April 2015
Disability Insurance Awareness Month Planning Panel
Eugene Cohen
Eugene Cohen Insurance
Agency, Inc.
Marvin H. Feldman
Life Happens,
Feldman Financial Group
Sean Hanson
Council for Disability
Awareness
Patrick T. Jackson
The Plus Group,
Income Replacement Agency
M. Susan Ondack
IDIS,
Principal Financial Group
Thomas R. Petersen
Petersen International
Underwriters
William J. (Jeff) Wheatley
Ohio National
Financial Services
Q: What suggestions do you have for brokers to help them take advantage of Disability Insurance Awareness Month?
Eugene Cohen: Disability income insurance is the “best kept secret.” You can make your clients aware of DI by telling them that May is Disability Insurance Awareness Month.
Ask questions:
• How important is your pay check?
• Is your income protected?
• If you were forced to retire tomorrow, how long would your savings last?
It is extremely important for you to study the policies, be familiar with the companies and brochures, and to review the illustrations.
Knowledge is power. It is important for the brokers who are not familiar with DI to work with an agency that is strong in this area and has the knowledge, time, patience and personnel to help you. Knowledge will build confidence, and confidence will result in sales.
Marvin Feldman: Life Happens created DIAM because far too many Americans don’t understand that their ability to earn an income is an asset that needs to be insured. Take this statistic: 51 percent of working Americans are concerned about supporting themselves if they were injured or ill and couldn’t work, but only 29 percent own disability insurance, according to the 2014 Insurance Barometer Study (www.lifehappens.org/industry-resources/agent/barometer/) by Life Happens and LIMRA. The only thing that’s going to change these numbers is if agents start talking about it with all their working clients and prospects.
So the simplest piece of advice I have is: Ensure that the agents you work with take advantage of May’s campaign-when a national spotlight will be on DI-to at least begin the DI conversation with all their clients and prospects.
Sean Hanson: We know from countless industry studies, including our own, that the typical working consumer is more focused on the messy reality of life-job security, health, kids, aging parents, and even just the daily grind. But, while that may not seem ideal, all of those issues are intertwined with the need to insure their income. As their advisor, it is your job to inform them about risks and issues they haven’t considered and to show them how those issues relate to what’s most important to them.
It’s always easier to focus on an issue when you have a deadline, and Disability Insurance Awareness Month provides an opportunity. Challenge clients and prospects to schedule a protection checkup by the end of May. This works equally well for clients who do have disability insurance and those who don’t. Maybe they need more coverage, or maybe they just need to be reminded of the value of DI so they’re not tempted to forgo their coverage to pay for something more immediate.
Just this week I received an email from my mortgage broker. She used tax return season as an opening to start a conversation. I’d been procrastinating a possible refinance for weeks, but her email finally kicked me into gear. All I had to do was take a minute to reply, and now the ball is in play. The lesson? Be a trusted advisor and get in touch at the right time with the right questions. Mortgage brokers are trying to find the best deal for you and get you what you need, so there is a strong level of trust there with wholesale lenders for mortgage brokers coming into play for the best financing options that will catch the right attention, this is important.
Patrick Jackson: The Plus Group is sponsoring the first-ever National DI Day on May 5th at locations across the country. Experienced professionals from our industry will present on a wide array of subjects related to the sale of disability income coverage. MetLife will show us innovative ways to communicate with our prospective buyers with a “Words that Work” presentation. Other insurance experts will provide insights into the claims process, help us with handling objections, show us ways to begin the conversation about income protection and help producers recognize opportunities-among other topics. Individuals who have experienced disabling events will describe how their lives were affected when disability struck. CE training will be available in most locations. At the end of the day, we want insurance brokers to be motivated to discuss income protection with all of their clients.
Susan Ondack: Marketing perspective: Use resources from industry organizations like the Council for Disability Awareness and Life Happens to build a campaign so that you’re communicating throughout the month. (Carriers also provide resources.) Your goal: Keep the topic of income protection in front of clients. Take advantage of print and digital media. Send postcards, send emails, post videos to your social media channels. And as a reminder, the income protection conversation isn’t just something for May. It should be happening year-round.
Tom Petersen: Disability Insurance Awareness Month has developed a number of years ago and each year increases in its scope. In May there is an increase in ads, public service announcements, social media communications, and other forms of communication, all designed to message the importance of disability insurance directly at the consumer level.
With this in mind, it is the producer’s opportunity to speak about disability insurance to clients while they are getting similar messages from third-party sources.
So what can a producer do?
