned down, how soon could you find a place to live?

 3. If you became sick or hurt and your doctor told you that you could not work for the next six months, two years, or the rest of your life, do you have an income guaranteed to cover your regular monthly bills, no matter how long you cannot work? Your income potential in your working lifetime is several million dollars—that is, if you don’t become disabled.

Phillips: ASK! Ask clients if they have DI.

If they do have DI, ask if they know what they have (chances are they won’t). If they have group coverage at work, ask to review the policy to point out any shortfalls and perhaps provide input on insuring any benefit shortfall relative to their income. Ask if an individual policy they have will cover their current situation. Ask if you can do a DI policy audit to ensure proper coverage.

If clients do not have coverage, ask how it would impact their lifestyle if they were sick or injured and couldn’t work. Ask if you can provide an affordable solution to the exposure they have.

Q: Many DI specialists share the view that every month should be treated as if it were DIAM. What can be done to convince specialists in other insurance fields to impress upon their clients the need to protect their income?

Cohen: Specialists in disability income protection find selling the product quite easy. This is because they know and understand the policies. Specialists in other insurance fields need to be educated so they, too, become knowledgeable and comfortable addressing the concept of disability income protection with their clients. At our agency we spend as much time as needed going over the disability policy illustration with our brokers, preparing them for the appointment; we are not satisfied until we have done our job of making the broker secure in his knowledge and comfortable with the previously uncomfortable. Knowledge is power.

Davidson: Unfortunately many financial advisors wake up to the importance of this issue only after one of their clients suffers a disabling illness or injury. In our practice we spend every day attempting to save these individuals from becoming an example which motivates their financial advisor to do the right thing.

Gentry: The great part about DIAM and using the Life Happens resources is that May becomes the launching pad for DI outreach—a great beginning. You can give your own campaign a big burst of energy while the national campaign is underway, and you can leverage the national attention that’s being put on DI. Then it goes back to consistency. Continue to use those DI resources throughout the year. Most of Life Happens resources—realLIFEstories flyers and videos, and social media posts—can be used any time of the year. Set up a calendar of when and how you are going to communicate about DI, and then stick to it.

Lundquist: As I noted earlier, a financial advisor’s responsibility is to help people protect what is most important. For nearly all wage earners, income is most important. If the broker is not familiar with disability insurance, that is not a valid excuse for not addressing income protection. There is plenty of help available to get educated, and plenty of opportunities to partner with experts to create the best solutions for a client. Some years back, LIMRA surveyed brokers who did not sell disability insurance and asked them why. The most common response was “the client didn’t ask for it.” That is simply not acceptable. The advisor’s job is to help the client understand his risks and to protect against them. Some people will talk about the broker’s liability because they didn’t talk about disability insurance to a client who subsequently became disabled. As a trusted professional, I cannot imagine having a conversation with a client who has suffered a disabling illness or injury, or perhaps having that conversation with one of that person’s loved ones, and having to explain to that person why there is no protection in place for that person’s lost income. For many, their lives will be completely ruined.

Petersen: While we in the disability insurance industry believe every insurance professional should always include DI, the reality is that they can’t (or won’t), for many reasons. This is one reason the need to network with others in our industry can be a useful tool. The specialists in other fields don’t need to know about disability insurance as much as they need to know (and use) the resources that can analyze, design and implement a DI plan. That may be a producer to split cases, or a brokerage outlet, or a carrier rep. If they want to do it alone, they should also know the online tools and resources we have already mentioned. A specialist in another field should understand that if their client becomes permanently disabled, he may lose them as a client! A CPA will not have a business client. However, a business owner disabled and with business overhead expense DI coverage will need a CPA! An investment advisor will find that a disabled person becomes a survivalist, and discretionary income for investing is much tougher to part with during a disability. A life insurance specialist should ask himself, “What if my client doesn’t die from a severe accident or heart attack?”

