Tuesday, June 18, 2024
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Thomas R. Petersen

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Thomas R. Petersen, MBA, RHU, HIA, FLMI, DABFE, ALHC, CFE, CHS-III, LPRT, is a senior partner of Petersen International Underwriters, a large underwriting firm specializing in disability coverage through Lloyd’s of London. Their product line includes excess and special disability insurance needs, international medical insurance, kidnap ransom coverage, and numerous other specialty lines. Petersen has written numerous articles and coauthored several books. A frequent speaker at local, state and national insurance organizations, he is a founding member and on the board of directors of the International DI Society. Petersen earned his bachelor’s degree from California State University, Northridge, and his MBA in international business at Pepperdine University. Petersen can be reached at Petersen International Underwriters, 23929 Valencia Boulevard, Suite 215, Valencia, CA 91355. Telephone: 800-345-8816. Email: tom@piu.org. Website: www.piu.org.

DI Forum

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

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

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

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

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

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

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

Schmitz
A shortage of trained life and disability insurance salespeople.

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

The Ultimate Financial Planning

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Financial builders, agents, brokers, planners, and advisors like The Wealth Builder dedicate considerable time, effort, and money to plan for their clients’ financial well being.  The goal is to create adequate cash flow to match expenses under any contingency.

Events that affect cash flow include becoming unemployed, having a business failure, getting too old to earn money, getting sick or hurt and, in consideration of dependents, dying.  The best solution for all of these contingencies is being rich or at least having enough passive cash flow to substitute for earned income.  

People often dismiss the possibility of unemployment or a business failure with a shrug and a comment like, “I would just start over with a new business or a new job and I would rely upon my rainy day reserves.”  It is hard for some people to accept that death could happen before they fully collect their retirement income proceeds.  Usually with procrastination, people acquire some inadequate amount of life insurance.  People who do admit they could get sick or hurt refuse to believe they could ever be truly disabled.  “I come from healthy stock and I’m a careful driver,” are clichés producers often hear from the uninformed and careless client.  Do advisors say the same things when they think about their own mortality, morbidity and financial plans?  Maybe?  

We producers have the ultimate financial planning tool.  We can create a brilliant financial plan that is unlike anything outside the insurance business.  Our unique planning tool is in the form of our renewal commissions on disability insurance-especially since this is guaranteed for the life of the policy.  In terms of cash flow, it produces the equivalent of millions of dollars of wealth and outperforms the best investments.  It is magnificent deferred compensation and the finest of passive income.

The industry annual premium on individual disability income averages $2,000 to $4,000.  One average sized case per week for 50 weeks can easily produce $100,000 of premium in force.  In 10 years, the in-force premium is $1 million.  A broker would have renewal income of $1 million per year based on a 10 percent renewal.  A disability account of $1 million in premiums can be done easily in 10 years or less.  In contrast, you would have to save $1,000 a month from after-tax earnings for 83 years to save $1 million.

Group insurance renewals are unpredictable due to the cancellation by insurer or plan sponsor, a change in the broker-of-record, or a change because of a merger, acquisition, or business failure.  In contrast, individual disability income is difficult to replace; people tend to keep it, so persistency is excellent; no broker-of-record letter is involved; and there are reliable rates and coverage.

Disability Insurance Awareness Month Planning Panel

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

Petersen: There are several things:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Disability Insurance Awareness Month Planning Panel

What special initiatives is your agency/company undertaking to take advantage of Disability Insurance Awareness Month?

Thomas R. Petersen: Each year Petersen International Underwriters does special promotions playing up Disability Insurance Awareness Month. This includes additional Communicators (our weekly newsletter), pointing producers in the direction of the International DI Society (IDIS) as well as the Council for Disability Awareness (CDA) at  www.disabilitycanhappen.org which has some great resources for this.

Eugene Cohen: May is Disability Insurance Awareness Month.  In order to help educate brokers and bring awareness to this important product, we are sponsoring a disability meeting called DI Day.   DI day is coming to Chicagoland on May 3rd and is part of The Plus Group national DI Day initiative.  Our agency is a founding member of The Plus Group and proudly supports the National DI Day initiatives held by many of our Plus Group partners around the country on May 5th. 

DI Day is celebrated by our agency by offering the opportunity to hear disability insurance speakers that are known nationally for their expertise; speakers who will walk you through your DI sales; as well as a keynote speaker who will help educate brokers on building their DI business, growing their portfolios and creating DI client relationships to last a lifetime.

We are also promoting disability insurance awareness through our website.  In conjunction with our website, we are advocating disability insurance through marketing (flyers, videos, info graphics, real life stories and more!) from Life Happens (www.lifehappens.org) and the Council for Disability Awareness (www.disabilitycanhappen.org).

Our agency is applying these resources in various campaigns through direct mail and email to our brokers.  Being an agency that is all about the broker, we have found these to be hot topics which not only increase the awareness and the need for disability insurance, but cultivate education for many.

Nicole Blodgett: Our team is doing several things to actively promote income protection prior to and during Disability Insurance Awareness Month. With more information becoming available about disability insurance, it is up to all of us to distribute that information so those that need to know about it can take advantage of their critical services. Our consultants have committed to speaking at a number of NAIFA events throughout the country to educate financial professionals on the importance of income protection and encourage incorporation within their practices. We’re hosting three National DI Day events in conjunction with our Plus Group partners including the 15th annual Twin Cities DI Day (MN) and debut DI Day events in Madison, WI, and Birmingham, AL. DI Day is recognized as the premier income protection event in the nation and with each event we host, we have three specific goals in mind: to educate financial professionals on the importance of disability insurance and income protection; to motivate them to protect their clients with income protection solutions; and to inspire them with stories of real people who faced and overcame the challenges of a disability. And finally, we’re engaging in proactive outreach on a daily basis to encourage our advisers to keep having the discussion about income protection in their practice as well as providing them the tools they need to be successful through targeted marketing campaigns.

Reed H. Schnittker: We are participating in National DI Day again this year.  We also add several tag lines to our email communications to brokers with interesting facts surrounding income protection.  Since income protection/solutions is what we do every day, we try to put a greater emphasis on education in the month of May.