Many things. First, recognize that there is no magic bullet! Period! It takes communication and time.
a. Go to the www.LifeHappens.org website and look at all of the producer resources available. Download or order some of these items as needed.
b. Mention the need for disability insurance to your clients.
c. Send them a copy of an ad or video on the need for disability insurance.
d. Make appointments to see, or at the very least speak with, as many clients as possible about this most valuable protection.
Jeff Wheatley: This is the biggest month of the year for disability insurance carriers, so there is plenty of material and education available to both brokers and consumers to help spread the importance of income protection.
I would encourage brokers to discuss income protection with every client or prospect they meet this month. The majority of people who don’t own DI say it’s because no one ever asked them about it. And of those who are asked, nearly half of them buy. (“Disability Insurance: Why Not?” 2011 Buyer-Non-Buyer Study, LIMRA.)
Take 20 seconds of courage during your next life sale or life insurance policy delivery to ask the person, “How would you continue paying bills and maintain your lifestyle if you suddenly became too sick or hurt to work?” Ohio National is a proud supporter and member company of the Council for Disability Awareness (CDA), a third-party organization that focuses on increasing awareness among American workers about their chances of losing their ability to earn an income due to illness or injury.
Q: What tools, processes and techniques do you recommend for brokers to help engage clients and prospects in the income insurance discussion?
Feldman: Life Happens has created a complete suite of DI marketing resources that agents can use in their outreach, which are available on our industry-only site at www.lifehappens.org/industry. You can see the complete list in the accompanying box “Making the DI Conversation Easier.”
But I’d like to highlight the power of the Real Life Stories videos that we offer and why agents should use them. These stories show how real families were able to survive and thrive financially because an agent helped them put DI in place-before it was needed. And these videos work. An independent survey showed that those who watched one of these Real Life Stories videos were 94 percent more likely to consider purchasing DI than those who had not seen one. That’s powerful. These videos open doors.
Life Happens also has an updated Disability Insurance Needs Calculator (www.lifehappens.org/DIcalc) that allows people to input their own information without any outside influence. It will tell them what, if anything, they need to do. It allows them to make the decision: Do I want to protect my income or don’t I? It’s powerful to have people come up with their own answers.
Hanson: I believe there are three steps to making the case for income insurance: (1) The importance of their income; (2) the risk of losing it, and (3) the right solution. Evidence from the Council for Disability Awareness’ 2014 America’s Income Protection Picture study showed that two-thirds of consumers understand the importance of their income, and one in three consumers say they’d be more likely to purchase DI if they knew more about it. That’s where a trusted advisor can make the difference.
A great salesperson knows how to ask great questions and then to sit back and listen. I don’t think you need to be too clever about this. Ask clients what they currently do with their income. The answers won’t surprise you: their home, transportation, kids, health care, retirement savings, and so on. But this opens the door for you to ask how they would pay for these things if their income stopped.
It’s then important to know what their likely answers might be and to have your responses prepared. The most common answers are that they would live on their spouse’s income, use savings or debt, get help from friends and family, or use government assistance. Smart use of data can help you make the case for the importance of having short and long term disability insurance coverage.
The most commonly heard answers are inadequate as long term solutions. When both spouses work, it’s typically because they need both incomes. The Council for Enterprise Development reports that 44 percent of Americans are living with less than $5,887 in savings for a family of four. Since 56 percent of Americans currently have subprime credit, if emergencies arise, many people are forced to resort to high interest debt from credit cards or payday loans. Most working consumers couldn’t afford to support a friend or family member and still meet their own obligations. And even if they qualified for government assistance, most could not maintain their lifestyle on SSDI alone.
Once you have agreement about the importance of income, the next step is to demonstrate that the risk is too high to ignore. This is more difficult, especially with data alone. While we have an abundance of statistics on this topic-and a good place to start is the CDA’s calculator at whatsmypdq.org-the real key to a connection is to create context, to tell a story, and to relate with an individual about things that matter to him.
That’s why we have insurance-to protect what’s important to us-whether it’s our home, our car, our health, our lifestyle or our livelihood. The very best financial professionals are able to show their passion for their product by telling stories that bring their message to life in a way that data alone cannot. Most of us know someone who’s had chronic back pain, cancer or depression. The CDA consumer survey showed that almost one in three people who have disability insurance cite “knowing someone who was disabled” as a primary reason for owning it.
The final step is the easy part: Narrow down their options and show them the right solution(s). If you can take away some of the uncertainty, it’ll be that much easier for them to make buying decisions.
