Q.What special initiatives is your agency/company undertaking to take advantage of Disability Insurance Awareness Month? What do you do to build on your DIAM momentum to help agents perpetuate DI awareness throughout the year?
Our Annual DI Day Conference is held in May during Disability Insurance Awareness Month. We invite carrier representatives and our producers to enjoy a morning of marketing ideas, carrier conversation, and a beneficiary of income protection to bring a real-world experience. Each invitee leaves with valuable information to improve their practice. In the afternoon, we have a “super fun and exciting” golf tournament which raises money for a worthy charity. This year, all proceeds will be donated to Project2Heal, a non-profit organization located just outside Charlotte. Their mission is to breed, nurture, and train Labrador Retrievers to provide heeling for those with physical and emotional challenges.
DI is included in all of our home office schools and training seminars, and our regional sales directors offer DI symposiums across the country. The goal is to help our producers understand the importance of talking about and incorporating income protection solutions into their client’s overall financial plan. In addition to these hands-on seminars, we continually develop new content throughout the other 11 months of the year, often using DIAM as a springboard for new marketing materials, product announcements and technology updates to help our producers facilitate the conversation with their clients.
Each May in conjunction with Disability Insurance Awareness Month we hold a “DI Day” meeting where we will bring in speakers, carrier representatives or even just do a session ourselves where we will often provide CE, sales tips, breaking industry news, etc., to the advisors in attendance. It’s usually very well attended and a lot of fun.
This year we’re having representatives from Thrivent in to give their unique perspective on their target market and their entry in the independent DI space as well as a practice management coach who worked for years as an employee benefit rep for one of our major DI carriers. Should be fun.
We are a “Disability Income Awareness Agency” all year, so our efforts for Disability Insurance Awareness Month aren’t much different compared to any other months —we stress the importance of disability income insurance in a client’s overall financial plan continuously every month of every year we operate. In addition to regular broadcast emails promoting this most important coverage, we provide tools on our website – past webinars and articles, constantly are doing workshops, seminars, webinars and face-to-face training and advising agencies and advisors. We’ll even send out an occasional piece of mail that reminds advisors and agents of our firm being an outlet for their coverages, and a place to seek advice and direction on disability income products.
Q.What suggestions do you have for brokers to help them take advantage of DIAM and engage clients/prospects in the DI discussion?
We focus on recommending continuous conversation with their clients and prospects to discuss income protection at each annual review. Oftentimes there are job and salary changes and therefore potential coverage opportunities. Our DI Day Conference is a great vehicle to reinforce the importance of income protection.
DIAM brings overall awareness to income protection and part of our focus will be on diversification—pursuing opportunities in non-medical markets. We know physicians have historically been more receptive to disability coverage, and while they constitute an important market, there are selling opportunities in other markets such as attorneys, business owners, executives and pharmacists. DIAM is a great opportunity for financial professionals to reflect on their current strategy, assess other target markets in their region and put a plan in place to carry them throughout the year.
If a producer is selling life insurance to a client to replace income in the event they suffer a catastrophic injury or death, what happens if they do survive? Most term insurance is calculated based on a multiple of earnings to determine face amount. Use that conversation to pivot and ask the question: “If you were sick or hurt and couldn’t work, financially would that be a problem?”
Whether it’s DIAM or not, the reality of the opportunity in the DI space is much like the tagline in the old Nike commercials, “Just do it!” Obviously, the advisor must do some backfilling of his or her knowledge about products and definitions in disability income coverages but the amount of resources available these days is extraordinary.
- First, and I’m prejudiced here, seek out a tenured BGA with direct access to their carriers and/or carrier reps to help with the educational process. Many, like us, who are truly in the DI arena will have ongoing opportunities for workshop training, sales modules, field underwriting and other aspects of marketing, writing and thriving in this space.
- Look to the Life Happens website, www.lifehappens.org. While they have a focus on life insurance and life sales, they do an excellent job at providing an overview of the need for disability income protection. Likewise, they have a very inexpensive “pay to play” module where, for a small fee, advisors get access to marketing materials to take all types of fixed insurance to the street.
- The International DI Society is also a great resource. In addition to training resources on their website (www.internationaldisociety.com), they offer a robust annual meeting, and one of my favorite resources—monthly “study group” conference calls where industry leaders talk about timely topics related to the income protection industry. As someone who’s been in the market for three decades, I still pick up a nugget or two on each one of these sessions.
- Perhaps the best way to learn and understand DI and its workings is to buy it on yourself! It leaves me nonplussed how many advisors we work with do not have any coverage on their own incomes and lifestyles—or it’s woefully out of date. The best way to understand something is to consume it yourself! Buy some or update your inforce coverage!
Q.What advice can you offer brokers who are not DI specialists to make it easier for them to approach their clients about DI?
We provide a “road map” for producers to discuss income protection with their clients and prospects. It is important to discuss “cash flow” issues in case of a disability moment. Planning advice should include three to six months income in the bank (or be easily accessible) and then provide “cash flow protection” from an income protection policy to protect family and/or business from financial adversity. Our producers trust us to provide the best solution for their clients, therefore they do not have to get “into the weeds” comparing multiple proposals. We recommend that our producers ask questions, determine actual needs, discuss tax consequences and present reasonable and affordable solutions. During the process the producer also needs to discuss potential policy issue obstacles.
