M. Susan Ondack, LUTCF
Disability Income Regional Vice-President, Principal Financial Group
Eugene Cohen Insurance Agency, Inc.
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 ï¬fty 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 ï¬t 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:
- The market is easier than they think. Mostly because so many avoid talking about disability insurance.
- The market builds and builds over time, it is not a quick sale program.
- 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.
- Disability insurance sounds depressing, so change the game and call it income protection!
- 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 simpliï¬ed 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 ï¬nancial 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:
- 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.
- 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.