Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Disability
DI Made Easier
Presented by Tim Dreher Are you like me when it comes to selling Income Protection? I love to get out there and meet new people and give them peace of mind by helping them to protect their greatest asset – their ability to earn a paycheck. But after the client says “yes”, I dread all of the paperwork that comes with the sale. Is it just me or have applications become as big as phone books recently? Well, fear not fellow agents. Thanks to several of our DI carriers, we now have a solution to those long, long applications with a streamlined application process called a tele-app. The tele-app is a shortened version of the regular application with Section B (medical questions, prescriptions, and health history) of the application missing. The agent completes only parts A and C of the application, which consists of basic demographic information and the signature page. Once the application is submitted to the carrier, the client receives a simple and brief (normally 15-20 minutes) fact finding phone call by a highly trained and experienced telephone interviewer well versed in underwriting and medical terminology. If something comes up in the client’s health history during the call that raises a red flag, the experienced interviewer is able to ask the right follow-up questions for clarification, helping to reduce the need for attending physician’s statements, medical records and paramedical exams. This has been shown to cut the underwriting process by as much as thirty-three percent. Quicker issue time means you get paid faster. Finally, another great benefit of the tele-app is to avoid having to ask your client about their personal and private health history, which in many situations, can be a little awkward and uncomfortable for both of you. In a nutshell, the tele-app simplifies the sales process for both the agent and the client, resulting in a quicker issue time. Be sure to give the tele-app a try with your next client. You’ll be glad you did.
Long Term Care and Disability Insurance
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.
Long Term Care and Disability Insurance
“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.
Long Term Care and Disability Insurance