Petsche: Every plan/program that you can set up in the financial services area is dependent on your income to keep them going, and once that money machine—you—breaks down, all your plans just become liabilities. Should we protect the goose? Or the golden eggs the goose lays? Too many advisors and their clients want to insure the golden eggs.

Phillips: If a person becomes disabled, the other specialists need to recognize that there is a good chance it will affect the client’s ability to pay the premiums on the products or investments they have sold. The fact is, before IRAs, before life insurance, before 401(k)s, before long term care insurance, there should be disability income insurance. Not only does it protect a paycheck, not only does it protect the lifestyle a client has grown accustomed to, it also protects the very plans that have been implemented to secure the individual’s and family’s financial future.

Q: In your experience, what are the main difficulties/objections you encounter in trying to market DI either to agents or to consumers, and how do you overcome them?

Ken Bloch: The biggest consumer objection is “sticker shock.” If the producer explains disability insurance in understandable terms with the policy premium at 2 percent or less of gross income as a starting point, the consumer can then design a policy that will provide value and peace of mind. [KB]

Cohen: This is a typical conversation when talking to a new broker: “Do you offer disability income protection to your clients?” Most answer no. “Why?” we ask. The most common answers we get are: “I don’t want to be bothered.” “I am busy with my casualty business, health insurance, etc.” “It’s too complicated.”

The real objection is that the broker is uncomfortable with his lack of product knowledge. We help brokers overcome the real objection of why they do not offer disability income protection to their clients by letting them know that our agency marketers are here to help them understand the product and how to offer it.

In overcoming objections from the consumer there are only four basic objections. Everything else is not a real objection. The four basic objections are: 1) no need, 2) no hurry, 3) no confidence, and 4) no money.

I gave examples earlier of questions to ask to establish the need for disability income protection. Once the client understands that he needs the policy, you have overcome objection number 1. 

Objection number 2 is “no hurry.” When your client knows he needs disability income protection, he will act. You have overcome the “no hurry” objection.

Objection number 3 is “no confidence.” If you have the knowledge, your client will have confidence in you. It is your job to obtain the knowledge by reading the material that companies have developed for producers and by working with a knowledgeable brokerage agency that can give you all the time and support you need.

Objection number 4 is “no money.” This is the final objection and this is when you ask the client, “If the company were to deduct x amount of dollars from your checking account every month, would this create a financial problem?” If the client says no, you are done! If the client says yes, then you state, “I am not here to create a financial problem, I am here to solve one.” (This approach only works because of its sincerity.) Then we work together to reduce the benefit and premium to something the client can manage.

Every day in our office is disability income protection awareness day. Every day we are teaching, training and talking disability income protection to our brokers and to each other. It is great to be a part of an industry that does so much good for people. [EC]

Davidson: A well-versed and motivated financial advisor encounters very few legitimate objections. We have worked closely with advisors whose placement ratio is almost 100 percent. This comes from understanding the needs of the client and the solutions that are available. Everyone wants what disability insurance does—our job is to help the client position it into their plan and budget. [GD]

Gentry: I see it less as an objection and more of an issue of something we don’t talk enough about. Health agents aren’t selling DI, P&C agents certainly aren’t selling it, and most life agents don’t sell it either. But the truth is, none of those other types of insurance meet the need that DI does. There is a huge gap between consumers who need DI and those who have adequate coverage.

I think the key is focusing the conversation on “protecting your paycheck.” People aren’t necessarily open to talking about disability insurance—they may not even know what it is. However, they will be open to knowing what can help them if an injury or illness keeps them out of work for an extended period of time. Life Happens did a survey that found that 50 percent of people would have financial troubles either immediately or within one month of not receiving a paycheck. That’s a crisis. We have the tools so that agents can help their clients solve this problem. Now we need to start using them. [CG]

Lundquist: Some common objections from brokers: It’s too complicated, it takes too long, and policies are too often modified from what was applied for. The first thing I’d say is: Just because something is hard doesn’t mean for a second that it is any less important. The more brokers learn about disability insurance, the more policies they sell and the easier it becomes. They can make sure the prospect knows what to expect if they themselves know what to expect.