 

What suggestions do you have for brokers to help them take advantage of DIAM and engage clients/prospects in the DI discussion?

Thomas R. Petersen: May is a great time to talk to new as well as existing clients about disability insurance (or about more). The industry is pushing stories and promotions on disability insurance through mainstream media sources which will add visibility and awareness more than at any other time of the year. Use the resources and tools from the CDA and IDIS. You don’t have to focus on making a sale (although you should) but focus on making your client more aware of the need for disability insurance. 

Eugene Cohen: I have the following suggestions for brokers to help them take advantage of Disability Insurance Awareness Month.

Disability income protection is the “best kept secret” in our industry. Disability Insurance Awareness Month is the second best kept secret.  I would suggest posting DIAM information on your social media.

Also post this question: “How important is your earned income and  are you protecting your income from sickness or accidents?”

This is a wonderful time to call your clients and introduce them to Disability Insurance Awareness Month.  When was the last time you discussed disability income insurance with them?

Utilize the real life stories presented on the web site www.lifehappens.org.  You can also check out their flyers.  It is worth your time.

Be sure to check out www.disabilitycanhappen.org for more tools and resources.

Nicole Blodgett: We have a few “best practices” when it comes to engaging with your clients and prospects, and the first is to use the words income protection when discussing disability insurance. No one wants to talk about becoming disabled, but everyone will engage in discussion about protecting their income. Focus your conversation on what the product does, not what the product is. This can be done in a number of different ways, but my personal favorite is to ask clients about their most valuable asset. They will likely say their home, car, cabin, boat or something similar, or some may give a more sentimental response such as their family or business. You then ask if they insure these assets and they will say yes. Then the question:  “What about your ability to earn an income – do you consider that a valuable asset?” It’s a great way to open the conversation to income protection.

Reed H. Schnittker: We encourage our customers (brokers, agents, planners, etc…) to communicate the various solutions that income protection products offer to their client base during DIAM.  There are more needs and solutions available today.  DIAM is a great time to get the word out.

 
What advice can you offer brokers who are not DI specialists to make it easier for them to approach their clients about DI?
 
Thomas R. Petersen: Adding disability insurance sales to any producer’s portfolio is easy. Producers who avoid including disability sales in their sales presentation are often concerned that the disability sale will either screw up their primary sale (life or medical) or is too difficult. 
 
When doing a life presentation the most common purpose of life insurance is personal protection for the family. The proverbial “What would your family (or business) do without your income?” Well the same problem occurs should a disability happen, only the client is still in the picture. So the discussion should always be “What would you and your family (or business) do in the event that you are no longer a financial participant?”
 
The producer who specializes in medical insurance sales is pitching that the high cost of getting well is the reason someone needs medical insurance. The explanation should be “in the event of an accident or illness, the high cost of getting well is mitigated using medical insurance, but recovery also requires you to take care of the daily financial burdens including your home (or business), utilities, food, etc. Medical insurance alone only completes half of the financial protection-the other half is disability insurance.”
 
In each of these sales, the “pitch” is the same for the need for disability insurance. Having the discussion of the need for disability insurance early and often leads to more sales and better financial protection for the client. 
 
Eugene Cohen: To make it easier for those of you who are not disability specialists, I suggest that you contact a brokerage general agency that has a disability income insurance team.  They will be more than happy to educate and guide you through the sale.  We educate and help brokers to become comfortable with the uncomfortable.  We guide brokers from the initial contact to the placing of the case. 
 
As I stated before, keep asking your clients questions.  Questions create interest.  For example, ask your client: “What was the longest vacation you have ever taken?”  Most often the answer is two or three weeks.  Your next question is: “Why only two or three weeks?”  The answer is consistently, “I can only afford to take off that much time.”  Your answer is a question: “If you were sick or disabled for two or three years, would you have an income problem?”  The answer is “yes”, and your answer is: “We need to talk.”
 
Nicole Blodgett: Definitely keep it simple! Ask your clients, “What planning have you done to ensure your income is protected if you become too sick or hurt to work for 60-90 days or more?” Using the words income protection will have a positive connotation to your clients and they will be receptive to a conversation. It doesn’t hurt to remind that income protection is the foundation to a sound financial plan. As their adviser you have the opportunity to coach and teach your clients how to mitigate financial risk, so ask them what their plan is and recommend income protection solutions where they are needed. Of course, not everyone can be a DI specialist – you’re already wearing enough hats as it is and we understand that. However, that doesn’t mean you should avoid income protection altogether with your clients.  Secura Consultants has two specialists on our team ready to come alongside advisors to help them start the conversation and place business. We have a boutique income protection specialist that works with the fee-based and fee-only planning community and we also have a broker’s broker for income protection that works alongside financial professionals on a split case basis. You can focus on being an advocate and identifying the need and let someone else do the heavy lifting of discussing options and placing the business.
 
Reed H. Schnittker: We encourage brokers who are already providing insurance solutions or money management to make sure that their clients are adequately covered if they become sick or hurt.  Our office is available to evaluate what protection solutions they already have and to make recommendations. 
 
 
What techniques can you recommend to brokers to successfully address DI needs in the business market?
 
Thomas R. Petersen: Be fearless! Apprehension surrounding bringing up the topic and apprehension regarding possibly losing a sale is in the mind of the producer, not the client! The client has asked for professional advice. This includes telling them about every coverage they should have. Not having the insurance does not lessen the risk potential of becoming disabled. 
 
Eugene Cohen: The business market for disability income insurance is another well-kept secret.  But there are several policies designed just for the business market. 
 
Asking questions creates sales.  For example, tell the business owner he has many types of insurance such as auto insurance, liability insurance and fire insurance.  As May is Disability Insurance Awareness Month, I want you to ask him a question:  “Do you have a policy that provides monthly benefits if you become sick or injured?”
 
Ask the business owner the question, “Do you have a buy-sell agreement?”  The next question is, “How is it funded for a disability?”  Disability buy-out insurance provides payment(s) to help with the purchase of a totally disabled business owner’s interest under a buy-sell agreement. 
 
Ask a small business owner if he has a lease.
 
