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Portfolio > Economy & Markets > Fixed Income

Income protection: The key to unlocking your sales potential

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I have the greatest job in the world. Every day, I help producers unlock their sales potential by sharing the advantages of selling income protection solutions — specifically, individual disability income insurance (DI).

After all, what other insurance product:

  • Protects everything clients have in life, including other solutions they’ve purchased from you?
  • Is not marketed by most other producers? Income protection offers you a perfect opportunity to become a trusted resource for all your clients’ financial needs.
  • Is something almost everyone in the working population needs? According to the U.S. Census Bureau, there are more than 55 million people in the United States, between 25 and 64, earning $40,000 or more annually. Only 7.4 percent have individual disability policies, according to LIMRA. That means 93 percent of workers don’t have enough income protection.

Now is the perfect time to bring clients’ attention to income protection. The country’s recent economic struggles are still fresh in many minds. Americans know the threat of losing their income first-hand. They understand how being unable to work and earn an income could dramatically change their financial situation. More than ever, these individuals are taking risk protection strategies to heart and are looking for ways to minimize the impact of a financial disruption.

Historically, most DI sales were made to high-income-earning occupations like attorneys, dentists and medical professionals. Now, more carriers are helping producers reach new and untapped market opportunities, such as workers earning less than $100,000 a year and occupations that show promise due to their income-earning potential, business ownership and ability to provide referrals.

Bring it up

Most producers don’t talk about income protection. That’s unfortunate for clients, but fortunate for you. You can be the superhero who saves the day by helping your client protect his or her most valuable asset: the ability to work and earn an income.

Nearly anyone in the working population is a good candidate for income protection. Here are a few ways to start the conversation with a prospect.

  •  “Can you afford to retire tomorrow? No? Not many of us can, but that’s what happens when you become too sick or hurt to work and can’t earn a paycheck.”
  • “We’ve all seen fundraisers held for someone who’s ill or injured and needs financial help. I know I have, and I don’t want that to happen to you. Let’s make sure you have a Plan B in place, so you can rely on your own protection strategy and not others.”
  • “Life is unpredictable. We don’t know what tomorrow will bring. But, you can prepare for the unexpected. That’s why we have risk protection. Think about the things you insure. Which one of those things is your most valuable asset? It’s not your car or your home — it’s your paycheck. If you’re not protecting that, you could be putting millions of dollars on the line.”
  • “Do you know anyone affected by a layoff? How did that person make ends meet? What would you rely on if you were no longer earning an income? While people can’t protect their income from the threat of a layoff, they can protect it from the threat of an illness or injury.”

Don’t be afraid to tie in our country’s recent economic struggles to drive home the importance of risk protection.

The best advice I can give is to simply ask clients about their income protection strategy. Most people don’t realize they have an income-protection gap. Take, for instance, your clients who have group long-term disability (LTD) through their employer. Most of them probably couldn’t tell you what the benefits are or how they work. Some may not even realize they have benefits at all! If they do know the details of the coverage, they typically don’t realize they still likely have an income-protection gap.

Nearly all group LTD plans replace 60 percent of an individual’s income, up to a set monthly cap — before taxes. To show clients what this means, ask them to take their income and divide it in half. That amount is roughly what they could expect from their group benefits after taxes. It’s a nice start, but for most, not nearly enough.

Keep it simple

The most common objection to selling income protection I hear from producers is that it’s too difficult. It’s not! And it’s especially not complicated when you “Keep It Super Simple,” or KISS.

During the sales conversation, talk to your clients about the need for income protection. Then describe what an individual DI insurance policy does — provide a monthly check in the event of an unexpected accident or illness.

During those initial talks, don’t get caught up in the details. I coach producers that there are five things clients should know about their DI insurance policies.

1. When will I receive benefits?

Explain that they receive benefits after satisfying the policy’s elimination/waiting period. A 90-day elimination period is common, but they can choose a longer or shorter time period. The time period affects the premium, so work with clients to figure out what’s right for them.

2. How long will I receive benefits if I become disabled?

The answer to this depends on the policy’s benefit period duration. Five-year benefit periods are fairly common, but typically, clients should purchase the longest option they can afford. (Most carriers offer coverage until age 65 or 67.)

3. How much benefit should I buy and how easy is it to get coverage?

A good rule of thumb is that clients should consider buying as much as they can afford, up to the carrier’s maximum benefit limits. These limits can vary based on the client’s occupation, income and existing disability coverage. For ease of getting coverage, some carriers have underwriting programs that have fewer underwriting requirements. With these programs, benefits are typically capped. Depending on the client’s income gap (and budget), full underwriting may be necessary to obtain the coverage amount they need.

4. What will the coverage cost?

One of the best aspects of individual DI insurance policies is that they can be customized to meet clients’ unique needs and budgets. For instance, a typical premium for a high-income earner can be less than what he or she might spend on his or her electronic devices each month. For a middle-income earner, coverage can cost less than a daily cup of premium coffee picked up from the coffee shop. Generally, coverage should cost between 1 percent and 3 percent of a person’s annual income.

5. How do I qualify for benefits?

This question relates to a critical part of the policy, something clients should understand well — the policy’s definition of disability. This sets the parameters for when a client qualifies for benefits. It’s important to do your due diligence and make sure clients are protected in the event of either a total disability or a partial/residual disability. Also, look for a carrier with a history of excellent claims service. After all, at the end of the day, your client is buying a promise that should be fulfilled. Make sure the carriers you work with offer superior customer service.

One more bit of advice? Proposals don’t sell insurance, you do. Once your client understands the importance of income protection and sees the need, then you can turn to a carrier’s proposal system to share the details of the coverage, such as features, benefits and price. Plan ahead and bring at least three scenarios for the client at varying price points. I recommend starting with the Cadillac/deluxe version and then modifying as appropriate.

Give these ideas a try to find the keys to your sales success. You’ll find that selling income protection is easier than you thought and the market opportunities are virtually limitless. If your clients are earning income they rely on, chances are they need income protection. Remember: ask clients and prospects about their income protection plans and do it with a KISS sales approach!

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