Disability insurance typically runs one to three percent of a client’s annual salary to protect their income1 and the average long-term disability claim is 2.8 years.2 It’s important to make an appropriate and affordable recommendation but it’s even more important your client have something rather than nothing.
We need to reframe how we discuss disability income; just the word “disability” conjures up very specific images. Instead, talk to your clients about income protection and protecting their financial plan. Most people are more likely to consider and purchase protection coverage for items they deem valuable. How many people have protection plans in place for something as simple as their cell phone or laptop? Your client’s greatest asset is their ability to earn an income, which is the foundation of accomplishing any financial goal. If their income is disrupted and unprotected, it could be catastrophic to their financial goals.
The easiest way for a broker or advisor to approach a client about their disability income needs is to just ask! It’s not that hard! When you think about it, there can only be three answers that client can give:
- “I don’t have it.” Well, let’s talk about that! It does not guarantee that a client will purchase, but it’s an exposure that needs to be discussed!
- “I have it at work.” I love this one. Fact is, a significant amount of people do have some sort of group LTD coverage as a benefit at work. The follow-up here is: “What does it cover?” Invariably the client won’t know and this allows for the broker to review the benefits book that describes the coverage. For those with modest incomes, it might very well come to pass that the group coverages at work will be the maximum benefits they can get. However, for the higher income earner, very often the group LTD leaves a large gap in their income compared to DI benefits. An individual policy should be used to cover that gap. Often the group disability benefits will not replace a high enough percentage of income for the individual to maintain their lifestyle in the event of a disability.
- “I have it already.” This sometimes happens—but not often. Someone has beaten the advisor to the punch and has already addressed their income protection exposure. But, in my experience, all fixed insurances suffer from feeble market penetration–disability income especially! Chances are this will not be a prospect’s response very often.
Q.What techniques can you recommend to brokers to successfully address DI needs in the business market?
There are potentially many business issues—personal protection, Business Overhead Expense needs, Disability Buy-Sell considerations, Key Person protection, and Retirement Security. Are there alimony and child support issues, special needs children support, or other education needs? Are there health issues that need to be addressed?
Determining all the basic business needs will lead to successful and meaningful solutions. The solutions can include guarantee issue group LTD coverage and guarantee issue or individually underwritten income protection to fully protect the business owners and executives. Specialty coverage can be obtained to cover all the needs of the individual or business.
We have found that group LTD is a wonderful entry talking point. This coverage is widely owned and available with varying levels of quality and pricing. Oftentimes, the business purchases this coverage based on a low pricing structure without due process to readily available quality features. A successful professional or business owner will be willing to discuss this coverage to make sure they have “state of the art” coverage at a reasonable price.
The business market offers the chance to have parallel conversations about DI because business owners should be mindful of business protection in addition to personal income protection.
We believe in holistic planning because it’s in the client’s best interest. Our complementary life products can be introduced to address the same needs.
Perhaps just as important, because small businesses often struggle to offer benefits comparable to larger employers, a multi-life DI policy provides them with a way to attract and retain talented employees. In fact, employer-sponsored multi-life programs represent a growing segment of the business, now accounting for more than 40 percent of the DI market according to a recent survey.3
Successful multi-life programs can also lead to robust cross-selling opportunities. Brokers can generate interest with key executives in the business market that otherwise weren’t available to them.
Now more than ever carriers are providing tools and products to protect the exposures of small business owners.
I’ve found that most advisors, if they are discussing DI at all, focus only on a business owner’s personal exposures. However, if that business owner is a big reason revenues are generated by the firm, business overhead (BOE) coverage must be discussed. Individual DI is built to protect the mortgage payment and the grocery bill. BOE can cover the bookkeeping, staff salaries, even insurance payments in the event that a business owner gets sick or hurt and can’t work.
At my brokerage general agency we see buy-sells funded by life insurance on a regular basis. But we seldom see the buy-sell protected by a disability buyout plan. Functioning like life insurance does in the event of an untimely death of a partner or shareholder, DI Buyout provides funds for a purchase of stock if a partner or shareholder becomes disabled. DI Buyout coverage should be discussed when the talk turns to business succession planning and transition.
Those coverages have been in the market for years, however, recently policies have been developed that also address other exposures that a small business has:
- Business Loan Protection—as the name suggests, simply, it allows for a debt obligation on a loan to continue to be paid down if the business owner gets disabled. Have a business owner who’s expanding his business? Purchasing a building? This is a coverage he needs to know about.
- Key Person DI—again, running parallel with the staid life insurance offering of key person life insurance, this coverage indemnifies a company should an employee who’s a vital cog in the firm’s operations and revenues gets disabled.
The blatant reality of these coverages is that the advisor probably already has small business clients he’s worked with for similar exposures in the event of a death. It should be an easy conversation to have with those who’ve already understood the need for insurance.
1. policygenious.com, 2019.
2. Council for Disability Awareness, 2019.
3. 2017 Annual Survey of the U.S. Individual Disability Income Insurance Market.