“How would you pay your monthly lease if you were not able to work for a year or two due to an accident or illness?”  The next question is, “In addition to your monthly lease, do you have other expenses that must be paid even if you are not able to work due to an accident or illness?”  “You need to own an overhead expense policy which is insurance for business expenses incurred during a disability.” 
 
Other questions you can ask a small business owner: “Do you have a key person who is critical to the success of your business?  If this person became disabled would this create a problem?” 
 
“There is a policy called a key person replacement policy.  We can look into this for you.” 
 
As you can tell, by asking questions you can uncover all sorts of needs for disability insurance for the business owner.
 
Nicole Blodgett:  I was recently presenting at a conference to a room of approximately 100 independent insurance agents and financial advisers, most of whom are business owners. I asked them to raise their hands if they knew exactly what would happen to their individual, family, and business incomes if they became too sick or hurt to work for 60-90 days or more. Not one hand was raised. My point? Ask this question to your business owner clients. They have double the risk when accidents or illnesses strike-obligations to continue providing for their personal needs and the needs of their business! Income protection solutions will insure the lights stay on and the doors stay open if the owner is disabled. 
 
As financial professionals we must focus on the when with our clients, not the if pertaining to the risks associated with disability. No one can predict if disability will happen, but we can control what the plan is when it happens and educate our clients because the risk is real and the stakes are unfathomably high.
 
Reed H. Schnittker: There are a number of ways to address this opportunity.  
 
Today there are more income protection solutions available than ever before.  Carriers are doing a good job developing specialty/niche products for specific needs.  A simple conversation with the broker, asking about his client can lead to recommending solutions that are available for the client to protect his income and the business income.
 
Our office does a lot of searching on the internet looking into potential insureds, learning about them and their businesses, so that we can suggest the type of income protection solutions that we have available to businesses like theirs. 

DI Forum: Key Attributes, Motivators, Industry Organizations And the Product Landscape

M. Susan Ondack, LUTCF
Disability Income Regional Vice-President, Principal Financial Group

Eugene Cohen
Eugene Cohen Insurance Agency, Inc.

Dale Chittenden
The Plus Group Arizona, The Chittenden Group

Thomas R. Petersen
Petersen International Underwriters

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

Patrick T. Jackson
The Plus Group, Income Replacement Agency

 

Q: What are some key attributes that you see in successful DI producers?

M. Susan Ondack: The biggest obstacle for agents selling DI is that they do not feel comfortable explaining the cost and benefits.  The agents successful in selling DI are those who put their client’s welfare in front of their own comfort.  They are producers who want to learn and be the best financial advisors they can be.  I find full financial planners and producers brought up in the career distribution system to be the most successful producers. 

Eugene Cohen: I have worked with hundreds of disability income producers during my fifty years plus in the insurance industry. I have found that the key attributes that the successful producers have are:  focus; concern for their clients; enthusiasm; quest for ongoing product knowledge; and resiliency. 

The successful disability producer is so focused that nothing can take him off track.  There is an internal mechanism that allows him to disregard distractions. The successful disability producer is always concerned about the needs of his client.  He is concerned that the clients have disability policies that fit their current needs.  With good record keeping the producers keep in touch with their clients and review coverage on an ongoing basis.  I see so much enthusiasm in successful disability producers. They get excited about their products because they have seen how the coverage has protected some of their clients when income protection was needed. Their coverage has helped families survive after a sickness or accident has removed the family’s paycheck.  The need generates enthusiasm. In any business you are in, Knowledge is Power.  Successful disability producers know this; they are always studying their products.

It is very important to our agency to facilitate the quest for knowledge.  We work with disability producers one on one and we hold workshops.  If a producer cannot come in, we will arrange a phone conference.  Our goal is to provide product knowledge as this is a key to being a successful disability producer.

It is a known fact that all successful disability producers will have rejections. Not every sales call will result in a sale.  Successful disability producers know this and when they are pushed back, they rebound forward.  They are resilient!

Dale Chittenden: Compassion, patience and the ability to see the big picture, along with a personal story to tell, are some of the key attributes.  It seems at times our lives are moving at lighting speed and we all want the immediate solution—instant gratification if you will.  Income protection, as vital to our financial health as it is, is anything but that.  Successful DI producers see that, understand that, and have spent the time to a) communicate this need to the client in multiple ways and then b) simplify and individualize the process.  They are willing to do their work upfront by doing the simple fact finding needed (income, health, job duties), setting realistic expectations for the client concerning the most likely outcome and then creating coverage that is tailored to and works for the client’s individual need and budget.  All too often I get requests to quote the max, adding every possible rider and benefit available.  Not everyone needs that or can afford that.  I spend a good amount of my time “downsizing” quotes and teaching producers that it is better for their client to have something than it is to scare the client away and they buy nothing. 

Thomas R. Petersen: Unafraid! I don’t mean that other producers are afraid, but many producers fear losing a life sale or a group sale if they discuss disability insurance. They think that the prospect will have overload on all the products, or, at the least, start mentally budgeting money away from the larger commissioned product.

The reality is that those who approach selling disability insurance by including it in their early discussions with prospects are often rewarded more by more sales as the prospect listens and understands that a loss of income can occur other than from death!

Raymond J. Phillips, Jr: One of the key factors I see in successful DI producers is they are organized and methodical in their approach to their clients and prospects.   Their approach to marketing to prospects is done in a strategic, consistent manner.  Indeed, often just getting a prospect to commit to sitting down to discuss DI planning is a great task in itself.  It requires consistent and timely follow up in order to get an appointment to make the client aware of the whole disability income insurance abstract. 

Successful DI producers are very knowledgeable and objective when comparing and presenting coverages.   For a proposed insured the jargon can get very confusing.  Within their skill set, successful DI producers have an ability to communicate often complex, confusing coverage descriptions into concise, understandable descriptions.

Their organization skills continue well beyond the sale. The successful producers I’ve run into understand that it is important to have consistent, timely communication with the client over the years.  As the policy remains in force an agent should help a client navigate future purchase options or adjust coverages as occupations and incomes change.  Very often this engagement leads to new sales with their existing clients and/or referrals to new DI purchasers.  

