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4 Misconceptions Your Clients Have About Disability Insurance

Most consumers believe that accidents are the primary cause of disabilities, but research shows that over 95% of disabilities are not work related; therefore workers’ compensation cannot be used.
 
Here are what consumers tend to believe versus the real facts:
  • 37% have never thought about how they would protect their income if they got sick or hurt.
  • Approximately 42% believe that they just need their sick leave and vacation days if disability were to strike.
  • Their own “personal odds” of becoming disabled are 1 in 100, when in fact 1 in every 4 Americans in the workforce will become disabled.
  • “Cancer is the leading cause of disability.” In reality, Musculoskeletal/Connective Tissue Disorders are the leading cause of disability at 28%, while cancer is the second leading cause at 15%.
As you can see from these statistics, it is crucial to educate consumers about the risk of income loss and how to better prepare for it.
 
Nearly 70% of consumers think that it’s important to start planning for a loss of income at any age – so there’s certainly an opportunity to connect with young consumers on how they intend to plan and maintain their financial independence if an illness or injury prevents them from earning an income.
 
Visit the CDA Website for more information about this specific survey, and contact your DI Sales Rep at to learn more about marketing and selling Disability Income Insurance.
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Helping Clients Understand the Complexities of Income Protection

With the current economic and health challenges in America, many individuals are justifiably concerned about ensuring they protect themselves and their families against the unexpected. And individuals are more open than ever to exploring ways to protect their future.

Advisors are uniquely positioned to help clients through times of uncertainty by offering income protection solutions, such as Individual Disability Insurance (IDI), that guard against an unforeseeable event.

By sharing a few essential details about income protection, advisors can help clients understand the true value of IDI, how it works and who needs it.
 
Communicating IDI Benefits
 
One of the most important aspects to communicate is that Individual Disability Insurance (IDI) can be an effective, long-term income-replacement solution. Just as life insurance pays beneficiaries for a loss, IDI can pay a monthly benefit, tailored to a policyowner’s total income, in the event of a serious illness or injury.
 
People rely on their whole income to maintain their financial security, which includes their base pay, any incentive pay and bonuses. Although many companies offer group long-term disability (LTD) coverage, clients should be aware that it often doesn’t cover all sources of income, and it is often taxable and typically only provides 40-60% of income replacement. It also likely does not cover bonuses or incentive pay.
 
For higher-income earners, Group LTD can be capped at an amount that is much lower than what is needed to replace a client’s monthly income. Should these individuals experience a disabling event, they would still be expected to keep up with their higher recurring expenses. Also, most employer-based disability coverage is only maintained while the employees are working for that employer. IDI is portable income protection, which stays with the individual throughout their career no matter where they work.
 
Everyone has monthly expenses, which often include mortgages, car and loan payments, and other recurring costs. Highlighting that expenses are recurring even in the absence of income can help clients realize how valuable IDI can be for their financial stability. Advisors can help paint the picture for clients that if they are unable to work, these expenses would remain, with possible new expenses arising due to their illness or injury. IDI helps protect the income that clients are using to pay for these monthly expenses, maintain their lifestyles and support their families. This is even more essential during unpredictable events like we’re experiencing now.
 
By providing meaningful solutions that address clients’ individual needs, advisors demonstrate how individual disability insurance can provide valuable protection and increased financial stability for clients.
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Short-Term DI Vs. Long-Term DI

Short-term disability insurance and long-term disability insurance are both designed to provide replacement income to your clients, in the event they are unable to work due to accidents or sickness. The most obvious difference between the policies is the amount of time they are designed to sustain your clients’ incomes.

A short-term policy will pay benefits for a select period up to a maximum of two years; a long-term policy will pay benefits for a select period of a minimum two years, and up to age 65 or even age 70.

Let’s take a further look at the advantages to both policies.
 
Advantages of Short-Term DI
 
Short-term disability insurance pays benefits after a pre-determined elimination period (the number of calendar days after a disabling injury or illness, before the disability insurance policy would begin to pay benefits) has been met.
 
Short-term disability insurance lasts for a shorter, specified period and typically a shorter elimination period or “waiting period” before benefits become payable. The average elimination period is 7 to 30 days. This type of insurance policy is useful for major, but relatively brief disabilities such as those suffered from accidents or non-terminal sickness.
 
