Helping a Business Owner Keep The Business Running

Presented by Michelle Daharsh When small business owners become disabled, there’s a lot more at stake than just their personal obligations to their family. Ongoing business expenses such as rent, utilities, employee salaries and property taxes all need to be met, regardless if the business owner is there or not. Your clients may already have disability income insurance in place to cover their personal expenses and income, but think about what would happen to those clients that own a business if they had a serious accident or an illness? How long would your client’s business survive, and how would they pay their monthly expenses in order to keep their business open? Business Overhead Expense (BOE) insurance is designed to help protect your client’s business if they were to become disabled due to a serious illness or accident and are unable to work. Not only does that business owner have their own personal expenses to worry about, but they also have to pay employee salaries, rent, taxes, utilities, and a host of other expenses of their business. How are they going to be able to do this if they can’t work? Those bills could add up quickly if there isn’t business expense protection in place. A BOE policy will provide monthly payments to help pay those overhead expenses of the business and give your client the peace of mind that their business will continue to be up and running while they are recovering! Without Business Overhead insurance, your client may have to consider other alternatives or potentially close their doors permanently. Unlike a personal disability income policy, which can pay benefits to age 65 due to a disability, a business overhead expense policy generally has a shorter benefit period of one to two years, but for a very specific reason. It allows a business owner that may be recovering from a disability, the time to get things back to some form of normalcy. However, if the disability of the owner is going to be more permanent, then it gives the owner ample time to explore alternatives for the business without being under a hardship to make a quick decision. Give your small business owner clients the power to help protect what they have worked so hard for with a Business Overhead expense policy!

Why You Need to Sell DI Regardless of Your…

Presented by Tim Dreher Many agents and advisors that I talk to just like you are not what I would consider “generalists” but have specialized in one type of insurance product or service. Regardless of your focus, Income Replacement insurance is a product that you should also be talking to all of your clients about to help them protect their most valuable asset…their ability to earn an income. Some of you focus your practice on the sale of life insurance. One of the reasons that you sell life insurance is to provide dollars to replace an income in the event of a death. Your client’s chance of a disability are so much greater than a premature death. Disability Income insurance would also benefit your client by providing income replacement in the event of a disabling accident or illness. Consider combining a death benefit with a living benefit to provide complete and comprehensive coverage for your client. Statistically, you are 16 times more likely to lose a home to foreclosure due to a disability than to a death. If the focus of your insurance practice is on selling group benefits, then you probably already know the importance of protecting your client’s most valuable asset, their ability to earn a paycheck. But do you also realize that many times group long term disability plans, although a good start, might not provide, due to limited benefit amounts and benefit duration, adequate protection in replacing a large portion of your client’s income in the event of a disability? Additionally, group DI benefits are normally either paid by the employer or are paid by the employee on a pre-tax basis. In this case, any benefits paid out to an employee because of a disability would likely be taxable, thus reducing their benefits even more. Supplementing their group LTD with an individual policy is an excellent way to make sure that the client is adequately covered. For those of you that focus on retirement planning, a disability that causes a loss of income can have a devastating effect on your client’s ability to continue to fund their retirement accounts. There are several carriers in the DI marketplace that have income replacement plans that not only help take care of your client’s monthly living expenses, but will also continue to contribute to your client’s retirement account while disabled. That becomes a double win. Finally, many of you are investment advisors and money managers. For most of your clients, their most valuable asset is their ability to earn a living. As their advisor, it should be properly managed and protected just as you would any other asset. Many wealth management advisors charge a fee of roughly 2% of assets under management. Similarly, in most cases, a properly designed Income Replacement policy (DI) can also be as little as 2% of your client’s income. There are many reasons to talk about DI with your clients. It helps you to diversify your portfolio of products and it’s also a great door opener to many sought- after markets, such as high income individuals and business owners. It’s also a great way to ensure that, in the event of an accident or illness that prevents your client from working, they would still have the ability to continue to pay their bills, including the premiums on those other products and services they already have with you.

“Thanks, but no thanks. I already have DI through…

Presented by Tim Dreher I’m sure that most of you who market Disability Income Protection have heard this before, perhaps even many times. Personally, I actually like it when I hear that response from potential clients. Either it tells me that they were savvy enough to recognize the need for Income Protection and did something about it, or it was provided to them by their employer as a “one size fits all” benefit that may not fit their individual needs. Either way, I have an opportunity to expand on the DI discussion. Let’s take a moment to look at some of the reasons that an employer provided plan may not be all it’s cracked up to be. With an employer sponsored plan you normally have to take whatever plan design and benefits the employer offers regardless of whether the employee is paying for a portion of or even the entire premium. In my experience, most of these plans can have very limited monthly benefit amounts, limited or no riders (such as residual or partial disability benefits) and limited benefit periods (generally 2-3 years in length), even though many disabilities can last longer than 5 years, and in some instances, even for a lifetime. Employers, unfortunately, have to choose plans that fit the masses. As an example, what might be a good fit for a dental hygienist is probably not the best plan for a dentist. Another point to consider is that those individuals that are in occupations that rely on commissions or bonuses for a large part of their income might also come up short as most employer provided plans use only the individual’s base salary when calculating any benefit payouts. This can leave those employees woefully underinsured. Portability is another reason that an employer sponsored plan might not be the best fit. An employer sponsored plan typically ends when the job ends, whereas an individual plan follows that employee to their next job or even to self-employment. The risk remains the same so why shouldn’t the insurance plan remain the same also? Finally, in my opinion, perhaps the biggest reason to consider an individual plan is how employer sponsored plans are taxed versus an individual plan. If an employer is providing the disability plan and paying the premiums then any benefits received from the plan would more than likely be taxable. This also holds true if the employee is paying the premiums out of their own pocket but on a pre-tax basis, then again any benefits received would likely be taxable. This could possibly mean a 20-40% reduction in any benefits received after the benefits are taxed. An employee thinking they are adequately insured could potentially find out the hard way (at the time of claim) that they are only getting a portion of what they thought they would receive. The bottom line is that most employer provided plans can, and do, provide some benefits, which is better than no benefits at all. However, an individual DI plan is very flexible and can be tailored to provide additional coverage and fill in those gaps that an employer’s plan might be missing.