Patrick T. Jackson: Successful DI producers should possess several important characteristics.  To me, the beginning point is that producers need to have both integrity and honesty coupled with a deep personal belief about the daunting financial risks that each of their clients face.  A caring and compassionate producer should endeavor to insure that all of his clients cover the risk of a disabling event and they should ideally own their own income protection plan. A producer should consider the complete financial picture of each of their clients’ needs to be able to articulate the potential risk as well as the pennies on the dollar solution to that risk.

 

Q: What role do you think industry organizations should play in motivating brokers to strive to provide DI to the majority of their clients and what can be done to get industry organizations more involved?

M. Susan Ondack:  It is my belief that NAIFA and NAHU need to promote disability insurance to their members.  Not only is it a benefit to their members, it is also a responsibility for all financial advisors to be aware of all the risk protection products available in today’s marketplace.  NAIFA boasts that their members earn much more than non-member producers.  They could impart the knowledge of how DI still has the best recurrent income stream for producers in the industry.  I was always annoyed when I went to the NAIFA convention and there were no DI programs to be heard.  NAHU members are striving for alternatives to surviving in this industry without health insurance being their bread and butter.  Well, DI is right here, a health insurance product, and a great source of income for its members.  
 
Eugene Cohen:  I think that it is the responsibility of the companies that offer disability income protection as well as the responsibility of the brokerage general agencies to promote disability awareness.  It would not hurt if industry organizations got involved also, however, in my organization we are always promoting disability protection.  We feel it is our responsibility to make all of our brokers aware of all of the disability products that are being offered.  We do this by advertising, sending emails to producers, sending out newsletters, providing training sessions and making one on one phone calls to our producers.  We do this on a daily basis.
 
Dale Chittenden: More attention to income protection products needs to be given by all of the industry organizations. With many of the industry organizations right now it is pretty much an afterthought, if given any credence at all.  Many organizations continue to focus their programs, training and attention on life insurance, the markets, and other investment and income producing products without any focus on the one asset that makes all those products sellable!  There is a great need for education and training on income protection risk management products for both the individual and the business markets. This need embodies what is right for the client by helping him keep all other planning in place should their income be lost due to accident or sickness. Yet few organizations give it the time of day.  The International DI Society (IDIS) was formed specifically to promote the disability insurance industry because there was very little income protection advocacy in the other industry organizations.   We need our NAIFA, AHIP, FSP, CFP, and NAHU local chapters to realize the importance of income protection and risk management, without which the financial plan goes to ruin.  These organizations and others like them need to promote this training and education to all of their members. 
 
Thomas R. Petersen: Industry organizations, like producers, need to include the need for disability insurance with the same enthusiasm as they do their core products. If they can demonstrate that selling disability insurance alongside life and medical sales builds a producer’s income and creates stability by having the client even more vested to the producer, the producer will create an empire not just a sale.
 
Raymond J. Phillips, Jr: I think the key factor industry organizations can provide is the promotion of the appropriateness of the DI purchase in the overall financial plan.   Articles, information, meetings; promoting this as an essential consideration for every financial professional will hopefully lead to more producers and planners being motivated to integrate this into their clients’ overall insurance plans or to seek partnership with someone who will.
 
I wince every time I hear DI described as a “niche” market.  That’s a label we seem to want to condone and promote.  It shouldn’t be a niche.  It should be ubiquitous, universally considered and implemented.   The industry organizations can help change this view of this important coverage.  
 
Patrick T. Jackson: Industry organizations need to continue to train producers on how to bring up the conversation with both clients and prospects. Offering real life stories about people who have lost their income due to a disabling event are very powerful tools we can provide to   producers. Events like Disability Insurance Awareness Month, International DISociety meetings and National DI Day serve to elevate the conversation and hopefully motivate producers to talk to their
clients every month about income protection planning.
 
Q: What are some key motivators to impress upon agents that for the most part avoid DI sales?
 
M. Susan Ondack: The most key motivator for me to impress upon producers is that without income protection, the entire financial program they have designed could be at risk.  I also like to promote DI specialists, who will help a producer educate and protect their clients on a split basis.  After all, how many times have we heard that 100 percent of nothing is still nothing!  Collaboration can work both ways and increase client satisfaction and producer income. I have a financial planner in Denver who went into collaboration with a DI specialist and increased his income in 2014 by $115,000, not to mention the residual income he will have.  This is not brain surgery, it’s common sense!
 
Eugene Cohen: The reasons why many insurance producers avoid disability sales are:
a) They are uncomfortable with the products due to lack of knowledge;
b) They think other products are easier to sell; and
c) They believe that disability underwriting is very different.  
 
How do we overcome these issues? In my agency we teach, so that the producers become comfortable with the uncomfortable. They will not avoid presenting disability products once they have the knowledge. The same principle applies to underwriting disability applications.  Once the producer understands the underwriting requirements, the misconception disappears. The reason they think other products are easier to sell is because they have been trained in those products and are comfortable with them.  With an open mind and a quest for knowledge, disability income will become an important part of an insurance producer’s portfolio.
 
Dale Chittenden: Income protection is a win-win situation.  It is a win for the producer and it is a win for the consumer. Unfortunately, I don’t think most producers see it that way.  The consumer needs to insure the engine that makes the rest of their financial world run—their income.    Many consumers feel, however, “it” will never happen to them and thus push back on the producer, who then feels it prudent to let the DI sale go to keep from jeopardizing other sales.   But, in doing so, what they are really doing is putting the entire plan in jeopardy.  If anything happens to the client’s income stream, nothing else gets funded.  
The win for the producer is that generally, once a DI policy is on the books, it stays there and requires very little maintenance.  The second win for the producer is that DI policies pay a significant renewal commission, unlike many of the other products that they sell. Thus, with a significant commission and a high persistency rate, the commission renewal stream becomes very healthy.  Between first year and renewal commissions a producer can generate a substantial, long term, steady income stream by simply writing one or two applications per month. 
 
Thomas R. Petersen: 
  1. The market is easier than they think. Mostly because so many avoid talking about disability insurance. 
  2. The market builds and builds over time, it is not a quick sale program.
  3. The commissions, while not as high as life insurance the first year, often far out pay life insurance within 2-5 years and persistency is higher.
  4. Disability insurance sounds depressing, so change the game and call it income protection! 
  5. You are not alone! Members of the International DI Society, fellow producers, the NAIFA Young Advisor Team, and many others are there to help, advise, cajole, and support you.
 
