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April 01, 2013 at 03:17 PM
When looking to add new clients to their portfolio, many brokers may be overlooking a profitable opportunity: Executives. Selling individual disability income (IDI) insurance to C-level professionals often can be the ticket to large sales and a reliable clientele.
This niche market is a prime target for IDI plans because C-level executives covered solely by an employer’s group long-term disability (LTD) plan are often at a greater disadvantage than a typical employee. This is due to a group policy’s maximum monthly benefit, which may not cover the executives’ full incomes.
C-level IDI policy sales are rooted in educating executives of this problem, which can pay off for both the client and the broker in the long term. Executives who buy IDI policies have the safety net of guaranteed income protection should they need to take a disability leave of absence. And they can take comfort in knowing they’ve made a smart investment for both themselves and their family.
In turn, selling to this exclusive market is a huge opportunity for brokers, as the earning potential from a sale is quite large and the customer base secure. Informing executives of a need they may not have previously considered can build a strong relationship and establish trust, a move that can open the door to selling to the entire board room.
The problem with group LTD
C-level professionals often are unaware their company’s group policy, while fine for regular employees, may be insufficient for them. This provides brokers with an opportunity to help educate executives on how they can fully protect their incomes and their ability to earn income in the future, a problem many executives may not have considered previously.
As mentioned above, a group policy’s maximum monthly benefit could hinder the level of income an executive would earn when out on disability leave. For example, employees earning more than $200,000 annually would need additional coverage to be as protected as the typical worker, as most group LTD plans offer a standard maximum monthly benefit of $10,000 to $15,000. And a maximum monthly benefit typically does not cover bonuses or incentive pay, which can make up a significant portion of an executive’s annual income.
In addition, benefits from employer-paid group LTD plans typically replace only 60 percent of an employee’s earnings. These earnings are generally taxable, which could bring down that figure even more. IDI policies, on the other hand, are not taxable and pay out the full income amount.
How IDI can help
Brokers can help executives and other high-earning clients fully protect their incomes with IDI insurance products. Target plan participants for these products are those in board-level positions in large corporations or other high-level earners, including doctors, lawyers, architects and accountants. Successful touch points build off the problems identified above: expose an executive’s potential for lost income and identify how IDI coverage can provide this protection.