Many very successful disability brokers that I know have made the observation: If I knew then what I know now I would have started selling disability insurance much sooner. Many companies today are offering multi-life programs on a guaranteed issue, simplified administration basis. Those multi-life programs can certainly make the process easier.

Another tip is to focus on younger wage earners. When someone is early in his career, his risk of disability over the many years he will work until his retirement is much higher than an older worker who has fewer years of work remaining. That younger worker’s earnings potential is significantly higher than the older worker for whom many of his earning years are behind him.

So the youngest prospect has the most to lose and the highest odds of losing it. Younger workers often have few financial resources to fall back on. And for younger workers, it is typically much easier and less expensive to purchase income protection.

Other benefits to brokers besides doing what is right for clients: There is less competition in the disability insurance marketplace and commissions are lucrative, especially renewals.

Some common objections from prospects: “It costs too much.” This may simply be a reflection of not appreciating their level of risk. Discuss the consequences of disability; ask how they would pay the bills. Ask if they know others who have had cancer, or a stroke, or experienced a bad accident. Use the Personal Disability Quotient calculator. Many wage earners assume that disability insurance is much more expensive than it is. Finally, don’t forget that having something is better than having nothing. Help them get something in place that can be built on in later years.

“I’m healthy.” It is certainly the case that a person can lower his risk of disability substantially by living a healthy lifestyle, keeping weight in line, eating right, exercising and so on. In fact, a person can cut his risk of disability in half. But even the youngest, healthiest person has a risk of disability that is too high to ignore.

“We can get by on our savings and (other sources).” Help them do some math. How much do they need each month to pay the bills? What sources of income would they tap into, how much would be available, and how long would the sources last? Finally, quantify the gap between needs and income sources. Help them learn how to best fill that gap.

Also keep in mind that the average long term disability, once the claimant satisfies his elimination period, exceeds 2.5 years. He needs to be prepared to withstand a disability that can last for several years, or one that may even end his working career.

Helping overcome objections is where stories and passion come most into play. Telling stories about others who have experienced disability and especially getting clients to talk about people they know who have experienced illnesses or injuries can certainly help. Many people don’t think they know anyone who was “disabled,” but when asked if they know someone who has had cancer, a stroke, or even chronic back pain, most everyone will say yes. Our Council for Disability Awareness research demonstrates that when an individual knows someone who has experienced a disability, they think their own risk of disability is higher.

Perseverance counts. Keep asking, keep reminding. As any successful salesperson can attest, the sale is very often made after many attempts. [BL]

Petersen: The DI industry has done a great job of educating insurance professionals that disability insurance is cash flow. More life insurance is sold for asset protection than for a “need for cash.” When insurance professionals who speak about assets as things that are important to insure realize that disability insurance is asset protection, then they begin to include it in their day-to-day sales. The same perception applies to the end buyers, too. People don’t visualize losing income as easily as losing a house, keeping kids in school, wrecking a car, etc. A long term disability will result in the same liquidation of those assets if they are not protected by disability insurance. We must do a paradigm shift in thinking about what disability insurance truly is. It is asset protection! [TP]

Petsche: The biggest obstacle we have to overcome with both brokers and consumers is the perception that “disability will not happen to me.” The best way to overcome this objection is by telling emotional and motivating stories about our experiences dealing with what happens to individuals with and without disability insurance. Also, show the law of averages that relates to disability, because the odds are not in their favor. [TP]

Phillips: The biggest hurdles, in my experience, have been cost, recognition of exposure, and perception of the underwriting process.

Cost is the major objection to many insurance sales. I’ve found that if the advisor gets the client to focus on the amount of annual and total payouts the DI plan could provide in the event of a claim, it helps. For instance, for a 40-year-old business owner who is considering a $5,000 monthly benefit, stress that this is $60,000 per year; and that the total potential payout to age 65 is $1.5 million. In that context, the premium relative to the benefits provided is perceived as much less than if presented monthly.