Raymond J. Phillips, Jr: I think the most important one is that it protects the foundation of every insurance and financial plan—the client’s income.   Without a paycheck, all other insurance coverages are impacted; all savings are impacted; and the savings, nest eggs and in force investments could very well be compromised.
 
Patrick T. Jackson: I think we need to reduce the complexity of the need conversations we have with our clients.  Simple direct questions to a prospect can clarify the issue.  How long can you exist without a paycheck before financial problems become acute?  Who will pay your family if you are unable to work and earn income?
Appeal to the producer’s own financial needs by showing them the financial result of writing income protection on 12 clients per year for 10 years.  
 
Lastly, appeal to the producer to do “the right thing.”  Having your clients protected from the risk of a disabling event provides a firm financial platform for them and allows them to utilize more services from you.
 
Q: How has the DI product landscape changed in the past 10 years, and what bright spots exist now and/or may be on the horizon?

 
M. Susan Ondack: In the past 10 years we have seen the DI product landscape change in a most positive way.  There are simplified underwriting programs, guarantee issue and guarantee to issue programs.  Teleapp,
e-application and e-signature capabilities.  The issue and participation limits have increased and medical conditions, such as antidepressant usage, have changed dramatically!  It is a great time to sell DI!
 
Eugene Cohen: The last ten years have been exciting years for disability income insurance.  There are companies that are promoting disability income as well as creating new products.  There is a disability product now for most occupations.  There are simplified underwriting as well as teleapps.    The companies that offer disability are very supportive and enthusiastic—their enthusiasm is contagious!
 
I am excited that we have financial advisors, life agents, health agents and casualty agents that need our help in education on the various disability products that their clients need.  Their clients not only need individual disability products, they need disability buyout insurance, disability key person replacement, disability overhead expense, and disability retirement security. Just look at the opportunity general agents have to build disability sales.  The more we educate, the more we grow! We are in the most exciting time for disability income protection sales.
 
Dale Chittenden: After almost becoming extinct, the income protection market has come back with gusto!  More and more carriers are deciding to come back into the market in one fashion or another.  The few that never left have continued to be innovative with product design, but attempt to stay away from the pitfalls of the mid-90s.  Time will tell if they truly can.  Underwriting has tightened up on one hand, but is keeping up with advances in medical science on the other.  For example, it used to be that someone taking any anti-anxiety drug was not able to get DI coverage—now they can.  Yet at the same time, I still see carriers attempting to stick to sound medical underwriting practices to not “give away the store.”  Product design is also evolving and becoming simplified.  This is a bright spot because the easier it is to explain the coverage, the more it defeats both the producer’s and the consumer’s view that income protection coverage is complicated and designed not to pay.  Probably the biggest hurdle I see, at all levels, is the perception that disability insurance is complicated and hard to understand.  The more we can do to simplify the provisions and give the consumer confidence the plan will pay when they need it, the better the penetration into the market we will have.
 
Thomas R. Petersen: For the most part, products have stayed the same and benefits have not changed dramatically in the past 10 years. There are two things that have changed:
  1. Underwriting has loosened up compared to 10 years ago. This means more sales and more policies to be placed. There are more resources for those with health issues, higher income needs, and occupations that have traditionally been difficult.  Coverage options to meet business needs have also expanded. 
  2. GSI programs have caught on and are one of the leading edge products. This is true in both the regular disability markets as well as excess disability programs. 
 
Raymond J. Phillips, Jr: A major change over the past 10 years has been a liberalization of the contract coverages/definitions and the increasing issue and participation limits.    It wasn’t a great deal beyond 10 years ago that the DI markets were in tumult and much of the language and benefit maximums had become more restrictive. There has been a consistent movement toward taking definitions and I/P limits “back to the future.”   It’s a great time to be a DI consumer!
 
Another segment that has liberalized over the past number of years is the amount of guaranteed standard issue (GSI) offers that can be made.  It’s been my experience that this has allowed individual DI to be made a part of the executive benefit consideration in small and medium sized firms, providing more individuals exposure to coverages for which they may not have previously been aware they could qualify.
 
There has been creation or enhancement of DI coverages available over the past decade.  Key employee DI coverage is now part of the conversation for business planning.  We can now provide protection for a business owner’s loans.  There’s never been a better time for a planner to approach a small business owner in reference to DI protection.  The market has adapted to a point that we can now even provide protection for an individual’s pension contributions.
 
I think (hope?) a bright spot might be a move toward making the application and underwriting process less difficult.  Logically, it seems that the evolution of technology and “Big Data” should spawn such a dynamic.    Many times we’re working with planners who do not do much disability income insurance.  Nothing is more frustrating than to have them scared away from this most important product offering by a cumbersome, clunky experience in underwriting.   Hopefully innovation in processes will alleviate the fear that I think many planners have of getting involved in DI selling.
 
Patrick T. Jackson: Growing concerns for the industry are the baby boomers retiring in large numbers and the dwindling number of qualified producers entering the insurance industry. As a result there are fewer disability experts to market income protection products. 
 
Additionally, during the last 10 years few new carriers have entered the market, however, the few remaining carriers are profitable. 
 
As the millennials begin entering the workforce, the hope is that they will follow in the footsteps of the baby boomers and purchase income protection coverage.  If this happens, a large number of income protection policies will be sold during the next 20 years. We hope for a large number of young producers entering the business and selling coverage to the millennials as happened with the baby boomers in the 1980s.

Disability Insurance Awareness Month Planning Panel

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

DI Forum: Best Practices, Training, Partnership And Product Outlook

Steven L. Brady, The Standard

Michael Cohen, Eugene Cohen Insurance Agency, Inc.

George G. Davidson, Secura Consultants

Craig Gussin, Auerbach & Gussin Insurance and Financial Services, Inc.

Keith Hoffman, NFP

Maureen A. Kirschhofer, Doc-DI.com

Thomas R. Petersen, Petersen International Underwriters

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

Q: What are some important agent best practices for selling DI?