Jackson: One of the tools we use to assist brokers is a lifestyle protection program. The idea is to relate costs of other insurable risks to that of insuring one’s income. Comparing the cost of insuring your cars, your house and medical insurance with that of insuring your income is enlightening. Most families spend thousands of dollars every year to insure their home and cars, and the cost of health insurance dwarfs both of these costs. Many clients can insure their income for a fraction of the costs of insuring the above risks.
To clearly define the dollar value of the risk of disability, do a simple capitalization of income calculation. A 40-year-old client earning $100,000 per year has a future income stream of at least $2,500,000 to protect. The loss of that income stream without income protection leaves your client in a devastating financial condition.
Real life stories of the impact of a disabling event on people’s lives are particularly compelling. The impact of a severe disability is felt by more than just the person disabled-it is felt by their whole family. If you do not personally know of a real life story, we can bring many to your attention.
Ondack: Offer an income protection review. Whether clients or prospects have any coverage in place or not, it’s a way to start the conversation and help them think about an area of their financial strategy that they may not have previously considered.
Petersen: Again, there is no magic bullet. However, as a successful producer, use the same techniques that work for your life, annuity, LTCI or medical sales.
Explaining the need each and every time is critical! My wife, a yacht broker, once told me that people buy boats when they feel “comfortable.” She always found that answering questions, getting information and constantly chatting about a boat is what sells. Not price. People have a hard time imagining themselves disabled. They then, in turn, think about the cost of the premium and what they perceive as their “chances.”
First, refer to DI as income protection. With the economy having been in shambles for a number of years, people can relate to reduced income. Relate this to the fact that even in the best of times, income loss can still occur.
Second, share stories. Most disabilities are not obvious. The wheelchair is obvious. The MS, degenerative eyesight, heart valve issues, PTSD are not as obvious. Also, don’t forget the beer truck-the unexpected accident. Point out that a disability does not have to be permanent to be financially ruinous. Sharing stories is key! If you don’t have one of your own, share mine! Or someone else’s!
Third, think about how DI is asset protection! For decades we have been taught that DI is all about cash flow. While that is what it is, what it does is maintain a person’s assets. Just like life insurance. A person who is severely sick or injured is, from a financial standpoint, just as dead, but they are still consumers. The bills must be paid, the mortgage of the house must continue, the car loan and insurance premiums paid, etc. These never stop! When we speak of cash flow for a disability, people often think their interest income will suffice. What they forget is that using savings or investment income today is sacrificing retirement income later.
Last and most important, a producer needs to see the value in DI with as much “heart” as he does a life sale! Financial planning begins and ends with income planning, and you cannot truly plan income without protecting it. Also, as alluded to before, for most people the assets they have today were generated by their income. If the income ceases, those assets will have to be liquidated back into cash to pay ongoing bills. If you, the producer, believe that you are helping by selling medical insurance alone, or just life insurance, then you don’t realize that you are only talking about a fraction of the protection your client needs.
Wheatley: Social media has become a very efficient way to disseminate information. Using what’s available and making a commitment to discuss income protection with each and every client. Speaking with conviction and giving your client or prospect the feeling that you truly care goes a long way.
Cohen: Use the month of May to schedule insurance reviews with your clients. This is an opportunity for you to educate your clients on the need for DI protection.
One of the best tools available to you and your clients is the website www.LifeHappens.org. This website is a great source for both the consumer and the broker for information on the need for DI. You will find videos and real life stories. Life Happens has so much great material that emphasizes the need for disability income. It is well worth your visit.
During your review, bring up the value of earned income. Ask the question, “If your income stopped tomorrow, how long can you survive financially?” Point out that future income may be their greatest asset. An individual earning $50,000 a year with no raises over 20 years would have earned $1 million; income of $100,000 would equal $2 million, and $200,000 would equal $4 million in 20 years. This, most likely, will be your client’s greatest asset.
Asking questions creates sales. Ask your client, “What is the longest vacation you have ever taken?” The answer is usually two or three weeks. You then ask your client, “Why only two or three weeks?” The answer is usually that the client has a job and needs to work. You then ask your client, “If you were out of work for two or three years due to a sickness or accident, would you have a problem? Usually the answer is yes. Then your reply is, “Let’s talk about solutions.”
During a disability your client would want stability in his life. The bills continue to come in, but the income has stopped. How many years did it take to accumulate his savings? How long will it take with no income to watch those savings disappear? You can tell your clients that owning disability protection can help solve some of that problem.
Q: What, in your experience, hinders or prevents agents from having the DI discussion with clients, and how do you address these concerns?
Hanson: It’s not an easy discussion to have. People are hopeful by nature. They expect their health to remain the same over time. Overcoming the “it won’t happen to me” objection takes patience and persistence. We also know that most people misunderstand the word “disability.” This misnamed label drives most of us to picture a catastrophic injury or illness. But this is another great opportunity to educate.