Also available is a very affordable short-term disability plan that only covers accidents. These are popular with younger, blue collar workers worried about getting hurt (either on or off the job). The premium is more affordable, as it does not cover sickness – so this should be offered to clients who aren’t as concerned about getting sick, but are more concerned about getting hurt or having an accident.
 
In many instances, short-term disability insurance is only a portion of how clients protect their income in a situation where they cannot work. They may also use their emergency savings, workers’ compensation, paid leave and other forms of insurance in conjunction with short-term disability. But, when these benefits are exhausted (or if they never had them in the first place), short-term disability can provide critically important funds.
 
Advantages of Long-Term DI
 
In the case of a long-term absence from work, a combination of short-term disability insurance benefits and other savings may not be enough to financially sustain your clients and their families. This could leave them vulnerable to financial burdens, such as mortgage foreclosures or default on debt.
 
A long-term disability insurance policy can help protect your clients and their families from scenarios like mortgage foreclosure and bankruptcy. These insurance policies are typically more comprehensive, offering long-term benefits that will protect your clients in the event of accidents and sickness. There are also additional rider options available such as a Cost of Living Adjustment, Partial Disability Benefits, and Benefit Increase Riders. The additional options for a long-term policy allow you to tailor coverage to meet your clients’ unique needs.
 
The benefit period on these policies ranges from two years, or until age 65 or 70, and often have a longer elimination period such as 90 to 180 days. Because your state may have different regulations governing the length and availability of long-term (and short-term) disability insurance, please contact us for plan availability.
 
How can you get started on designing the right plan for your clients? Asking the right questions is always a good start.
  • How long would they be able to meet their monthly expenses if they were unable to work for a period of time?
  • How much of their savings would be available?
  • Does their employer offer an income protection plan?
  • What are their occupations and annual reported incomes?
For more information about short-term and long-term disability insurance, contact your DI Sales Rep.
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Introducing Brand Protection Insurance

It doesn’t matter whether it’s an athlete, an entertainer or someone just famous for being famous; if you want to raise a brand’s profile quickly, hiring a celebrity is a proven way to do so. However, fame can sometimes turn into notoriety.

The media always seeks to uncover celebrity details, and what is exposed is not always flattering.

Death, Disability, & Disgrace coverage provides support for brands that use celebrities or spokespeople to endorse and publicize their products or services.
 
If in the unfortunate event the insured causes the Brand/Company into being viewed negatively by the public, or the insured becomes disabled or pass away during the policy period, the policy provides up to an agreed sum, enabling the brand managers to recover costs and expenses of the insured campaign.
 
Consider this:
 
Take the case of a young performer, who just signed a tour contract and a promotion contract for a well-known beverage company. Both the promoter and the beverage company purchased a Death, Disability, & Disgrace policy to protect their investments and company images.
 
Halfway through the tour, the young performer had a nervous breakdown and committed numerous acts that were viewed negatively by the community. The tour had to be cancelled and the drink company’s advertising had to be pulled.
 
With the Death, Disability, & Disgrace policies, the promoter was able to recoup the cost of the cancelled shows and the drink company was able to recover costs and expenses of the insured campaign.
 
Brand Protection Insurance is ideal for Sponsorships, Spokespersons, Celebrity Endorsements and Personal Appearances.
 
Please contact your Income Protection Specialist today for more details today.
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7 Ways To Fast-Track Your DI Sales

Everyone knows how hard insurance professionals work to prospect, set appointments, complete the fact-finding process, run quotes, close the deal, fill out and send in forms all just to submit a single Disability Case.

The last thing you want is for an application to be held up in underwriting because information may be incomplete or worse yet, declined because of medical issues.

It’s important to remember that the information required by underwriters helps the insurance company manage risk, which in turn helps to keep prices and products competitive across the market.
 