Steven Brady: Agent best practices would include frequency of applications. We did a study on agents who write at least five applications a year. The actuaries found that the morbidity was much lower on agents/brokers who did at least five a year. I think the reason is that frequency creates confidence. Confidence is needed in placing a case that has a rating and exclusion and possibly limitations. Confidence also allows an agent/broker to seek out potential clients instead of waiting and being asked about disability. Many will say selling skills or underwriting thoroughness or even target market depth, but I think frequency is the best skill…just go out and do it.

Michael Cohen: Brokers have to ask their clients before the client asks them. Once that occurs, they may not be able to obtain the coverage! There are some great opening questions to ask a client, but starting with a disability insurance inventory is one way to open the conversation. Having an assistant or yourself gather the current disability coverage allows for the conversation. Most individuals do not know what they own or the details of the policies. Better yet, most policies haven’t been updated for their current needs. More times than not you’ll find that there is no disability coverage at all, which paves the way to more targeted questions and real planning.

George Davidson: Don’t make the decision for your client.

Producers make the “buying decision” for their clients without even asking them. We see this repeatedly. “My client doesn’t need this coverage. She has a group plan at work and that is sufficient.” The producer attitude closes down the client’s opportunity to protect her family and/or business. Establish a process that ensures that each client has the opportunity to vote.

Craig Gussin: Agents have to mention and ask every one of their clients to buy DI for many reasons: 1) If you don’t, some other agent will, and then your client has two insurance agents instead of just you. 2) Based on statistics, 25 percent or more of your clients will become disabled. If your client becomes disabled and asks you why he did not have DI, what are you going to say? How is he going to pay his bills? 3) You can increase your income greatly without much work-your clients like and trust you already and will buy DI if you educate them on the need.

Be sure you understand the different DI products and the benefits the different insurance companies will offer a person based on his occupation and income. Not all DI products are the same!

Keith Hoffman: Prospecting, DI storytelling and the consultative approach.

Maureen Kirschhofer: I believe that it is really important to sell the need rather than the features when first meeting with a client. Disability insurance is probably the most important insurance that clients can purchase. When you look at the statistics, it is shocking to see the number of individuals who will become disabled for more than 90 days before age 65. I tell my clients that if they love someone, they buy life insurance; if they love themselves, they buy disability insurance. After working for one company for many years, I really appreciate that I can present more than one option and company to my clients. That way it becomes their decision, not mine. When my clients have a claim, I will be there for them, helping them to complete forms and assuring them that the piece of paper they purchased from me is a contract that will pay them when they are sick or injured and can’t work. It is the “you never know” time of their lives. A disability is difficult, but when the bills come and don’t get paid, it is even worse.

My present clients are quick to offer referrals to me, and that makes me feel that I have done the best job that I can for them. I feel like I am a specialist. I am the cardiologist of the insurance market. I don’t try to be everything to every client, but I make suggestions to help them with their planning by working with other specialists whom I feel will do the best for them

Thomas Petersen: Set reasonable expectations and don’t oversell! There is a difference between explaining what disability insurance is designed to do and promising what a specific carrier will do. Expectations get high about the process during underwriting and claim time.

Ray Phillips: First and foremost, know what you’re selling. While there is a certain amount of complexity in knowing product definitions, for the most part it’s my experience that carriers make their policy provisions understandable and accessible. Agents owe it to their clients to know what constitutes a claim. I’m convinced that many do not review the coverage with their clients in an elevated manner. The fact is that income fuels all other insurance planning and investment planning. I’m not sure that this reality is expressed enthusiastically to the prospective DI consumer.

Future purchase option (FPO) riders are a must-sell to those who can qualify. Fact is, clients’ incomes do go up over time in just about every occupation. FPOs provide an efficient way for policy benefits to track with the increased exposure. While a person’s health may not deteriorate over time, the ease of accessing higher benefits is very appealing.

Hand-in-hand with that, when selling DI I think the agent should continue to communicate with the client consistently after the sale. Having a DI policy in force always provides an opportunity for a conversation. That conversation will allow for a review of policy provisions, an opportunity to adjust coverage to a client’s current situation (higher income, different job duties, etc.) or to provide suggestions on other coverages the agent can offer.

Q: Where should agents go for a) basic DI training, and b) continuing or advanced DI education?

Cohen: We find that this is really an apprentice type of business. Working with those agents and BGAs who have been selling disability insurance for decades is really the place to learn. The International DI Society is a great association that allows agents to dive deeper into disability insurance. In addition, The Plus Group is a nice source of regional BGAs around the country who provide training and education to agents.

Davidson: The Plus Group! If your “product source” isn’t your “information source,” then find a new partner. However, if you are serious about sales, you need to employ a sales strategy I learned from one of our carrier partners years ago: ask to get. Ask for training and you will likely get it!

Gussin: As an agent you should learn about DI from taking courses offered by AHIP, IDIS and other organizations such as NAHU and NAIFA, along with working with reps from DI companies. DI reps love to teach you and go on appointments with you, and they will help you make the sale. To get continuing or advanced DI education, join IDIS, the only organization solely geared toward DI.

Hoffman: There’s a distinct difference between product training and sales training. So I’d say product training can best be learned from BGAs and carrier wholesalers. Sales training from senior producers, senior BGAs and senior wholesalers. As an example, Impel Dynamic offer sales training services that can really help someone learn the ropes, but there’s nothing better than doing it on the job, because the “frequency of fatal accidents” diminishes with experience.

Kirschhofer: I was fortunate to work for a company that specialized in disability insurance. They had wonderful training both in my agency and at the home office. We met for some new agent training after about six months in the business, and I believe that this was the wood that kindled my fire to become a DI expert. Unfortunately, so many companies have dropped selling DI or don’t focus on it because it does not profit them, so agents need to go elsewhere for their training. I would recommend that they find out who is the best in DI in their area and take them to lunch and personally ask if they would mind mentoring them. I have worked with several agents in the Jacksonville area just because they asked. Nothing is more meaningful than seeing someone in action on a sales call. The International DI Society offers monthly educational seminars, and I would highly encourage any agents who want to sell more DI to try one of them. One is open for free, and then membership in the society is necessary to continue. The association has worked hard to establish an advanced disability designation in conjunction with AHIP. Here again, I would encourage anyone interested to go to the website, www.internationaldisociety.com, and check it out.