Statistics abound that provide the realities of the exposure an income earner has to a disability. The Council on Disability Awareness has information available to help point out this exposure, as does the Life Happens site, www.lifehappens.org.

The facts are that the DI underwriting process can be involved and tedious. Accurately pre-screening the client as well as detailing the process and the reasons behind the scrutiny involved must be explained to the client. The amount of potential benefits requires a process that allows carriers to mitigate their own exposures.

But within that framework a number of carriers have come out with a simplified underwriting process that can be less invasive for clients up to a certain age and benefit amount. Exploring that process for the client’s particular situation can be an effective way to cut the time and consideration involved. [RP]

According to these successful marketers, there are endless possibilities for growth and success in the DI business.

Q: What led you to specialize in the DI market?

Kenneth Bloch: I was fortunate to begin my career with a carrier that considered individual DI their premier product. Although that company offered other products and services, the goal of most of the home office and field employees was to be involved with the individual DI product line. We were equipped with the best training available, a superior product and a first class delivery system. Our specialized knowledge of this critically important consumer-oriented product allowed us to be an invaluable resource in the brokerage community.

There have been many changes over the years as there are different carriers now specializing in individual DI with new and creative products and solutions. There has never been a better time to be an individual DI specialist or to work with a brokerage agency that specializes in that market.

Barbara Gelber: Working as an administrator for Berkshire Life led me onto the path of sales in the disability income market. Early on, as I began to run illustrations for clients, I quickly became fascinated with DI products and their associated riders.

Through my daily conversations with brokers and clients, I began to really understand the need to protect one’s income and the serious financial ramifications resulting when someone sustains a serious injury and cannot return to work. It was this knowledge that led me not only to purchase my own policy to protect my family, but also to make selling in the individual disability world my career.

Q: How do you prospect for clients?

Gelber: In the brokerage arena, I am often referred to as the “DI Queen,” primarily because there really aren’t many individuals who have chosen to focus on selling this particular product. By consistently making myself visible in the marketplace and having a relentless passion for DI, I have been able to establish new broker relationships and increase my clientele. For example, I am on the board of the Greater Philadelphia Chapter of the National Association of Insurance and Financial Advisors (NAIFA), as well as a certified continuing education (CE) course instructor, both of which have provided me with numerous opportunities to network with new brokers. In addition, asking for referrals helps to establish new business.

Bloch: Prospecting for clients is very easy if you can be creative and think outside the box. Guaranteed issue DI products are available for as few as five lives. The executive market is another opportunity source—all you have to do is explain the income gap that exists should they become disabled with only their company provided DI policies. Another almost unlimited prospecting opportunity is qualified associations (chambers of commerce, etc.)—the fact that individual DI products can be discounted for such groups makes the sale even more likely. Have you ever thought that when you sell a key person life plan or a buy/sell plan you could add matching disability plans, too?

Today there are many new products available with discounts for multiple lives, increased issue and participation limits, as well as substandard products that bring existing policyholders additional coverage. True own-occupation and enhanced policy definitions for all occupations can also provide policy upgrades.

By teaming up with a brokerage operation that specializes in individual DI, you can find all of the assistance you need to develop a personalized plan of action to increase your sales—and, perhaps, even make individual DI your lead product.

Q: What are the most challenging issues for a disability insurance specialist today?

Bloch: The most challenging issue for the individual DI specialist is explaining the entire underwriting process to a casual producer. It differs dramatically from the life underwriting process. Financial underwriting requires income verification for both personal and business, if applicable. Medical underwriting can be a challenge if there are significant medical issues. Occupation classifications can also create issues in regard to rates and potential levels of coverage. An individual DI specialist anticipates these issues prior to taking a formal application, working with a company’s underwriting department to anticipate potential offers for the challenging cases. These inquiries can make a potentially problematic situation become manageable and productive for the producer and the client.

