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Practice Management > Building Your Business

Building a Disability Insurance Practice: One Producer's View

By Jamie K. Fleischner

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When I first started in the insurance business, I was young, hungry, and searching for prospects. I was still in college, and most of my peers were not good candidates for life insurance — none of them were married, or had dependents. Most of them were well-educated with great earning potential but were in the very early stages of their careers.

I soon learned, however, that these prospects made great DI clients. They were young and healthy with many years in the workplace ahead of them. They had invested their resources in their careers with hopes of an affluent lifestyle in the future. This future lifestyle needed to be protected, and I was able to help them early on and build long-term relationships.

A niche insurance practice was born.

Years later, my practice has blossomed. These clients — and the ones who followed — grew into successful professionals. Most of them got married, had children, and became my life insurance clients, as well. Today, I continue to work with these clients and other young professionals. My practice is stable, grows each year, and provides me with a great renewal stream and referral source.

I have helped clients with their disability claims. I’ve watched the disability insurance plans that I implemented provide an essential safety net for clients’ economic welfare and give them peace of mind so that they could focus their energy on recovering, and not on how to pay their bills while disabled and out of work. Being able to really help my clients during their most vulnerable moments has brought me deep professional satisfaction. I consider myself fortunate to be able to have built my career from a disability insurance perspective.

Building awareness — and your practice
This May, the LIFE Foundation is once again devoting an entire month to promoting the importance of disability insurance to the public. In addition to creating public awareness, LIFE’s initiative is also vital to increase the prominence of disability insurance among the insurance agent, and broker, community.

By helping your clients acquire disability insurance, you are fulfilling an essential need by protecting them against severe economic distress caused by their loss of income due to disability. Statistically, individuals have a roughly 1 in 3 chance of suffering from a long-term disability between the ages of 30 and 65, according to the Social Security Administration Fact Sheet released Jan. 31, 2007. This is a much greater probability than the chance of dying during the same period of time.

Most Americans rely heavily on their earned incomes and are unable to go very long without a paycheck before their financial world collapses. Especially in today’s difficult economic landscape, we see firsthand what happens when someone loses their job. The media is replete with stories about the devastating effects that job loss can have on finances and relationships. The same disastrous situations can occur when someone loses their income because of a sickness or injury — but thankfully, DI provides a solution to this risk.

DI keeps on giving
Incorporating disability insurance into your practice can also be beneficial to your business. DI commissions are high compared with other types of insurance, and renewals are among the best in the industry. Since underwriting can be initially difficult and premiums are locked in and guaranteed for the client, disability insurance policies tend to stay on the books without being easily replaced by competitors.

Furthermore, as your clients grow more financially successful over time, their need to protect their success also grows, giving them a strong incentive to increase their disability policy’s coverage by exercising guaranteed increase options in the future. This provides excellent new sales opportunities for you without the need for medical underwriting. As your clients prosper, then, so does your business.

A prospecting tool
Approaching consumers from a disability insurance perspective may actually increase your potential base of prospects. People who depend on their incomes need to insure themselves whether they are single, married, or divorced. Life insurance prospects tend to have dependents. As many individuals are waiting longer to get married and start families, they also tend to delay the purchase of life insurance.

Disability insurance can open new markets and different types of prospects to supplement your existing business.

A satisfying business
The most rewarding reason to focus on disability insurance is the beneficial effect you can have on your clients’ lives during their most difficult times. I have had several clients experience disability claims that range from a temporary loss of work to more severe, life-changing, and permanent disabilities. Without exception, they are traumatized by their loss of ability to work and provide for themselves and their families.

I have seen the positive effect that disability benefits can have for my clients. They no longer need to fear the economic effect of their disability and can concentrate on the physical and mental well-being of themselves and their families. I feel a great deal of pride and personal satisfaction knowing I have truly made a difference in their lives.

Jamie K. Fleischner is the president of Set for Life Insurance, an independent brokerage specializing in disability and life insurance. She can be reached at [email protected] or 888-553-3559.

Getting Started with DI

How to find prospects

  • Age. DI becomes more expensive as people age. Furthermore, as people grow older, they tend to have more health problems, which can disqualify them from coverage. Ideally, your prospects will purchase their policies between the ages of 25 and 45.
  • Income. People with greater earning potential make better DI candidates. If their income is too low, they will pay a disproportionate amount in premiums for their coverage. Lower-income individuals may also have more of their income covered through a group policy. In contrast, people with higher incomes need more benefits and will have a lower proportion of coverage through an employer’s group plan. They are also morewilling and able to pay premiums to cover their risk.
  • Occupation. Policy benefits, definitions, and premiums are determined by occupational class. A blue collar worker — such as a plumber — will have a different (and more expensive) policy than a white collar worker — such as an accountant — since the blue collar worker is considered a higher risk. Some of the best rates and most liberal definitions available are for such white collar professionals as attorneys and engineers.
  • Health. DI underwriting is among the mostdifficult in the industry. Companies will look at clients’ medical history closely since they only have one chance to underwrite the policy. Therefore, if your client already has significant health concerns, they may not be a good candidate for individual DI. However, it is always worthwhile to contact your insurer’s underwriting department to determine whether a specific health condition can be excluded, or if coverage can be offered regardless of the health condition but with a shorter benefit period (e.g., a five-year benefit or a benefit to age 65).

How to prepare

  • Determine your ideal candidate and contact clients and prospects who fulfill that profile.
  • Search your network to identify people who could be centers of influence and provide you with referrals.
  • Educate yourself as much as possible. Take an LUTC (Life Underwriter Training Council) class, or find a mentor in your office or community who specializes in disability insurance.
  • Learn about the products you have available to you and get to know them well. Policies can be complex. It is important to be well versed in the contract language.
  • Use resources such as, the LIFE Foundation at www.lifehappens.org or the Council for Disability Awareness at www.disabilitycanhappen.org. These nonprofit organizations can help you find statistical information and quality handouts to give to clients.

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