4 Common Mistakes Your Clients May Be Making When…

Presented by Michelle Daharsh When having a conversation about disability income protection with your clients, you will probably come across some common reasons stated as to why they don’t need it or want it. Most times when your client is asked about “disability insurance” they think it’s about getting hurt or injured. A better way to get their attention is asking them how long they could go without a paycheck. Below are four common reasons that your clients aren’t buying “paycheck protection” insurance – or Disability Income Insurance:
  1. It won’t happen to me because I plan to stay healthy. We all think and hope this. However, one in four 20 year olds will become disabled by the time they are age 67. (Social Security Administration, Fact Sheet, February 2013). How many of your clients will possibly fall into this statistic? In fact, illnesses account for approximately 90% of disability insurance claims…not accidents.
  2. Social Security will take care of me, right? It may, but will your clients qualify for benefits? How long will it take to get approved and how much will they receive? About 45% of individuals that apply for Social Security disability benefits are initially denied, and those who are approved receive an average of $1100 a month. Plus, it’s a process that can potentially take up to two years for approval before benefits begin. How long can your client wait for a paycheck and would this average benefit be enough?
  3. I have coverage through my Employer. Many times through employer plans, the benefits are taxed, policies are not portable, and they have maximum limits on benefits offered. This is a great opportunity where you can provide education on their actual benefits and truly uncover the additional income protection that you could provide them with an individual policy.
  4. I can rely on my savings. They probably can for a limited time, but have your clients really looked at their day-to-day living expenses and priorities and figured out how long their savings would last? About half of working Americans report that they couldn’t make it 30 days without a paycheck. Do your clients fit in this category? Can they make it a month, three months, a year – and if they have savings, is it really enough to cover them for an extended period of time.
Don’t let these mistakes cause a financial burden for your clients. Sit down with them and have the conversation about their need of “paycheck protection”, and how it can provide the protection needed for them and their family.

Medicare Supplement plans – enhancing your bottom line

Presented by Leonard Berthelsen As an industry, we have been talking about the impact that the baby boom generation was going to have as these folks become Medicare eligible, and well, it is upon us. Despite being well-versed in Medicare and the options available, there is still a tinge of anxiety that comes up when I start to think about it. Do I stay on my current health coverage after reaching Medicare eligibility, or do I go on Medicare Part A &B? Which way is going to give me the best coverage at the best price? If I delay going on Medicare will there be a penalty? WOW, it can be mind boggling and I’m in the insurance business! Think about a consumer and how confusing it can be for them when looking at all the options. They have many decisions to make and are they making the right one? Medicare, Medicare Supplements, Medicare Advantage, Prescription Drug Plan and Supplemental Health coverage can weigh heavily on the minds of consumers. And, that is just on the surface, as each one of those has multiple options within itself. I’m getting clammy hands as I write this. Let’s look just at Medicare supplement coverage and what that can add to your bottom line. Someone turning 65 and in their open enrollment period becomes eligible for Medicare and can purchase a Supplemental plan without evidence of insurability. No medical underwriting, just age, gender, build, and if they are a tobacco user, are generally all the underwriting that takes place. It’s a fairly simple process. As a trusted advisor, your real value comes into play in navigating which carrier is going to meet their expectations and determining which plan with that carrier is the right choice. There are some reports coming out that suggest there are not enough advisors working in this market causing many consumers to make decisions about their health care on their own. Some are making the right decisions while others are merely guessing and hoping that they got it right. Do you think you could become that advisor that has the expertise to navigate the market and make Medicare supplemental plans an important part of your insurance practice? Most Medicare supplemental plans offered today have level commissions for the first five to six years. Every time a client renews their coverage, the renewal is paid to the advisor. If an advisor wrote five supplemental plans a month, he/she could add $15,000 to their bottom line. When the clients renew their coverage, that $15,000 is earned again plus the additional commission for the five new monthly plans for the new year. This means that by the end of year two, the advisor has added a nice $30,000+ to their bottom line. Continue that same thought process out to the end of year five and now you have some real dollars to consider. This could boost your annual income by $75,000 – $100,000 by the end of the fifth year. That is not counting any LTC, hybrid LTC, life Insurance, annuity or supplemental products that may get placed along with the supplemental plan. Becoming the “go to” advisor for Medicare supplemental coverage might just put your career on a different plateau.