Here are 7 ways you can help your cases move through underwriting faster and more efficiently:
  1. Before moving forward with an application, know your client. Take the time to ask about their medical history, health concerns, and current medications. If there are red flags, allow our Underwriting Department go to go to work for you. We can pre-screen the client and direct you to a carrier that might be lenient with that particular medical concern.
  2. Answer all questions on the application and provide full details such as occupation and job duties as well as physician name, address and phone number. Make sure all required fields are completed. Incomplete apps may delay your case.
  3. Send a copy of the most recent illustration reflecting the correct occupation class, benefits, discounts and premiums.
  4. Attach all necessary financial documentation.
  5. When possible, submit the case for simplified underwriting with no blood, urine, EKGs, or APS required. Typically, if the client is between the ages of 18-50 and looking for a monthly benefit amount up to $10,000 this is the way to go. This program averages a 48-hour turnaround time once the application and TeleApp interviews are competed and received.
  6. While not required, it’s always helpful to attach a cover letter that discusses the details of the particular case. This helps to give the Underwriting Department a clear picture of the case, particularly if there are any unusual medical concerns or job occupation descriptions.
  7. You can complete the telephone health interview at any time. The application does not have to be in-house for the phone interview to be conducted and typically takes less than 20 minutes.
The tips on this list will save you valuable time and help you grow your business.
 
Contact your dedicated Disability Specialist today to learn more about how you can streamline the underwriting process!
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Why Small Businesses Need Business Overhead Expense Coverage

Many small-business owners fail to understand how difficult it would be to stay operational if they were disabled and unable to run their business.

The impact of a small-business owner’s disability does not just affect the business itself, but the employees as well.

Protect both the business and staff with Business Overhead Expense (BOE) coverage.
 
The majority of small businesses are tight-knit families, who rely on each other for support. If the business is unable to produce in the absence of the owner, the employees may have to start looking for alternative employment opportunities and the business would be at a high risk for closure.
 
The BOE Answer
 
The need is simple to set up: Small businesses typically cannot survive without consistent production – so what happens when the owner is the primary producer of the business’s revenue and is unable to work?
 
A BOE plan would keep the business in operation in the event the owner becomes disabled and couldn’t work for a period of time. BOE coverage reimburses all the fixed expenses, including the employees’ salaries, back to the business. In addition, a BOE plan allows for up-front tax deductions of premiums when insuring for the potential disability of the self-employed person. Often, small business owners are candidates for short-term and/or long-term DI as well.
 
BOE policies are typically short term, with benefit periods from 12 to 24 months and a 30 or 60 day waiting period before benefits are payable – this keeps the premium low and very affordable.
 
We feature carriers offering BOE benefits of up to $25,000 per month with no exam, lab tests, or tax returns. A policy can be issued within 48 hours after the completion of a short application and client telephone interview.
 
Speak with your small-business owner clients today to see how you can help them protect one of the most important assets they have – their business.
 
We’re ready to start work on your clients’ BOE planning – contact your Disability Income Marketing Managers today.
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Sacrifice Your Daily Starbucks, Buy Income Protection

When it comes to achieving our goals of financial security, we are our own best friends – or more likely, our own worst enemies. It seems the average American is not setting aside enough money to achieve their financial objectives, let alone protect what they already have.

While the need for income protection is apparent, the majority of Americans have not purchased individual Disability Income insurance due to the misconception that it is too expensive.

Consider This:
 
As a financial advisor it’s your job to let clients know there are simple, affordable solutions to fit just about every need and budget. Ask your clients to think about the amount they may spend on a daily cup of premium store-bought coffee? A date night each month? A monthly cable bill? Movie rentals? For the amount of money they spend on these discretionary activities, they could work towards insuring their income.
 
Some clients may think they are saving money by delaying the purchase of Individual DI Insurance. But reality is that most DI policies allow clients to lock in an affordable premium – much lower than that of someone who waits, assuming he or she is even insurable at an older age.
 
Talk to your clients about income protection today. Through careful planning and follow-through, achieving financial security and protecting a lifestyle and dreams for the future are well within reach. Need tips on how to start the conversation? Contact your DI Specialists today.
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Income Protection – Statistics That Hit Home

With the access you have to your clients’ financial plans, comes the responsibility to protect their most valuable asset – the ability to earn a living.

Insurance is available for everything from a car to a cell phone, and it’s vital to remind your clients that those things don’t exist without the funds to facilitate them – which is exactly why income protection is so important.

