Webster's defines "The Golden Rule" as, "Do to others as you would have them do to you." This is not only a good rule to live by, but a good way to run your practice.
Personally, I don't like being sold a product. Most people, myself included, prefer being educated about a product. We like to discover things on our own. With this informed discovery at the core of our sales process, we have a recipe for success in the disability market.
Evaluating your client's needs
Start by making a list of your clients who don't need an income. Take this handful of names and eliminate them from your disability insurance list. Everyone else needs your product.
Next, take a look at percentages. If you look hard enough, you can find the stats to support your stance on just about anything — simply Google it. For instance, if you're in your 30s, some statistics say there is a one in three chance you'll become disabled. The problem with this statistic is that there is only one of you, not three. Because of this, there are just two percentages you should focus on: 0 and 100. Either you'll never become disabled (a 0 percent chance) or you'll definitely become disabled (a 100 percent chance). The question is: do you want to insure against this risk, or roll the dice? Your client's answer will give you an idea of the direction and depth of education your client needs.
I've learned that ignorance can sway your client's decision to purchase disability insurance, which is why education is so important. I have the opportunity to speak to a class of pharmacy students on a regular basis, and I often ask them the following question: "If I told you that we could offer you a disability insurance policy right now with no underwriting by increasing your tuition $500 per year, would you take it?" Not a single hand goes up. I've done this many times over the past six years, and the results are always the same. Then, I explain what disability insurance protects against, and give the students a basic understanding of how it works. I ask the same question again. This time, every single hand goes up.
Keeping things simple
The key to any effective education process is to keep it simple and speak to things the audience understands. I like to use analogies and stories. People remember the stories, not the statistics. Always start with a question that anyone can relate to, such as, "What is your largest asset?" Almost 100 percent of the time, they'll answer, "My home." However, when you define an asset as anything that can provide an income stream, you find that your home is not your largest asset. Your largest asset, especially early on in your financial life, is your ability to make money; if you take this out of the equation, nothing works.
Another analogy that clients will easily understand is, "If you had a machine in your basement that printed $7,000 each month, would you insure the machine? You're not doing this without disability insurance. You are that machine, and if you break down or become ill, the machine stops printing money."
Once you make your point, move on to the basics of disability insurance. Start by asking, "What do you think of when you think of a disabled person?" The most popular answer is "injury." However, the reality is that most disabilities are due to an illness rather than an injury.
Break down for your clients the difference between a blue collar and a white collar plan: Blue collar plans are designed for workers whose jobs entail physical labor, which means they are more likely to suffer from a physical injury. White collar plans, on the other hand, are designed for workers whose jobs require less labor and more mental stress. These white collar policies focus more on stress-related illnesses than injuries.
At this point, I often provide this straightforward illustration: If I walked into any chain grocery store and asked all the employees to gather in the parking lot, then separated them by blue collar, or labor-intensive jobs versus white collar, professional jobs, the majority of the employees would be on the blue collar side. The store owners would design their group disability plan to serve the majority of their employees – the blue collar workers. You could create a different, equally relevant plan for white collar employees if they make up a company's workforce. I often point this out to the pharmacists, because there are few industries that are more white collar.
Next, use a T-chart to break down the difference between a group plan and an individual plan:
| Group long term disability plan | Individual long term disability plan |
| Based on base income only | Based on all income |
| May be partially or fully taxable | Tax-free |
| Flat income benefit | Increasing benefit with COLA rider |
| Coverage can change on an annual basis and is not portable | Coverage does not change on an annual basis and is portable |
| Modified own occupation | Own occupation |
| No riders, or limited riders | Riders: catastrophic, retirement protection, residual partial, etc. |
Keep in mind that group long term disability plans may vary in coverage, as might individual long term disability plans. Educate yourself as an advisor, or add a professional in this area to assist you.
Wrapping up the sale
Once you complete your tutorial and you have confirmed that the client has a good basic understanding of long term disability insurance, it's a good idea to recommend they enter underwriting. Manage expectations by explaining that disability insurance is often difficult to obtain, and that it may take some time for the underwriter to approve the policy. Explain what underwriting entails. For example, you might say, "You'll need to have a physical that will most likely require blood work, urinalysis, and a record of your weight, occupation, driving record, and other factors. It will also require us to fill out and sign an application." The idea behind sharing this list of requirements is to get the client to say "yes" several times. Then, when you pull out the application and ask if they want to take care of it right now, they will be more likely to say "yes" a final time – the most important time.
I use this process with each and every one of my clients. Why? Because if the situation was reversed, I would want someone to do the same for me.
Daniel B. Spickard is the cofounder of Wealth Innovations. He can be reached at 412-391-6700 or dspickard@lfgco.com.
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