Use Riders To Present DI Scenarios To Prospective Clients

Often, the key to gaining a prospects agreement on the need to protect income with disability income insurance is to present scenarios that seem realistic to your prospect.

This article explains how to do that by using several DI riders to illuminate the discussion–and make the need for coverage believable.

Chances are, when your prospect thinks of the word “disability,” he or she thinks “wheelchair.” Since the person cannot envision being disabled that way, he or she may not want to buy DI insurance.

The solution? Start educating your prospect about the various types of disabilities. (See chart.) Ask your prospect which type he or she thinks of when you say “disabled.” Probably, the answer will be “No. 4.” Then, tell your prospect that many disabilities fall into one of the other three categories.

The fact is, most people dont think of partial claims as being disabling; yet more people can identify with these types of disabilities because they know someone who has suffered one of them.

When you ask if your prospect has a relative or friend who has suffered a heart attack or has had cancer or a bad back, chances are the answer is “yes.” So, point out how the residual rider, attached to a quality DI contract, can provide needed income during one of these periods of disability.

Heres another example using the residual rider. Anyone whose income is derived on a fee-for-service basis–attorneys, doctors, dentists, many commissioned salespeople–derive income from an established clientele that may have taken years to develop.

Consider an attorney having a key client who generates a substantial amount of revenue for the law firm. Suppose that attorney is disabled by an accident for nine months, during which time the client obtains new legal counsel.

When the attorney recovers and returns to work, performing all duties for as many hours as before, the loss of that key account hurts. The attorney is now earning substantially less than before the accident, and it may take weeks, months or years to replace that large account.

This points out why anyone who works on a fee-for-service basis should have a recovery benefit built into the residual rider of his/her DI contract.

This feature could pay a residual benefit for as long as the income loss continues, provided the loss of income is due to the previous illness or accident. Some contracts have a recovery provision that pays a benefit for six months or a year. The best contracts continue benefits to the end of the benefit period, often to age 65.

Use these examples when explaining the clients need for DI. For many people, including the residual rider makes sense–because it provides a benefit for types of disabilities they could envision having.

Another approach is to use insurability options to point out the need for DI now and in the future. To illustrate, ask your prospect if his or her parent, uncle or friend of a parent is in better or poorer health than himself or herself.

Here again, the likely answer is yes. We all know others who have or could become disabled and they are often older than ourselves. So, ask your prospect if he or she thinks that person could qualify for a DI policy. Then point out that someday, that person could be himself or herself.

Inform your prospect that its best to take advantage of ones good health today and to add options that will allow purchase of more coverage in the future. Explain that election of a guaranteed physical insurability rider will make this possible.

The keys to this sale are:

  • As one ages, the likelihood of qualifying medically, at standard rates, decreases. Unfortunately, when one is in peak earnings years and most needs coverage, it is often difficult to qualify for coverage. Purchase coverage when young and healthy.
  • Add options so that the insured can purchase additional coverage as income increases. That way, one only need qualify medically once, when young and healthy, and then be able to add coverage as the need arises without proving physical insurability.

Activities of Daily Living riders provide yet another way to address needs.

Many prospects, especially higher-compensated individuals, desire a higher level of coverage than they are able to obtain. This is particularly true of physicians, as many insurers have lowered the issue limits for physicians.

In response, some insurers have introduced an ADL rider as a way to issue additional coverage, over and above maximum issue limits. (The ADL definition of disability is like that found in long term care policies–the inability to perform two or more activities of daily living.)

The premium for the ADL rider is significantly less than a comparable amount of base coverage, making this a way to reduce the cost of coverage. The real benefit, however, is that it can boost the replacement of income ratio, particularly for highly compensated individuals who “max out” on traditional issue and participation limits.

There are still other valuable riders and options you can use to illustrate DI protection at work. Dont just recite the features, though. Use actual examples of claims you have seen. Then explain how these riders can personalize the coverage to meet your clients own needs.

Paul G. Wesling, CLU, is director-DI market development and sales at The Union Central Life Insurance Company, Cincinnati, Ohio. His e-mail is pwesling@unioncentral.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 2, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.