Agents Need To Penetrate The Fog Of DI Design

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In Errol Morris acclaimed film documentary “The Fog of War,” former defense secretary Robert McNamara talks about the inherent difficulty of making decisions about a war that is thousands of miles away. War is so “utterly complex,” he says, that seeing all of the fundamental pieces is like navigating through a fog.

As a result, key elements of information necessary to make the right decision will be hidden from view, leading to erroneous choices being made. Wartime mistakes cost lives. What do financial mistakes cost?

Lets say an advisor is working with a client through the fog of financial planning. Its a large playing field, with many variables to consider. Needs are addressed. The advisor uses the 401(k), life insurance, health insurance and mutual funds as planning solutions. But one element remains hidden from view. This is the individuals ability to generate the income that pays for all this planning.

Lets say a disability occurs later that prevents this individual from working. Income grinds to a haltand so does the plan. Money is a luxury now; the client uses it for key expenses like mortgage payments, but the amount available may or may not be enough. Soon, livesand standards of livingare altered. All of this is preventable, but the client and the advisor have to see it from the beginning, not lose it in the mist.

Why does disabilityand its solution of disability income insuranceoften get lost in the murky haze of planning? Disability insurance is, in its own way, “utterly complex,” too. While the need is easily recognizable if explained, the product itself contains a multitude of moving parts that easily can confuse an agent or prospect, or both.Occupational classifications are based on job duties, type of field, white- or blue-collar responsibilities, business ownership, years on the job, number of employees and, sometimes, income.

Policy benefit levels are based on income, which can consist of salary, bonus, pension contribution and other fringe benefits. Definitions of disability dictate how one becomes eligible for benefits, and the language is both varied and vague. Medical conditions are carefully underwritten. In fact, it may be easier to walk over Sherlock Holmes moors looking for the hound of the Baskervilles than to read and digest a DI underwriting guide.

The fog of DI frequently has prevented many agents from tackling this issue and many prospects from seeing its importance. However, because one extended illness or injury can derail an otherwise solid financial plan before it reaches its destination, DI insurance simply must be considered when constructing any financial plan. The prospect must understand the need. It is not necessary to delve into every single bit of DI detail with the client, however. A healthy percentage of those details may not apply to the individual, and little will be accomplished other than creating confusion. If that happens, perplexed people will not buy this vital protection.

What does the agent need to do to solve the prospects need for this protection of ones financial plan properly? Understand the essentialspenetrate the fogof benefit design (including disability definitions).

This will require some homework. Take a disability course for continuing education credit, for example. Ask a DI carrier (or two) for some introductory material. The best strategy is to take DI 101 first; then start to implement this knowledge in your everyday work.

Lives depend on it. I know, that sounds like a Tom Clancy thriller tag line. But anyone who has seen what happens to families when the disability protection element is overlooked and an injury or illness occurs, vows to never lose DI in the fog again.

is president of Sadler Disability Services Inc., Ormond Beach, Fla., and author of “Disability Income: The Sale, The Product, The Market” published by The National Underwriter Company. His e-mail address is sadlerds@aol.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 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.