Gelber: Over the years, I found that one of the most challenging aspects in the DI market is increasing awareness of the product in the brokerage community. There is a notion that DI underwriting is extremely difficult. Furthermore, because many insurance carriers are no longer offering DI, most brokers do not know how to sell it.

From the client’s perspective, the main objection I often hear is that they do not need DI insurance because they are healthy. My immediate response has always been: “No one has a crystal ball. No one knows in advance that he will suffer a heart attack, cancer, stroke, a car accident, skiing accident—any type of catastrophic incident—which ultimately prevents him from working.”

In addition, many of my prospective clients inform me about the DI policies they have through their employer; therefore, they have no need to purchase an individual policy. At this point I explain that any benefits they receive from such a policy are taxable (if the employer is paying the premium), present the potential gap they may have after the taxation, and then show them how supplemental coverage can bring them closer to their net income. I also indicate that if they were to leave their job, they would lose their coverage. Once a person has been properly informed about how individual disability coverage works, the critical need often prompts them to reconsider their original stance on the purchase of this specific type of coverage.

This type of sales discussion is one that has taken time for me to master by speaking to many brokers and their potential clients. Yet, selling DI insurance is often a challenge.

Q: What advice would you have for a producer who is just entering the disability insurance market?

Gelber: My advice for producers who are just entering the world of DI sales is to find a niche market. Target young professionals, especially in the medical field. Doctors certainly understand the need for DI insurance, so it would be a comfortable place to begin. If you insure your client while he is young, he will be your client for many years, giving you the opportunity to sell additional products to him.

A new producer should work with a seasoned broker, as it is beneficial to have a mentor who can help you make the sale. Furthermore, always listen to the needs of the client. Most importantly, never say the term “disability.” Instead, use the term “income replacement.” Frankly, no one thinks he will be disabled in the future. Remember, you must present the possibilities of what could happen before stating you have a product which can pay your client’s income when he is unable to work due to an illness or injury.

Always believe in and be passionate about what you are selling—love your product and how it protects your clients. Ultimately, that has been the key to my success in the DI insurance market. [BG]

Bloch: The best advice I can give any producer is to become an individual DI professional. In order to do that you must completely understand policy definitions, be aware of underwriting variables, and understand how to secure complete information from a client during the application process. Developing a relationship with a premier brokerage operation is the first step. In order to find a DI specialist that will truly be your partner, ask about their training programs, joint field opportunities and DI seminars.

There is tremendous opportunity to become a recognized leader in the individual DI industry. It starts with professional knowledge, a positive attitude and developing cohesive relationships—and the results are unlimited. [KB]

Though disability is behind a significant number of home foreclosures and personal bankruptcies, insuring against it has not been a high priority for most workers because many assume they’re already covered through Social Security, workers’ compensation or employer-provided group plans.

Most Americans don’t realize a disability could interrupt their income—and fewer still are protected from that loss by adequate savings, private insurance or government programs.

Just consider the following statistics on disability recently compiled by the Council for Disability Awareness:

More than 10 percent of Americans between the ages of 18 and 64 have a disability (U.S. Census Bureau, Selected Social Characteristics in the United States: 2009).

8.1 million U.S. workers receive Social Security Disability benefits as of October 2010 (SSA Beneficiary Data, 10/10).

Nearly 90 percent of disabilities aren’t work-related and thus don’t qualify for workers’ compensation benefits (National Safety Council, Injury Facts, 2008 edition).

Applications for Social Security Disability Insurance (SSDI) benefits increased 21 percent from 2008 and are projected to increase in 2010 as well, yet only 35 percent
of initial SSDI applications were approved in 2009 (Social Security Administration).

100 Million Americans are not protected by private disability insurance (Council for Disability Awareness, Long-Term Disability Claims Review, 2005).

