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.
