Congratulations! You have made the disability income sale, you have a satisfied client and you are ready to close the books and move on to your next customer.
Before you say goodbye, ask yourself if you’ve left any stone unturned. Often, DI clients have other unmet insurance needs that you and they themselves may be unaware of. If those needs include life, long term care and annuity products, then you are in luck–those 3 are a good fit with DI.
There are numerous strategies for cross-selling life, LTC and annuity products with disability income insurance. The next time you make a DI sale, try this approach:
“Mr. and Mrs. Prospect, my specialty is not just income protection. I also specialize in evaluating people’s financial planning needs. When I return with your income protection policy, that’s what I’d like to do. I’ll take a few minutes to look over what you already have and make sure all your needs are covered. OK?”
Then be sure to do it.
People need life insurance for much the same reason they need disability coverage–to protect their family’s lifestyle.
DI helps people maintain their way of life when their income stops or when their income is reduced. When a family member passes away, that person’s income is lost forever. What happens to the family’s lifestyle then? That’s when life insurance comes into the picture.
Your empty-nester DI clients also may have an unmet insurance need. Many of your boomer DI clients may have purchased term life insurance to cover their needs until their children left the house. If they didn’t “invest the difference” between term life and permanent life when they purchased their term life policy, the cost to renew their term insurance may help them see the wisdom of permanent insurance this time around, particularly if they’ve had a change in health status.
Remember to highlight that permanent life insurance provides:
o Safety of principal.
o Tax-deferred growth at competitive interest rates.
o Cash accumulation.
o Lifetime protection at level premiums.
o Flexibility to change the plan.
o Easy access to their money through policy loans or withdrawals.
o A means to pass on a substantial lump sum of money to their heirs or a charity.
o An immediate increase in the value of their estate and allows their recipients to receive the benefits tax-free.
Talk to these folks about whole life, guaranteed universal life or single premium life to meet their life insurance needs. Their children may now be gone, but the need for life insurance remains.
Long term care
Sometimes it’s hard to know how to make the transition to a long term care discussion. Here are a few questions that can help:
o “Mr. and Mrs. Prospect, what percentage of your retirement assets have you set aside to pay for long term care services?”
o “Your DI coverage meets your current needs, but are you concerned about the impact a chronic illness would have on your retirement savings?”
o “If it were necessary to increase your spending by $3,000 or $4,000 per month (to pay for long term care services), would that be a concern to you?”
The answer to each of these situations is long term care insurance. Emphasize that LTC insurance can help your client:
o Protect their retirement assets.
o Maintain their independence.
o Avoid becoming a burden to their family.
If your clients are over age 65, the need for an individual LTC insurance policy may be obvious. They know they may need help as they age and they want to be able to pay for any long term care expenses without draining their retirement savings or becoming a burden on their family.
But what may surprise them: if they’re 60, 55 or even 50 years old, they should consider adding LTC insurance to their portfolio. This is because the need for LTC services can arise from a serious accident or illness. And if that happens, how will they pay for the care they need?
Long term care insurance is the answer. Plus, if they purchase LTC coverage at a younger age, the premiums they pay will be lower than if they wait to purchase the coverage. Also, changes in health status later on may make them ineligible for LTC coverage when they do turn 65.
Annuities can help your clients manage one of their fundamental concerns–outliving their savings. Annuities can offer guaranteed lifetime income payments, which give your clients:
o Freedom to fulfill their retirement dreams.
o Financial peace of mind.
o Flexibility to use their cash however they choose.
When you talk to your clients, position annuities as protection against life’s “what ifs.”
o What if I die? Deferred annuities provide a death benefit.
o What if I outlive my income? An annuity can guarantee income for life.
o What if I become terminally ill? Many annuities offer waiver of surrender charges for terminal illness.
o What if I have to go to a nursing home? Some annuities offer waiver of surrender charges if you become confined to a nursing home, and some companies are even beginning to offer LTC riders on annuities as well.
Another successful strategy many agents are using is to show clients how an immediate annuity can fund one or more LTC policies.
For example, instead of spending down assets to qualify for Medicaid, you can suggest your clients use a portion of the assets they were willing to give away to purchase an immediate annuity. They can then use the annuity payout to cover the premium on an LTC policy.
Agents are missing the boat if they pass up the opportunity to write ancillary business with their existing clients. These people already know and trust you, and they’ll be open to talking with you about other products.
Make a commitment to start having this conversation with every single client. You’ll be helping people protect themselves and the ones they love while maximizing the value of the service you provide.
Bradley Buechler, FSA, MAAA, is vice president-product performance for individual health product lines, including disability income lines, at Mutual of Omaha, Omaha, Neb.