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]