Petersen: In general, the best training still comes from the brokerage outlets, as they have a variety of carriers so they can advise on each case a producer comes across.

Unfortunately, most carriers do not train people to sell disability insurance. Many believe they do, but what they often teach is product knowledge, not sales or general disability education. Thus, most training is left to brokerage, to online sources, and through organizations such as the International DI Society.

Phillips: At the risk of sounding self-serving, an agent’s local BGA is usually a wealth of training and education. Likewise, many of the carriers provide wonderful training modules on their websites and have local/regional brokerage reps of their own to support their products.

Life Happens has a wonderful DI suite on their website, www.lifehappens.org. The Council for Disability Awareness also has great background information and abstracts on their site, www.disabilitycanhappen.org.

For advanced education, the International DI Society has partnered with AHIP for the following designations: Disability Insurance Fellow (DIF) and Disability Insurance Associate (DIA).

Brady: I think that training is the most evident problem with our industry today. The time was that with many carriers providing disability insurance, and many brokerage companies competing for business, we wrote the most we have written as an industry because we had the most training available at that time. Now, one must go to LUTC for DI training, and to the local independent DI wholesaler. We are fortunate to have independent wholesalers who believe in disability insurance and provide training on all levels, even on case help.

Q: What are some effective ways “non-DI” aents can partner with DI experts?

Davidson: Outsourcing has been a catch phrase in business for years now, and many times it has a negative connotation. The reality is that partnering with a product specialist is the best way to jump start your practice. Ask  in your network for a referral and visit with a product expert to make sure you both have the same business values. Develop a simple agreement on process and compensation, then “pick five!” The “pick five” is a great way to “date before you get married.” Identify five existing clients who exhibit the characteristics of a DI purchaser.

 • Between 30 and 55 years old.

 • Self-employed or employed with their current employer for more than two years, and earning $75,000 or more.

 • Children still in the home or in school.

 • Client is a “planner” and exhibits this characteristic in prior transactions.

 Now plan the outreach with your partner (introductory note and phone call) and start the process!

Gussin: Meet agents who sell DI at your local NAHU or NAIFA association meetings and discuss partnership with them. Also talk with some of the DI reps and ask them to help you find an agent who is an expert in DI. They will recommend a DI agent they know will be a good fit for you.

Hoffman: The most effective way is to go with an expert on many joint calls.

Kirschhofer: I briefly mentioned this before, but I treasure my relationship with my DI partner. We each have various strengths that we share with each other. We were competitors who met and instead of competing for clients became a company focused on working together with them. In many ways it had taken awhile to get into the market that we have, but it really works. While I love to review contract language with our clients and do educational seminars, Judi is great at focusing on marketing to them on a persistent basis.

Petersen: Just ask! However, most people won’t for fear of someone stealing a client. The reality is that many good DI producers would love to share a sale and help everyone.

Phillips: The agent needs to decide how much he wants to become involved with the DI sale. Does the broker want to present the product, or serve as a facilitator to the client’s consideration of DI?

As mentioned earlier, there are a number of local, state and national opportunities for an agent to get to know and understand the market. An agent can partner with a carrier brokerage rep or BGA to become educated on the presentation of the concept. Most often the carrier brokerage rep or BGA will assist in point-of-sale presentations to allow the agent to get comfortable in the process. Often this is done without concern for any commission split.

In each market there are other agents who specialize in the DI sale. They work with agents who do not want to become involved with the specifics of a DI sale, but rather are looking to “farm out” that business. Those cases are typically done on a commission split basis. Where can they be found? I’d suggest the local NAHU or NAIFA meetings, or even by referral from the company brokerage rep or local BGA.

Brady: The key is “partner.” Corey Anderson is a great example of a true partner. He works with agents who have the relationship with the client but no interest in becoming a DI expert. So they contact Anderson and he splits the case with them. I think that is the future. With disability insurance being so contractual-language-driven and so competitive, it takes an expert to see beyond price and get it through underwriting as sold.

Cohen: Anyone who has clients should be asking some of the basic DI questions. Disability insurance is easy to learn when you have the right teachers. Each broker can become an expert in this marketplace with a little help and direction.

Q: How are today’s products different? What’s good today, what would you like to see, and what do you wish would come back?

Gussin: DI products have changed over the past 20 years. For example, they would pay your client for life if he became disabled, but now they pay only to age 67. The one thing that has not changed is that if he becomes disabled he will receive a tax-free check until age 67. I believe the plans today are as good as or better than before. Just be sure you understand the product you are presenting to your clients based on their occupation and income.

Hoffman: The basic guts of the policy have not really changed. Sure, there are tweaks which have always created the “leapfrogging” that carriers enjoy, but there is nothing really new. “You get a benefit if you are too sick or hurt to work!” I really wish more life insurance carriers would focus their messages on total risk management for planning and not just promote life insurance for income replacement.

Kirschhofer: I guess that I have been in the business long enough to see a complete turnaround from the 1980s. When I began, companies were competing with one another for best cost, benefits and sales. Suddenly at claim time, they realized they had given away the store. Benefits were withdrawn, prices changed, and many companies are no longer in the business. Now, with more rational underwriting and rates, the companies are offering many of the same original benefits. I loved selling return of premium to my clients and wish we had more options to do this in my state. I had one client who remodeled her kitchen when her 10-year return of premium was up. It makes clients feel that they can achieve a benefit without being disabled. We need to convince our state insurance departments to realize that this is a great benefit and one that would be great to return. If you show potential clients a competitive rate of return on the extra premium, it works even better.

Petersen: Products today are nearly as good as they were in the “heyday.” Limits are up, definitions are excellent, provisions are broad, and access to group, individual, multi-life, excess and business coverages have never been greater. Underwriting is faster than ever, too.

There are some products that producers who have been in the disability industry for many years may miss, but some of these items cannot come back, at least in their original form, due either to regulatory or financial reasons. Case in point is return of premium. There are a couple of carriers that still offer this in some form or another, and my hat is off to them. However, most carriers will stay away from this due to the financial loading and reserving it requires. Another provision is the “lifetime” benefit. The concern for “over insurance” is not just the benefit amount that could create a possible malingering, but also having cash flow for the rest of a person’s life. While it still may have its opponents and proponents because of these theories, the fact is that this benefit might not resurface for some time. I do note that maximum benefit periods are creeping up, though!