Once again the LIFE Foundation has de­clared May Disabil­ity Insur­ance Aware­ness Month. It’s a time when the insurance industry comes together to do something about the enormous gap that exists between Americans’ need for disability income protection and the actual coverage they have in place. This year’s theme is “Pro­tect Your Pay­check.” LIFE will be launching the Produc­er Plan­ning Tool­kit later this month to help insurance professionals pull together a quick and effective campaign for May. Some of the many promotional endeavors include the following:

• Microsite. LIFE has created a microsite, www.protectyourpaycheck.org, to focus Americans on the fact that too many are leaving their most valuable asset—their paycheck—completely unprotected. At the end of this month, this will become a standalone microsite that will feature the best of LIFE’s web-based DI resources. It will also be one of two places where consumers can enter the “This Moment Made Possible by My Paycheck” photo contest.

• “This Moment Made Possible by My Paycheck” Photo Contest. Accessible through the www.protectyourpaycheck.org microsite and LIFE’s Facebook fanpage beginning later this month, this contest will ask consumers to submit a photo with a caption that captures a moment that their paycheck has made possible (e.g., family members enjoying time together in their home, a memorable vacation, etc.). There will be a photo carousel on the www.protectyourpaycheck.org microsite, and people who grant LIFE permission will have their photos featured there. It will only take a few minutes to enter, and the person who submits the best photo and caption will receive a $500 gift card.

• DIAM on the LIFE Website and Blog. During May, the homepage of LIFE’s main website will focus on disability insurance, including a link to LIFE’s popular “Disability Needs Calculator” and the “Lifetime Earnings Calculator.” LIFE will also feature disability insurance content on “The Insurance Word Blog” throughout the month.

• Disability e-Cards. LIFE has a suite of electronic greeting cards, designed to give insurance professionals a cost-free way to communicate with people in their communities during DIAM and throughout the year. There are disability insurance e-cards that were developed specifically for use during the May campaign. You can access LIFE’s e-cards at www.­insureyourfuturenow.org.

• Turnkey Planning Kit. LIFE is creating a new planning kit for agents to use during May, which includes free downloadable flyers for use in mailings and client meetings, a DI sales ideas podcast, links to important DI resources, as well as a marketing guide so agents can create their own quick, effective DIAM campaign to reach out to their communities.

• Media Outreach. Throughout the year, LIFE reaches out to personal finance reporters at the nation’s leading print and online publications. During May, LIFE’s focus will be on story ideas relating to disability and disability insurance.

• Public Service Announcements. LIFE will develop and distribute radio PSAs to 1,000 radio stations across America.

The following information will provide you with some helpful statistics and information as well as some sales ideas from leading DI specialists from The Plus Group.

Social Security Disability Insurance: Participation Trends
and Their Fiscal Implications

A series of issue summaries from the Congressional Budget Office, 7/22/10

Benefits in the Program
“Average monthly benefits for disabled beneficiaries were $1,065 in May 2010. Benefits for spouses and children were lower, averaging around $300 per month. Disabled beneficiaries usually receive the same amount of benefits each month, boosted by annual cost-of-living adjustments, for the rest of their lives.

“DI benefits, like all Social Security benefits, are tied to a worker’s past earnings through a progressive formula. That is, workers who have higher earnings receive larger benefits, but the replacement rate—the portion of earnings that benefits replace—declines with earnings.

“For example, a 55-year-old worker who has had earnings equal to the nationwide average (in 2008, $41,000) during all of his or her working life and who becomes disabled this year will receive monthly benefits of $1,544, replacing 45 percent of those earnings. Yet if that person’s earnings had been half as much, the benefit would have been $993, replacing 58 percent of earnings.

“Because the benefit formula is linked to the growth of average earnings nationwide, average initial DI benefits grow at approximately the same rate as average earnings.”
For the entire eight-page report in pdf format, go to www.cbo.gov/ftpdocs/116xx/doc11673/07-22-SSDisabilityIns_Brief.pdf

About the Personal Disability Quotient

The Personal Disability Quotient and the PDQ Calculator were ­developed to aid in educating consumers by the Council for Disability Awareness. The statistical basis for the PDQ Calculator is the 1985 Commissioners’ Individual Disability Tables A and C, Society of Actuaries.

