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Life Health > Health Insurance

Income Protection and Financial Planning

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What You Need to Know

  • A car needs an air bag.
  • A plane needs oxygen masks.
  • A client needs a way to survive loss of the ability to earn a paycheck.

Your clients have worked hard to manage their money and plan for their future, but is their financial plan protected? Since March 2020, many Americans have experienced uncertainty stemming from the coronavirus pandemic and are now looking for ways to protect themselves from other unplanned events. For example, would your clients be able to fund their financial plan if they became seriously ill or injured and couldn’t work?

Income protection insurance — or individual disability insurance (IDI) — is a vital addition to any financial plan. It will pay monthly benefits to replace lost income if your clients are unable to work due to sickness or injury.

IDI is an important safety net that can provide peace of mind. By adding income protection insurance to your practice, you can ensure your clients are protected so that an unexpected event, or disability, doesn’t derail their financial plans.

Consider these three reasons to recommend income protection insurance to your clients in 2022:

1. Income protection is critical.

Your clients have seen the very real impact this pandemic has had on family members or friends — or maybe even themselves — and may be seeking ways to feel more secure. Just as this pandemic occurred out of the blue, so too can an injury or illness that prevents your clients from being able to earn their usual paychecks. Show them how income protection insurance will help allow them to cope financially if an unanticipated disability leaves them unable to work for an extended period of time.

2. Income protection insurance will help you stand out from the competition & retain clients.

As a financial advisor, you help your clients plan for the future and achieve their goals by developing a solid financial plan. Part of that work includes identifying and mitigating any risks to achieving that plan. However, if you haven’t addressed the potential risk of an illness or injury, you may be leaving your clients — and yourself — exposed.

Your clients’ income not only pays for their financial plans, it also allows them to engage with you and your services. While many advisors focus solely on asset management, you can differentiate yourself by making sure their plans will continue to be funded no matter what happens. Doing so will ensure their plans for the future stay in place and they can continue working with you for years to come.

3. Selling income protection insurance can be lucrative.

Not only will you be doing right by your clients, ensuring they’re protected against income loss due to an injury or illness, you can also earn a lot by selling income protection insurance. First-year commissions are typically 50% of a policy’s annual premium, and renewal commissions typically pay another 5% annually for up to ten years. And income protection insurance has a very high persistency rate with policyowners keeping policies for many years. Income protection insurance can add an additional income stream for you, while providing much needed protection for your clients.

Ready to offer income protection insurance, but not sure where to start? There are plenty of resources available to help. Reaching out to a carrier for insights on products is a good first step. Carriers have marketing materials that can provide basic information to help start the conversation as well as product guides and competitor comparisons that can help you choose a policy that best fits the needs of your clients. Agencies that specialize in income protection are another resource that can help you get up to speed on income protection insurance and offer tips on how to bring it up with your clients. Or, partner with another advisor who specializes in income protection. An expert can help you find solutions to meet your clients’ income protection needs.

No matter how you add income protection insurance to your practice, your clients will appreciate that you’re helping protect them from a possible illness or injury that could upend their plans for the future.


Tawni Johnson (Photo: The Standard)Tawni Johnson is an individual disability insurance sales manager at The Standard.

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(Photo: John Disney/ALM)