Many carriers have been increasing their maximum benefits. This is true for personal disability plans as well as business plans. Fortunately for us, there are still many income producers as well as businesses and business deals which require higher amounts for protection than what most carriers will insure. Even within our business of excess coverages, we have seen new product designs that have been generated to meet the demands for these situations and to fill in gaps.

Historically, for example, excess coverage plans were limited to a maximum of five years benefit. Today we have benefits that can be paid up to age 70! This came as a response to the need for programs that better overlap traditional disability plans.

Key person disability planning is another area that has been changing. While there are a couple of traditional carriers that write key person, the benefits they offer currently are relatively low and only for a select group. Every business has a key person, and sometimes they are high income people such as the rainmakers of a law firm or a top executive, and other times they may be technicians who keep the business flowing.

So how do insurance professionals get training for these things? For the most part, selling supplemental or excess disability plans is similar to selling the base underlying plan since, in a perfect world, excess plans are just an extension of the base coverage. This is where product knowledge comes in. There are some differences in the product, but not the sales technique.

I refer back to another comment I made that what producers need to do is keep the discussion, at least initially, on what disability insurance does (regardless if it is personal, business, group, excess, etc.). Once the sales process goes beyond the expression of interest, then specific products should be discussed regarding how they work.

Phillips: Today’s products have many of the traditional definitions that made the DI market viable and substantial years ago. Specialty own-occ coverage is very available. Many carriers have residual definitions as good as or better than they have ever been. I’m not sure there has ever been a time when definitions have provided more robust coverage opportunities than at present.

I am a big fan of the old return of premium rider structure, and I would love to see that rider return in an affordable form. I’m not sure that with interest rates having been in the doldrums for so long-and apparently going nowhere anytime soon-there will be any innovations in that department.

With national health care a reality, I would also like to see more carriers offering the old “nondisabling injury benefit” or accident coverage in their plans. This allows for a sum to be paid out if a client is injured in an accident but not disabled-a sprained ankle, a separated shoulder, a twisted knee, etc. Such coverage can provide dollars to offset deductibles that might end up as dominant factors in the health insurance structure as we go forward. Plus it gives the client a very realistic view of a positive that the coverage can offer.

Brady: Products seem very similar to the best we had to offer in 1980-1985. I think products and underwriting have remained unchanged. GSI is a different animal, and certainly the future of DI growth for most companies. I would like to see a whole life version of disability insurance built and offered to new markets that currently do not purchase disability insurance.

Cohen: The need is there and should be covered. To preserve space, I can’t go into the products and features we would like to see. It’s important in today’s world to train brokers on how to ask and develop the need for this product. Once there is the need, there are resources that can  help review and educate the broker.

Davidson: This is the best time to be in this business! Premiums are lower than they have been in years. Carriers are offering programs to help with  multi-life and business owners. There is more capacity and better underwriting. Demographics are swaying in our favor, with the largest buying group ever about to hit the prime DI buying years. Position yourself now as the go-to person for income protection and you will reap the rewards for years to come.

Q: In LTCI sales, one school of thought is to get at least some coverage in place, with a goal of striving for more coverage in the future. Does this approach lend itself to the DI market?

Hoffman: Agreed, but it is the approach that is incorrect. Many times, at the point of sale, the producer recommends a reduction in the benefit amount to “save premium.” The benefit should be the last choice to reduce premium. It makes more sense to tinker with the elimination period or the benefit period to save money. The reason is that once you’re disabled, it will be hard enough to live on 60 percent of your income. [KH]

Kirschhofer: If cost is a problem-and I tell my clients that they should look at about 3 to 6 percent of their income to protect that income-something is really better than nothing. If they have to decide between a shorter benefit period or a smaller indemnity, I would suggest a shorter benefit period. What I say, if this is an issue, is, “Close your eyes and picture yourself disabled.” Then decide what you really need in a product that will help you to continue in your world. A disability can be a living death, but we can make it tolerable by taking away the fear of living without an income. [MK]

Petersen: It seems to be a thought brought in by some and may have some merit, but the reality is that maximum benefits and benefit excess plan maximums are based upon an adequate amount of coverage, not an overabundance of coverage. Thus, if you get half of what you should have, you go broke only half as fast as without coverage.

LTCI is not designed to replace income in the purest sense, but to provide funds to pay for a specific type of expense. It is not there to cover household bills, mortgage, etc. [TP]

Phillips: I think this approach can and does work in the DI markets. While I am truly a proponent of protecting a client from that catastrophic, long term situation, often it can’t happen within a client’s budgetary constraints. Elimination of riders should be considered first, as far as allowing for the clients to afford something.

Lengthening elimination periods or shortening benefits periods can then be looked at if the client balks at a more comprehensive plan.

If the client cannot-or does not want to-afford a comprehensive DI plan, then something is better than nothing, in my opinion. [RP]

Brady: I think that idea is currently used with future purchase options and automatic increase riders, but to buy a small policy today and grow seems opposite of what most people want. They seem to want the most they can get now and not wait until later. [SB]

Cohen: The future purchase option is one of the most valuable parts of a disability insurance contract. These come in different shapes and sizes, but need to be positioned properly if a broker is going to have success in this marketplace.

The ability to make one’s product less expensive today so that clients can have some protection in force and, in the future, be allowed to apply for more without health questions is very productive and viable. [MC]

Davidson: Of course. Planning is never an “all or nothing” endeavor. Your client may not be able to save as much as he should, but he can start by saving a little and then it grows over time. Property/casualty customers may not have the highest limits, but they don’t go “naked” because of it. Income protection involves diversification (some coverage at work and some personally owned), and recognizing that you may not be able to have everything you want but you at least should have what you will absolutely need. [GD]

Gussin: Yes! I sell a lot of DI and add a future purchase option so clients can buy more DI in the future, regardless of their health. Get your clients some DI, and as their income goes up (and they can afford to pay more) you increase their DI coverage.  [CG]

Disability Insurance Awareness Month Planning Panel

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]