The fact is that-for most of us-disability is associated with an injury, surgery or sickness that puts us out of work for a closed period of time. Even the healthiest individuals are at risk to temporarily leave work, and the financial consequences are too large to ignore. This is where personal stories combined with smart use of data can really help.
One in three of our survey respondents said their reason for not having DI is that they can’t afford the premiums. Yet among those respondents there was a wide variety of perceptions about how much income protection costs. You can explain the premiums and explore a range of plan designs to help clients find an affordable solution. Some protection is always better than none, and you can (and should) check back with them down the road to see if they would like to increase their coverage. While clients may not think they can afford to insure their income, they can much less afford to lose it.
The other major obstacle we see is that some brokers and agents lack familiarity or expertise in disability insurance. DI is one of the more difficult insurance products to sell. We commonly hear from agents and brokers that the product is too complicated, it takes too long to complete, to hear back from the insurance carrier once the application is filed, and-when they get a response from the carrier-the coverage is often modified from the requested plan design. Each of those issues creates the possibility that the client will lose interest, which contributes to agents’ unwillingness to learn a new product. But if an agent wants to learn, the resources available are plentiful-from carriers, experienced DI brokers, and industry groups and conferences. The more you know, the more you can prepare prospects for what they’ll experience during the application process.
Financial professionals have to decide which products to offer their clients, and not all of them will decide to sell DI. However, Disability Insurance Awareness Month is a great reminder that being a trusted advisor sometimes means recommending a solution you’re not able to provide yourself. I experienced this recently when, after the birth of our second child, my own life and disability agent convinced me to hire a professional to update my family’s estate plan. Your clients will value your expertise that much more if they see that you are looking out for their interests-even when you don’t stand to gain anything.
Jackson: I think there are two major reasons producers hesitate to discuss income protection with their clients. A lack of confidence in their knowledge of product solutions is the number one issue. These individuals likely offer high level advice in areas such as life insurance planning where they have great expertise. They fear losing the confidence of their clients if they offer advice in areas where they lack expertise. These producers also do not want to tarnish their relationships if the underwriting result is less than their client’s expectations. Avoiding the issue appears to be the path of least resistance for these producers. The other reason I think producers avoid the topic is that they really do not know how to broach the topic with prospects. We provide training to producers to help them begin the conversation. Something as simple as a five minute talk over a cup of coffee is a great way to begin the conversation. Simply let your prospect know you would like to talk to them about something that has been on your mind. Ask your client: “If you were injured or sick and unable to work, would your family expect that we had covered that risk?” The yes or no answer will drive the conversation. Our office provides product training in conjunction with sales training that gives producers the confidence to begin the conversation with clients about protecting their income. We also offer a concierge service to those individuals who want their clients covered but do not wish to be involved.
Ondack: I think fear is the biggest obstacle that hinders agents or financial professionals from having the discussion about insuring clients’ incomes. Think about it: We are all trained to sell life insurance and retirement plans. Some of us even get training on long term care insurance or the alternatives available. Assets under management are a no-brainer for those of us brought up in this industry, but a discussion on disability insurance-now that is something way out of most agents’ comfort zones. All the definitions are baffling. Somehow common sense has escaped us! And it is so expensive! Reality check: It costs between 2 and 4 percent to insure our income. Income is the foundation of every financial plan, so find a company or wholesaler you feel comfortable with and trust them to guide you on plan design and product. Quit looking at the lowest benefit, the monthly payout, and the highest cost-the annual payment. Think of it as a life insurance contract. Multiply the monthly benefit by the number of months to life expectancy and divide the premium by at least 12 months. You will be shocked to see that the “face amount” of the income protection plan costs the same or less than the life insurance you are proposing!
Petersen: Fear. There is a fear that talking about or selling DI may screw up current or future sales. Why? There are a couple of perceptions that some producers have which make them reluctant to sell DI:
a. The premium for DI looks big and may hinder the large life or medical case.
b. Disability cases sometimes come back with waivers, rate-ups, declines or other things that the producer feels might make him look bad to the client.
So here is what needs to be done:
The perception of the premium looking too big is often the producer’s perception and not the client’s. Let the client decide! Additionally, it can be the way the proposal is shown. If I show a 45-year-old a $5,000 monthly benefit DI policy and the annual premium is $4,000, the instant perception can be, “You mean for $4,000 I might get $5,000?” Instead, if you show the aggregate of the benefit (like life insurance), you show the customer the $1,200,000 ($5,000 to age 65) benefit for $4,000/year. It has a whole different feel and suddenly it looks reasonable.