For questions about the PDQ or CDA, please call 207-774-2634.

For more information and other client questionnaires, go to www.DisabilityCanHappen.org.

Your Chance of Becoming Disabled
Check the box below that reflects your total points. Read across to see your estimated chance of becoming disabled and unable to work for three months or longer before the age of 65.

__ less than 25 points
   5-25% chance (below average)
__ 25-35 points
   25-35% chance (about average)
__ 36-49 points
   35-50% chance (above average)
__ 50+ points
   50% or more chance (significantly above average)

The Length of Time a Disability May Last
                                                 Probability
                           Average      of disability*
                          length of    lasting 5 years
       Age          disability*       or more
__ 20-24       69 months          30%
__ 25-29       74 months          32%
__ 30-34       78 months          35%
__ 35-39       82 months          38%
__ 40-44       85 months          40%
__ 45-49       86 months          43%
__ 50-54       86 months          45%
__ 55+          84 months          46%
*For disabilities lasting three months or longer.

Mind the Gap In Your Key Clients’
Group DI Plan

By Ray Phillips

A trip on the London Underground is a unique experience. The complexity of the subway system borders on anarchy. Yet through it all a proper British structure keeps the system moving in a timely, efficient and orderly way.

As one stands on the platform and a subway car approaches, an otherworldly voice bellows from a loudspeaker, Mind the gap. This is the London Transit Authority’s way of telling riders to be careful getting in the car lest they trip over the space between the car and the platform, or worse yet, get a foot caught in the small chasm.

A prudent DI planner might use this anecdote with clients when discussing their need to supplement a group long term disability (LTD). “If you don’t Mind the gap, you might get caught short at claim time.”

Consider this scenario: A well-compensated client has coverage at work. His perception is that it completely covers his income and there is no need for additional individual coverage. But remember, Mind the gap.

Let’s assume the client is making $225,000 and that he does indeed have a solid group LTD plan at work—60 percent of salary to a maximum of $10,000 per month. The client’s annual DI benefit would provide $120,000 of taxable benefits (this benefit is taxable if the employer is paying the premium). Obviously, there’s a shortfall relative to his income here, and realize that the gap would be wider if the client’s income was higher or if the group LTD program’s monthly cap was lower. Yet an appropriately structured individual DI plan can address that shortfall.

Likewise, bonuses and commissions are not countable toward the income a group LTD plan will protect. This might further widen the gap, especially for those who are in a commission-oriented occupation or who have a history of healthy bonuses.

When working with the clients who have DI coverage provided by their employers, it is important to make sure the income they’re making is suitably protected. Group LTD benefits may not protect as much income as the client assumes. Remember to think of the London Underground and Mind the gap in your client’s group LTD plan!

Tips for a Successful
Voluntary Multi-Life DI Case

By Reed Schnittker

The individual disability income (DI) insurance industry has seen growth in the voluntary multi-life marketplace. It’s an attractive market because it allows:

• Employers to maintain comprehensive and budget-friendly employee benefit packages to attract and retain employees.

• Employees to purchase valuable coverage at a discount through a carrier their employer has endorsed—often with streamlined underwriting.

• Producers to see increased referrals, increased cross-selling opportunities and more commissions.

To be successful, producers need to understand the customer, effectively communicate the offering, and work with the employer to establish a plan and enrollment strategy that best meets the employer’s needs.

Understand the Customer. Employers are the “gatekeepers” to employees, and a strong relationship with them can result in better support, access to employees, and a stronger plan design. When meeting with employers, position yourself as an expert for employee benefits and ask questions that help you deepen your understanding of their workplace and objectives. The knowledge you gain helps you and the insurance carrier develop a plan design that meets employer and employee needs.

Communication. Putting benefit decisions in the hands of employees means more education and communication is needed. Most employers welcome assistance in helping employees understand the benefit offering. The best way to educate them and ensure a successful enrollment is to use a variety of communication methods with messages that address their needs.

