How to Sell Disability Income Insurance

Your Guide to Becoming a Top Producer in a Revitalized Market

Jeff Sadler

• Publisher: The National Underwriter Company
• Year: 2012
• Print ISBN: 9780872186361
• eBook ISBN: 9781938130113
• Topic: Business
• Subtopic: Insurance
• Index: Business

The key to better serving clients while increasing sales in the disability insurance market. Learn how to teach your clients about the options available, determine their needs, and choose products to meet those needs. Show your clients that they need more disabilty income protection than an employer can provide. Present disability income coverage as a wealth preservation vehicle. Explain Social Security and Worker's Compensation limited disability income protection. Build the bridge to future long-term care sales.

Part One: The Disability Income Need

“Money cannot buy health, but I’d settle for a diamond-studded wheelchair.”

– Dorothy Parker

Key Concepts

1. Consumers are generally unaware of the disability risk.

• There is a greater chance each year of a disability than death.

• One out of 18 mortgages is not being paid because of a disability to the mortgage holder.

2. Disability is money going out, no dollars coming in.

3. Today’s hot DI prospects are middle income earners, women, home-based businesses, boomers, and small businesses.

4. The Americans with Disabilities Act has been narrowed by the U.S. Supreme Court, elevating the importance of private disability insurance protection.

5. Selling DI in a down economy can be simpler because it’s easier for the consumer to see the effect of lost income.

6. Diversify your DI prospects just as you would diversify your financial portfolio.

7. Critical illness insurance is another way to insure the risk of disability.

If I Were A Carpenter …

“John Doe” was a carpenter, married with a wife and child, and finding more work than he could possibly handle in building-mad Orlando, Florida. Despite time away from his family, he often worked weekends, knowing in the back of his mind that it’s better to earn it now as this kind of work could dry up at some point. He and his wife had talked about a second child, and he wanted to make sure there was enough money in the bank for this next step in their lifestyle. What John didn’t count on was the back injury, when he fell from his own ladder while cleaning out the eaves along his home. The pain was excruciating for weeks; he was unable to work for any length of time. The carpenter work on various job sites began to go to someone else, who could be counted on to show up and meet the building deadlines. The money John had put away eventually dwindled down. Frustrated with John’s inability to recover and his deep depression as a result, his wife took their child and moved to Ohio to live with her mother. John stayed in the house until it was repossessed, then began living on the streets, joining a group of homeless people, just trying to get by day to day. He sometimes thinks about what could have been, and what one unexpected back injury had taken from him.

... And You Were A Lady

“You think cancer won’t happen to you,” said a 40-year-old quality-testing analyst for a computer firm in Columbia, S.C. “But sometimes it does, and you have to get from that nightmare point, where they say you have it, to a point where you accept it and move on.” In this case, it was a malignant lump in her breast that had spread to the lymph nodes. She was out of work for nearly a year. During her illness, her employer paid her sick leave benefits for 90 days. She then began receiving long-term disability insurance benefits that she had taken out at work. Even though her income was secure, she was anxious to get back to her job. Doctors did not want her to hurry back to work, and the insurance carrier was wary of too early a return. But they constructed a work schedule for her, graduating from part-time, as little as 10 hours a week – to full-time work in just over six months. Said the claims examiner who worked with the computer analyst, “Many of the disabled people I deal with want to work because it helps them stay focused on something other than the illness or injury.” The claimant said, “I didn’t feel I had to go back to work. I wanted to go back.” The disability benefits made the economic part of the recovery easier, so she could focus on her physical improvement.1

The Financial Planning Gap

“It amazes me that most people spend more time planning next summer’s vacation then they do planning the rest of their lives.”

– Patricia Fripp

You spend weeks, months and years trying to build up your income, putting in the extra time, taking the promotions that come along, all focused on some financial goal: a house, a new car, the kids’ college education, a retirement cottage on the beach. The spotlight shines so bright on these financial objectives that it is easy to overlook the one key element that makes it all possible—the ability to work and earn an income.

Have you ever passed a homeless person on the street and wondered where this individual came from? What sort of bad hand they were dealt that placed them in this unenviable position? There are a number a stories out there like the carpenter’s, people who led a normal life until an unforeseen occurrence turned their lives upside down. Disability is just that kind of life-changing event.

In today’s performance-based economy, few Americans feel any sense of security. Bruce Springsteen sang about vanished dreams due to the country’s floundering financial times in his legendary song “The River.” But disability can be permanent unemployment: when no earned income is projected for the future. Imagine the bills, the loss of a home, of savings, of college funds, of prom gowns, and wedding dresses. No more trips to McDonald’s after little league games. The stress on a marriage and a family is overwhelming.2 A lifestyle can be altered overnight

Consumers simply aren’t aware of the disability risk. They receive their medical benefit booklets from work, take them home, may or may not look at them, and assume they have adequate coverage. Individuals are conditioned to think about medical insurance benefits, but not about what happens to income should an injury or illness extend for a protracted period of time.

Nearly half of the 1 million Americans who filed for bankruptcy protection in 1999 did so after being sidelined by an unexpected injury or illness.3

Despite this relative lack of urgency about the issue, the risk is real. A Conning Research study found that 30-year-old women have a 57% chance of becoming disabled, and only a 16% chance of dying before age 65.4 Yet the focus of most people when they discuss employee benefits with their employer is health and life insurance.

Insurance coverage that can supply a significant portion of an individual’s pay during a disability is not a mandated coverage. As such, people don’t think to ask for it. They know they need health insurance (although this isn’t mandated, either.) They understand they have to secure auto insurance to put a car on the road. They accept that they must obtain homeowner’s coverage if they want to be assured of obtaining a mortgage from a lender. But if they do not protect their income, there are no immediate consequences—until a disability happens.

Conditions that used to kill people have evolved into “disablers,” thanks to the wonders of modern medical technology. This would not necessarily be an issue if everyone had enough cash on hand to cover the disability contingency. But the typical U.S. citizen over the past 13 years has had a decline in personal savings rate and an increase in percent of debt when compared to disposable personal income.5

“In a two income family, the odds are two in three that one of the earners will be put out of work temporarily or permanently. Working couples with no disability coverage should consider putting money into a disability package before they buy more stocks.”

– Peter Lynch, Manager,

Fidelity Investments Magellan Fund,

during the height of the bull market, 1999

“Being a two-income family is the best disability income protection you’ll ever need, because if one of you is disabled, the other can work and make up the money lost.”

– Charles Givens,

from his best-selling book,

Wealth Without RiskThe Checkbook Story

The Checkbook Story

Who should consider disability income insurance? Everyone that works and earns an income should become acquainted with the concept. We’re all vulnerable. It just isn’t easy for healthy people to think seriously about a possible unhealthy future.

One of out 18 mortgages is not being paid because of the disability of the mortgage holder.6

One way to illustrate the potential financial disaster that could lie ahead is to take out a checkbook. I know, I know, these are much harder to find these days. Perhaps you can pick one up at a garage sale or an antique store for illustrative purposes only. Many people do their banking online today. So whether you use a checkbook or pull up a sample Quicken page on the computer, the idea is the same.

Flip through the pages of the checkbook. Whom do you pay the mortgage or rent to? Who is the utility company? Who is the phone carrier? Whom do you pay for the car each month? Chances are the consumer may have some of the same bill payments and creditors as you do. It’s then easy to g...

Table of contents

• Dedication
• Acknowledgements
• About the Author
• Part One: The Disability Income Need
• Part Two: Working With A Client
• Part Three: Which Product Should I Choose?
• Part Four: Knowledge is Power
• Glossary of Terms