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Riders Appeal To Clients Who Just Won't Buy Traditional DI

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Up until a few decades ago, any producer would have been hard pressed to convince baby boomers that they weren’t invincible. However, now that many boomers have come to the realization that they do indeed have a limited time on this earth, it’s still an uphill battle for insurance professionals to communicate the real need for disability insurance.

The fact is, according to a 2007 study by the Council for Disability Awareness, Portland, Maine, more than 80% of workers believe their chances of becoming disabled are far lower than actual statistics report. At the same time, the number of disabled workers in America has risen 35% since 2000.

So how do you bridge the gap between boomers’ perceptions and the reality? Suggest a disability income rider on a life insurance policy.

DI riders are for consumers who want to protect themselves against the loss of income as well as against the loss of life. The value of the DI rider is that, in most cases, coverage can be added with no additional medical underwriting, making it easy for the customer to obtain coverage, which can be a powerful business retention tool for advisors.

Disability coverage is an essential part of any financial plan. However, as shown in LIMRA’s 2004 U.S. Buyers and Non-Buyers of Individual Disability Insurance report, there are 2 major factors keeping individuals away from purchasing–or at least purchasing outright–traditional disability coverage: the product’s complexity and its expense.

Even when the DI rider was introduced several years back, a downside existed: Benefits were more limited than that of a traditional disability insurance policy. Additionally, the candidate had to answer more questions in order to qualify.

Today’s DI riders are greatly simplified, more affordable and more robust.

1. Competition has driven many carriers to bring innovative new features and benefits to their disability insurance portfolio. As a result, agents who do their homework can choose a rider with the clearest language, the least limitations, the greatest benefit and also the most flexible products, enabling them to provide clients with truly customizable solutions.

2. New products, like return-of-premium term life insurance, become even more attractive, as does the DI rider option, when consumers learn that both the premiums for the ROP term policy and the disability rider itself are refundable if neither is used during the life of the policy.

3. Another factor that has helped the increase in popularity of DI riders is their expanded availability. More and more traditional life insurance policies include a DI rider option.

4. Finally, many of these policies require no additional questions of applicants, further streamlining the process and making it easier to sell.

For the past several decades, this country has moved from an industrial-based economy to a service- and/or information-based economy. This only adds to the argument against disability insurance coverage. Mr. and Mrs. America don’t expect to get hurt on the job, and of course nothing could happen to them in their personal lives; that’s always the other guy.

However, despite the fact that Americans are leading longer and healthier lives, you don’t need to go far to hear a news report about increased rates of obesity and the complications and conditions that result from it, including diabetes, heart disease and stroke–all leading causes of disability.

Now couple these facts with your client’s specific life goals and needs, both short-term and long-term. For example, a debilitating injury at work, or one suffered due to poor health, can leave clients at a disadvantage in paying for ongoing expenses, including mortgages, car loans, child care, college tuition, the seemingly ever-present credit card balance and potential medical expenses related to the disability. And, if they’re unable to earn an income, it’s more than likely that they won’t be able to keep up with the premiums on the attractive term life policy you’ve just sold them.

There are a great many DI riders out there. That’s why it’s critical for producers to do their homework, primarily by looking into the carriers that offer these products and the way in which they structure them.

Carriers are aware of the complexities inherent in their products and the limited time and resources of the producers to whom they cater; those who will be most successful will make ease of doing business paramount not only in the construction of these riders but also in the hoops–or lack thereof–that producers and their clients have to jump through in order to benefit from this type of coverage.

Flexibility of design and the filing efficiency of riders are key, not only for achieving customer buy in but also for securing fast and efficient underwriting, policy issue and commission payments.

The LIMRA 2004 Disability Insurance report notes that using DI riders as a solution for income protection also adds greatly to the producers’ business retention.

By offering DI riders through existing and/or new and innovative product offerings, producers can leverage the relationship they have with their clients and provide another opportunity to reach out to them in solidifying their overall financial picture, whether it’s loss of life or loss of income.

By offering clients financial solutions versus selling them products, you can gain a customer for life.