Guidelines To Follow When You Have An Impaired Risk DI Client

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Selling an impaired risk disability income insurance policy is not unlike selling any other DI policy. The basic rules are the same, if not more significant, when you are working with a client in the impaired risk market.

Remember that you are not just making a sale. What you do, or dont do, can directly impact the lives of your clients and their families for many years. Here are some guidelines to help you fulfill your clients needs and, in the end, make you their trusted financial partner.

Avoid assumptions. Many agents go into a DI sale making two assumptions. They assume they already know what type of policy to sell and how much DI coverage the client needs even before they ask a single question.

In fact, to a great number of agents, a product is not worth buying if it is not non-cancelable, or at least guaranteed renewable to age 65, and does not have the purest own occupation provisions. While offering such coverage may be a noble approach if your prospect list is made up of perfect people, the reality is that not everyone qualifies for, or even needs, the premier DI contract.

The best way to avoid the assumption hazard is to talk to your client. Learn about the family, financial situation and needs, and health before you ever try to make a sale.

In the process, help the client understand that the largest burden of risk in regard to disability lies in the first two years of a claim. Those two years are also the time that disabled individuals adjust their lifestyles, change their buying habits, and learn to cope with the changes in their lives. This discussion should help you identify the clients own needs.

Be thorough. Impaired risk insurance products are built to cover people with illnesses. The carrier already knows your client has health issues, or you wouldnt have submitted an application. So provide the information the carrier needs to assess the risk.

Remember, even if a carrier claims there is “no medical underwriting,” at some point, every client is underwritten. Whether at the time of application or time of claim, the carrier will underwrite and it will be thorough. You should be thorough, too.

Keep in mind that these products are designed to cover over 90% of applicants. If your clients health is poor enough to be in the other 10%, chances are that a trail of medical records exists that will severely jeopardize the clients chances of receiving benefit. Too frequently, individuals are denied benefits due to omission or fraud for things that would have been covered had they been revealed on the application.

Set proper expectations. Dont promise the moon until you have the facts, and then dont walk away if you discover your client has health problems. Chances are, a solution exists that will solve the clients needs.

Make certain from the onset that the client understands the process and that the application may entail a little extra work related to the medical condition. And yes, do mention that in the end, they may not qualify for the insurance.

If you have done your job correctly, however, even with the worst outcome, you will have not only cemented your relationship but also laid the ground work for developing other non-insured solutions that will protect your clients family in the event of financial crisis.

Sometimes your job is not to make your client happy but to help the client to make difficult choices. If you truly know your client, you will be able to serve as his or her partner in planning–and your client will thank you for asking all those hard questions.

Forget the “impaired” part. I myself am disabled, but I am certainly not impaired when it comes to my work or my obligations to my employees, family and friends.

The term “impaired risk” refers to the risk assumed by the insurance company and not by the individual policyholder. Someone with a history of health challenges is obviously a greater risk to an insurer than a healthy person but, from the perspective of the policyholder, the persons risks in life are the same as those for anyone else.

Cancer, stress, arthritis, diabetes, back trouble or any aliment does not define who a person is, and most people will not like being told they are “impaired.” Be sensitive and supportive.

In sum, as an agent, your job is to help your client plan for the event of a disability. By following these simple guidelines, healthy or not, your clients future will not be impaired if disability strikes.

is sales leader of BISYS-Hanleigh, Dubuque, Iowa, and founder and president of the Disability Income Advisor and Consumer Association. His e-mail is brad.parks@bisys.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 18, 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.