Are you leaving business on the table? You probably are if you’re not helping clients protect themselves against an illness or injury that prevents them from working. Here’s how I’ve found success in making individual disability income insurance (IDI) an integral part of my business.
Income protection is part of a holistic approach
If you take a holistic approach in helping clients meet their needs, then you know that involves developing and presenting a variety of financial solutions, such as:
- Survivor income for loved ones at a client’s death, and
- Saving and investing for future needs, such as a child’s college education and retirement.
Another critical need, but an often-neglected one, is providing “living” benefits to help clients cover daily expenses if they become too sick or hurt to work. Many advisors don’t feel comfortable bringing up this possibility (mostly due to unfamiliarity with product options) and most consumers don’t know to ask for it.
Income protection is something new you can bring to the conversation. I see it as a real opportunity to help clients develop a comprehensive protection plan — no matter what life brings. It also helps you stand apart from competitors who aren’t discussing this foundational financial element.
Offering disability income insurance is an excellent way to satisfy a very real client concern — “what will happen to me and my family if I can’t work and earn an income?” Addressing this issue with clients is something you can feel good about, especially if the unfortunate does happen.
With the hectic lifestyles we all lead these days, it’s always a challenge getting people to sit down and discuss these needs. I’ve found that, if I’ve done a good job in laying out how I can help them achieve their financial objectives and they realize the importance of protecting themselves, people will make the time.
If you’re not currently selling IDI, the first step is to make a commitment to discuss the need for income protection with all appropriate clients. Don’t make assumptions about affordability or existing coverage. After all, today’s individual policies are increasingly more affordable and can typically be structured to meet a variety of client needs and budgets. And if your client is fortunate enough to have group coverage, remember that benefits are typically taxable. This often leaves a large portion of income unprotected, especially for high income-earners.
Why I sell income protection — my story
One inspiration for my strong belief in disability income protection was my father. He was in insurance sales all his adult life and owned his own agency. At age 62, that all changed with a diagnosis of early-onset dementia. The abrupt end of his career was devastating, but fortunately Dad had done a lot of planning (just as he advised his clients to do).
The life and disability income insurance and investments he had purchased made the transition easier for both him and my mother. I witnessed this first-hand when I took time away from my then-current job to help him exit his business.
Growing up I had seen the value of my dad’s profession, but this “up close and personal” look really opened my eyes. The various insurance products, including disability income protection, made such a difference during this difficult time. I decided to change careers and become an advisor like my dad. Over time I developed a passion for helping others, and in particular, making sure their income protection houses were in order. And, you can bet that I’m protecting myself as thoroughly as Dad did.
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.