Establish a Plan. Creating a customized plan design and determining the best ways to communicate with employees takes time and coordination. Work with an insurance carrier that offers assistance, such as customizable communication templates, employee enrollment packets and enrollment help. Establish employer expectations by clearly defining your role and theirs regarding account set-up, enrollment communication, enrollment meetings and policy delivery.

Following these tips when selling and enrolling a voluntary multi-life DI program can provide benefits for everyone—you, the employer and their employees.

Disability Protection
For the Single Business Owner

By Ken Bloch

Single business owners invest countless hours and energy into creating wealth, stability and security for their families. These businesses are not only the single source of income, but also future retirement income and legacy for the owners. Will the value of such a business withstand a disability moment?

The sole business owner is the strength to his family, employees and clients. However, even the most stable businesses can become fragile in a disability moment. When this happens, a business suffers a loss of value due to the loss of leadership.

A single business owner protects his income with personal disability insurance and business expenses with a business overhead policy. His family is protected with life insurance. What about protection for the business? A single business owner can insure the value of his business up to $5,000,000 based on current market conditions and receive a permanent total disability lump sum payment after a 12-month elimination period. The value of the business is calculated using a multiplier of wages plus profits. Benefits would not be payable if the business owner was able to sell the business.

Every sole owner business should consider this coverage—physicians, attorneys, CPAs, dentists, manufacturer’s representatives, financial planners, and other executives and professional business owners. After a severe stroke, how long will any of the above occupations be able to maintain their client base and business value?

Discussing this issue with your business professional clients gives you the opportunity to review all facets of business insurance with them. It also provides the opportunity for new agents to utilize daytime activity to create new clients and build a successful career.

Important Resources for Disability Insurance
Information and Education

The Life and Health Insurance Foundation (LIFE)
www.lifehappens.org
888-543-3777
LIFE is a nonprofit organization, formed in 1994 by seven leading insurance producer organizations, to better educate the public about important insurance planning topics. LIFE coordinates three industry-wide awareness campaigns: Insure Your Love (observed in January/February), Life Insurance Awareness Month (observed in September) and Disability Insurance Awareness Month (observed in May). A wealth of information is on the site, plus the organization provides various promotional materials for clients.

Council for Disability Awareness
www.disabilitycanhappen.org
207-774-2634
Since it began in 2005, this nonprofit group has engaged in communications, research and education, helping the American workforce become aware of the growing likelihood of disability and its financial consequences. This website contains useful information that can be helpful in marketing DI to clients.

The International DI Society
www.internationalDIsociety.com
562-481-2381
The International DI Society is dedicated to the task of preserving and enhancing the disability insurance industry. Membership includes industry regulators, producers, educators and insurers. IDIS has a mentoring program for newcomers to the disability market. The Society hosts an annual meeting in the fall. The website provides helpful articles and a very useful glossary of terms used in disability insurance.

The American College
www.theamericancollege.edu
610-526-1442
The premier educational institute, specializing in financial services. Offers several respected industry designation programs, as well as other specialized educational classes. For courses specializing in disability insurance, go to www.theamericancollege.edu/insurance-education/lutcf-insurance-skills.

LIMRA
www.limra.com
860-688-3358
More than 850 financial services companies in more than 70 countries around the world turn to LIMRA first to help them build their businesses and improve their performance. This 90-year-old organization provides financial services companies with the latest industry information and makes recommendations that address their needs. While much of their information is proprietary to member companies, the website has useful information.

The Plus Group
www.plusgroupus.com
800-831-1018
The only national insurance brokerage organization focused on disability insurance. There are 20 partners who represent the recognized leaders in the income and asset protection industry. Helpful articles can be found on this group’s website.

Disability Insurance Forum
www.disabilityinsuranceforums.com
This is a website/blog where disability insurance agents can interact with each other. Use this to find joint work partners across the country, debate products and learn more about disability insurance.

Armed with this information and sources, you should be ready to take advantage of the promotional materials available from the LIFE Foundation to bring DI into your product mix.