Agents who neglect to sell disability insurance often cite one of two reasons: They don’t want to scare away the life insurance sale, and they’re not sure how to bring disability discussions into the post-life insurance sale.
Most professional life insurance specialists sell life insurance emphasizing one of several “needs.” The first set is personal needs, and can be broken down into one of two common names or uses: financial planning, or estate planning.
Life insurance in the personal needs category is geared toward building replacement cash flow for the family in the event of a catastrophic loss of the primary producer of income in the household. This cash flow helps maintains the family’s daily living standard and protects assets built by the family over time.
The second set is business needs, which can also be broken down into two areas: business planning, or business interruption protection (e.g., for funding buy-sells, key person, etc.).
Here, life insurance is used to produce replacement cash flow for a business in the event of a catastrophic loss of a valuable business asset (e.g., the individual, owner, key person, etc.). This cash flow helps maintain the business’ daily activities and protects assets built by the business over time.
Whatever sales pitch you use, life insurance is all about generating money after the loss of a money-maker.
Along those lines, what are some key reasons for selling disability insurance? That’s pretty simple — either for personal needs, when conducting financial planning or estate planning, or for business needs, when conducting business planning and business interruption protection.
Sound familiar? That’s because the sales approach for disability insurance, compared with life insurance, is the same story, because the products address the same basic need. This is what’s referred to as the “two-fer” approach.
While it can be difficult for producers to wrap their minds around the idea of setting up the sale of two products at the same time (life and disability), to the producer the cost of adding DI to a life sale is basically zero, seeing as how both products are designed to cover the same exposure. You have already established the need for the insurance when pitching life insurance; now, you just have to explain that your client needs to look at covering the same problem — income loss and threat to assets — from two different causes: a death and a disability.
Death and disability are similar in two ways:
- You generally can’t control when either happens
- They both cause the cessation of cash flow
You cannot control the timing of a death or disability. It is impossible to say “I’m sorry, we’re in the middle of year-end budgets, family holiday, or whatever, so you just can’t be dead.” Any type of planning undertaken by a family or a business to address these two issues must be done in advance. Life and disability insurance are both available for pennies on the dollar and can both help guarantee that assets are protected and cash flow continues so that a business or a family can go on.
The bottom line is that if you have a client buying life insurance from you, you should have the same conviction for the sale of disability insurance. It’s the same need, same sales call.
Thomas R. Petersen is the vice president and chief information officer for Petersen International Underwriters. He can be reached at [email protected] or 800-345-8816.