Regarding underwriting issues, the key is managing expectations up front, and it gets easier the more you sell DI!
“Dear client, based upon your occupation, age and the benefit structure we discussed, I believe our best program will be through ABC insurance company. However, there is a lot that goes into underwriting disability insurance, and since they are underwriting with the purpose of being a partner with you for the next 20 years, they may look at things much differently than a life insurance policy. Depending upon any existing health conditions, it is possible that they could issue a policy with an exclusion, or even possibly decline it. While we don’t anticipate this, I wanted you to be aware of this going forward. We have determined together that this type of coverage is very important. We will do our best to make the process as smooth as possible. Should an adverse decision be made, we will discuss options at that time, which may include talking to the carrier or perhaps seeking options with another carrier. In either event, we will do this together!”
Wheatley: Human nature is to talk about what you know. With the decrease in the number of insurance companies offering income protection, there isn’t as much chatter as there once was. There is a lack of confidence among younger agents because income protection has taken a back seat to other products such as life insurance and retirement plans.
Cohen: Brokers come from many specialties: property and casualty agents, financial advisors, life agents and health agents. There are very few individuals and very few insurance companies that specialize in individual disability income protection.
Unfortunately, many agents do not have a comfort level with disability income protection. Because of the lack of knowledge, many agents do not offer it to their clients. This is why I stated earlier that DI protection is the best kept secret.
The job of a brokerage general agent is to make agents comfortable with the uncomfortable. We make agents comfortable by educating them about the need and products of DI protection. We review the questions that they should ask clients to see if this insurance is important to them. We review the illustrations that they will present to the client, as well as going over the features and benefits of the DI policy. We introduce the company brochures that are helpful to the agent. Our goal is to educate the broker and give him a new comfort level with this very important policy.
The need for disability income protection is great. Once the presenting agent understands the need and the policy, DI protection will no longer be the best kept secret. It will become part of their clients’ financial plans.
Feldman: The first problem is that most brokers and agents don’t do DI at all. They may not sell it because they are focused on life insurance, annuities or investments, which are much easier to sell, and choose not to discuss DI with their clients. It may also be because they’re not comfortable with it or they don’t understand it.
Regardless of why they aren’t currently selling it, brokers need to start these conversations so their clients understand that it is critically important to protect their incomes-and offering brokers DI marketing materials to use is a good first step.
At the very minimum, agents need to discuss DI with their clients to make sure they are aware of the problem that exists if they don’t have a DI benefit through work or if the benefit is limited. Agents should note the conversation in the client’s file along with the client’s decision of whether or not to get coverage. It’s important that agents verify that they did their duty to discuss it with every client who needs it.
It also might be a good idea to find a DI specialist to refer business to if a broker feels he wants to routinely sell. That’s what I did in my own business. I would refer my DI business to a specialist, telling clients, “I have someone associated with me and all she does is DI planning. I think you should sit down with her and see what your needs and options are.” We would split the commission; so for her it was a constant source of referrals, and for me a constant source of income.
Q: What advice can you offer to brokers working in the business market, from worksite sales to DI solutions for owners, key executives and high income earning professionals?
Jackson: Insurance carriers are very aggressively offering guarantee issue in the key executive arena. The number of executives needed to create a GSI plan has continued to drop. The competition among carriers in this market segment is fierce. If you have clients in the small business market you may be surprised how much easier it is today to secure coverage for them.
Insurance company issue and participation limits have been expanding for the last 10 years. Excess coverage special risk carriers are also aggressively involved in both GSI and very high limit coverage. We will help you identify prospective sales opportunities and help you complete the sales process with them. [PJ]
Ondack: There are so many income protection solutions for the business owner in today’s marketplace. If you are not aware of what is available, please work with a disability income wholesaler that you trust. They can guide you through the best solutions available. Most of us know what is available in the marketplace and can help with the best solutions available for your client. It may be special risk products, or it may be traditional business products. There isn’t an income or business risk protection need that there is no solution for. The industry has thought of everything. Be it key person, buy out, overhead expense or the arm of an exceptionally gifted pro football player-there is a solution to every problem! Pick up the phone and ask! [SO]
Petersen: Talk about it! Believe in it! DI is much the same sales story as you use for life insurance, medical insurance, group/employee benefits, etc. You are of much greater service when you think of the whole of your clients’ DI protection needs-including personal, colleagues/key man, buy/sell and overhead expense coverage. Look for opportunities everywhere with your existing clients. [TRP]
Wheatley: Income is the foundation to any financial strategy, whether it’s personal income or business revenue. For most business owners their b
