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Adding income protection solutions to your practice

I’d estimate that my practice’s risk protection breakdown is around 60 percent life insurance and 40 percent disability income insurance. It didn’t get to that level overnight, though. Over time I gained knowledge about the products, the markets and the opportunities. Here are some of the key things I learned:

Learn more about available products — When I first started, I knew little about disability income insurance. It’s not emphasized as much as life insurance and investments. Advisors often have to make a concerted effort to get trained on it. I found three approaches very helpful in learning the IDI ropes:

• See what educational materials your carrier(s) offer and if you need more, check out the LUTCF and CHFC programs, as well as industry resources from the Council for Disability Awareness or the Life and Health Insurance (LIFE) Foundation.
• Do joint work with more experienced producers.
• Use your carriers’ wholesalers and support staff to help with case work.

The latter two options proved to be great resources to generate ideas, learn product specifics and develop sales strategies. 

Avoid pre-conceived notions — First, I keep an open mind when initially meeting with clients. I conduct very thorough fact-finding sessions with them, asking a series of questions to determine their goals and objectives. These interviews yield many current and future needs. Essentially, I let them tell me what their concerns are instead of going into appointments with a pre-set agenda.

Second, I try not to pre-judge the level or type of disability income coverage a client may qualify for. Some disability income insurance carriers can make creative offers to help meet client needs, despite perceived underwriting concerns.

Proactively explore adding disability income coverage when helping clients with life insurance — When taking a life insurance application from a client who is a good candidate for income protection, consider submitting a disability income (DI) application at the same time. At the very least, I’ll visit with my IDI underwriter to see how much coverage we could offer the client. That way, when I deliver the life policy, I’m ready to discuss the specifics of obtaining income protection as well.

Finding clients — Finding IDI clients is like finding prospects for other financial products: cross-selling with existing clients and getting referrals from them; obtaining referrals from other financial professionals, such as property and casualty agents, CPAs and attorneys; and networking and being involved in the community.

One of the best aspects of adding IDI to your practice is the endless avenues for sales. After all, almost everyone in the working population needs to protect their paycheck.  That’s a great conversation point for personal financial strategy discussions. I have also found that the business market offers great potential:

• Multi-life DI sales: I like working with employers to offer disability income coverage to their employees.  Worksite sales offer higher volumes and the work is more day-based.  These cases often use a more targeted approach and provide opportunities for streamlined underwriting and premium discounts.
• Business protection and exit planning: Business owners face multiple threats from a disability income — their own or those of a key employee or business partner. In addition to personal income needs, there are concerns about keeping the business open (paying rent, salaries, etc.) and preparing to exit the business if an owner becomes permanently disabled. (If an owner has a buy-sell agreement, it’s often funded with just life insurance, not disability income insurance.) A variety of solutions, including key person, overhead expense and disability income buy-out insurance, can be employed in these situations. If your carrier offers it, a DI product that protects the ability to save for retirement against a disability is also a great option for executives and business owners.

You can’t eat an apple in one bite

Not eating that apple all at once also holds true when proposing solutions to clients. They may not be able to act on all your recommendations initially. When addressing personal income protection needs, if budget becomes an issue, I typically restate to clients what I heard them say they want to accomplish and then explain the options. This may get buy-in, but if not, we can modify the policy (a longer elimination period, shorter benefit period, etc.) to make coverage more affordable. Purchasing additional coverage later is also an option. I’ve learned to be patient and flexible in helping clients get to the right solution for them.

One last bit of advice

My strongest recommendation for disability income insurance sales is this: Don’t be afraid to have “difficult” conversations with clients. Some advisors shy from asking hard questions for fear of hurting the relationship.

I think it’s necessary to ask the tough questions. It may not be comfortable, but it gets clients thinking. For instance, when talking to the spouse of a single-wage earner, I’ll ask, “If your spouse couldn’t work, what sort of income could you earn?” 

Or I’ll try to personalize the situation by asking, “Who do you know who’s disabled?” or “If you became too sick or hurt to work, who do you know who could pay your expenses for a month or two or even longer?” These thought-provoking inquiries never fail to bring the issue of disability income protection front and center.   

At the core: Don’t forget disability income protection. It offers both you and your clients long-term benefits.