The following statistics highlight the importance of having that discussion:
  • An estimated 48.9 million people, or 19.4% of the non-institutionalized US civilians, have a disability.
  • An estimated 24.1 million people have a severe disability.
  • An estimated 34.2 million people, or 17.5%, have a functional limitation
Social Security is not a reasonable resource on its own – the average SSDI benefit payment is a mere $1,256 for males and $993 for females per month.
 
Employer sponsored DI plans only pay 60% of a client’s income – plus, the benefits are taxable with a cap on the maximum benefit. And, less than 5% of disabilities occur as a result from an accident on the job – where worker’s comp would be applicable.
 
It’s a matter that every advisor should take to heart, especially when most of you know your clients on a personal level.
 
We have the tools for advisors to start the conversation about Income Protection. Contact your DI Associate today.
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Avoiding “Sticker Shock” With Disability Income Sales

Ever presented Disability Income Insurance to a client, and found that with one look at the price-tag they are reluctant to purchase?

While it is true that a DI plan could be costly for some – it certainly doesn’t have to be.

Avoid the “sticker shock” with your clients.
 
The general rule for the amount a client should spend on their Income Protection plan is 3% or less of their annual income.
 
If the premium is higher than the 3% amount, the client is more likely to experience “sticker shock” – and, even if you are able to place the policy, the likelihood of it lapsing is much higher. The client will then have no protection and you will not have a renewal commission.
 
How to keep premiums under 3% of a client’s income.
 
1) By adjusting both the Benefit Amount and Elimination Period (EP), you are able to make the policy more cost effective.
  • Adjust the benefit amount to cover just the basic monthly expenses such as rent/mortgage, utilities, groceries, etc.
  • Approximately 75% of fully underwritten policies have a 90-day EP – if your client has enough savings, offer a 180-day EP.
2) Creating a mixture of Base Benefit and Social Insurance Supplement (SIS) coverage, is another solution to keep a client’s premiums low.
  • The idea here is to get the most coverage for the lowest premium. Since the SIS coverage can be offset by Social Security, State DI or Workers Compensation, the premium is less expensive than that of the Base Benefit.
  • A good mixture of SIS and Base coverage can generally keep the premium within a client’s budget, yet provide them with the coverage to ensure their financial stability in the event they are unable to work.
A Fun Fact to share with your “sticker shocked” clients.
 
Over 80% of disability income claims are settled within 5 years because the client recovered and returned to work, or they passed away. In lieu of a less than 20% chance your claim will go past 5 years, a 5-year benefit can be very affordable.*
 
Not every client needs all the available costly riders the carrier offers – choose only the riders that will actually benefit a client.
 
And if in doubt of which rider(s) would be the most suitable – contact your DI Specialists to discuss the best options. We are here to help!
 
*Council for Disability Awareness
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Critical Illness Insurance: Preparing To Bridge The Gap

Many Americans are living without ample savings – and a lot are living paycheck to paycheck. When these families are struck with an unexpected illness such as a heart attack, stroke, or cancer, it can cause a serious financial hardship… even if they have health insurance.
 
The average annual income in the United States is $50,000 – and most health insurance policies carry at least a $5,000 or $10,000 out of pocket max that will easily be reached when suffering from a critical illness.
 
On top of that, any one of these illnesses will undoubtedly result in an absence from work for an extended period of time – causing the loss of valuable income at a time when they are experiencing increased expenses.
 
Consider This
 
This combination of out-of-pocket healthcare costs, loss of income, and mounting household expenses come together to form ‘The Perfect Storm’, which too often leads to a bankruptcy.
 
Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year-making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data.

Having health insurance doesn’t buffer consumers against financial hardship.

Most advisors sell life insurance to protect their clients should the bread winner not make it home from work one day. But how can we protect our clients against financial catastrophe if the heart attack, stroke, or serious illness doesn’t amount in a premature death?
 
Critical Illness Insurance pays a tax free lump sum payment on diagnosis of any one of a list of serious illnesses – including cancer, heart attacks, or stroke.
 
Claims statistics suggest we are five times more likely to suffer from one of these issues, than we are to die before we reach age 65. You don’t want to get a call one day, find out something has happened to a client, and regret having never discussed the opportunity to purchase a Disability Income or Critical Illness Plan with them – have the discussion with each of your clients as soon as possible.
 
Our dedicated DI Sales Reps are well versed on the features and benefits of Critical Illness Coverage – contact us at for assistance today.

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