Increase Your DI Sales in 4 SIMPLE Steps!

Presented by Michelle Daharsh

Disability insurance is a new concept for most consumers but it also is a concept that you should be talking about to each and every one of your clients. Start with the basics and uncover if your client has any misconceptions about disability income protection. Educating clients from what it covers, how benefits can be used and that their coverage can be tailored. You can help assist your client in making the right decisions by showing them how to protect their income and everyday lifestyle.

Do you know the right questions to ask your clients? Utilizing the Income Protection Calculator from Principal Financial Group (link is below) can do just that! This calculator will help you ask the right questions as you delve into the basic issues of disability. Then you will be able to provide your client with three income protection options. Don’t let misconceptions about disability income coverage stop the sale before it starts! The right tools can make a world of difference.

The Eight Elements of Extended Care Riders – Element 4 – Tax Code and Benefit Qualification

Presented by Brian Leising

The Eight Elements of Extended Care Riders

Finding the right formula for each client

Not all extended care riders on life insurance policies are created equally. Do you know the differences? Different combinations will appeal to different clients more than others. Here are eight of the major distinguishing features among insurance companies offering extended care riders. All include some combination of the eight elements. This allows you to find the right formula for each client.

Premium Payments Benefit Qualification Benefit Amount
Pf Payment Frequency Pa Payment Amount
Lg Lapse Guarantee Tc Tax Code Pm Payment Method
Wp Waiver of Premium Ep Elimination Period If Inflation

Element 4 – Tax Code and Benefit Qualification

Insurance companies file their extended care riders and provisions under one of two (or both) tax codes, 7702(T) or 101(g). What’s the difference? Only the riders filed under 7702(T) may use the words “long term care” to describe the rider. Since the 7702(T) riders are viewed as tax-qualified LTC polices that have been added to a life insurance contract, the LTC benefit in many cases will exceed the death benefit of the underlying policy. Chronic illness riders (101(g)) may only accelerate up to the actual death benefit amount. The difference of greater concern pertains to benefit qualification. With either tax code, benefit qualification depends upon the client losing physical and/or mental abilities. The insured can qualify for benefits by losing the ability to perform two of six activities of daily living (ADL’s) or severe cognitive impairment (such as Alzheimer’s or dementia). With chronic illness riders (101(g)) an additional requirement must be met: the condition must be deemed to be permanent. An insured may recover, but the expectation they will not triggers the chronic illness (101(g)) benefit.

Look for Element 5 – Elimination Period in May.

4 Common Mistakes Your Clients May Be Making When Protecting Their Paycheck

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.

MYTH: “I won’t need life insurance when I retire.”

Presented by Brian Leising

Four responses you can use with your clients.

4- Really? So, that means you love the government more than you love your family?

Did you know your money can go three places when you die? Your family, charity, or the government. Even if you will all your assets to your family, the government may still inherit part of it. All money in IRAs, 401(k)s or other Qualified Plans, plus growth in non-Qualified annuities is taxable to the person receiving it. The government is going to get their share, but will your family get theirs? Life insurance death benefits pass tax-free to beneficiaries. Why not purchase a life insurance policy to cover the taxes your family will pay the government upon your death? Better yet, you could omit the government completely with proper planning. You could name a charity as beneficiary of your Qualified money (charities pay no income tax) and replace the value of the asset with a life insurance policy. Your loved ones win, your favorite charity wins and the government gets nothing. As George Thorogood says, “Who do you love?”

4 Risk Rules

Presented by Deb Strong

Risk 1 – Inflation

What is the #1 increase in expenses for a retiree?  Most people will say it is Health Care, which isn’t actually accurate.  The #1 increase in expenses in retirement is daily living. Every day is a Saturday.  What is inflation directly tied to?  The increase in the costs of good and services over time…daily living.  Not to mention, do you expect inflation to go up or down?  Similar to taxes, everyone expects inflation to go up over time.

So having at least a portion of the client’s money allocated to a policy that can help them combat inflation is just smart planning for your client.

Risk 2 – Market Volatility

In the last 14 years the market has corrected by 50% twice!  Over that 14 year period investors would have averaged a 2% annualized yield in the market.  We are at the top of a 6 year bull market, when the average bull market only lasts 4.  If client’s are heavily allocated to the market they may not have time to recover from another major correction. Hence, the reason I like the rule of 100.  Take the client’s age from 100 and that is the percentage of their assets that should be at risk (example 100-70=30).  This means my 70 year old client should not have more than 30% of their retirement assets at risk.

Not to mention, from the Future of Retirement Income Study, 60% of annuity owners and 61% of annuity considerers would be willing to pay ADDITIONAL fees to keep from losing any money in a bad year, while gaining SOME of the market in good years.  People are willing to pay for what an index annuity does contractually!

Risk 3 – Interest Rate Risk

Many clients use bond funds in their retirement income plan.  However, most of them do not understand the inverse relationship of bond fund rates to interest rates.  In 2013, 88% of bond fund rates lost money.  The other interest rate risk is for the $11.3 Trillion dollars on the sidelines earning less than 1% interest, not even keeping up in a low inflation market.

Risk 4 – Longevity

Longevity is the multiplier of all Risks.  One out of 4 people 65 years old today will live past 90.  One out of 10 will live past 95.  People are in retirement as long as they are in their professional careers.  You have to make sure that they have an income they can’t outlive.

Unfortunately, many advisors are still using the outdated method of the 4% rule.  Which says that if you have a 50/50 stock bond portfolio you can pull out 4% annually and it would be guaranteed to last 30 years.  We have a White Paper and tools called Rethinking Retirement Income, which is a study done that shows if you use that, you have less than a 50% chance of success.  The real number is more like 2.8%.  What I find as more of the real problem versus the percentages is what happens when you outlive the 30 years?