Income Protection: The Best Kept Secret to Sales Success

bilderBy Candence S. Bidler Hurley, FLMI for November 2012 issue of Life & Health Advisor.

Ms. Bidler Hurley is National Vice President of Individual Disability Insurance Sales – Principal Financial Group®.

I’ve often thought that the greatest competition in the individual disability insurance business isn’t other carriers; it’s all the other products and solutions in the marketplace that producers are selling instead of offering their clients income protection. Income protection is a solution everyone needs – or at least should have the opportunity to decline. I am not advocating you stop offering other solutions to your clients, just add individual disability income (DI) insurance to the portfolio of solutions you offer clients to help meet their needs.

Countless surveys and research show that consumers understand the importance of having protection, yet they don’t have the coverage they need. Consider this: 72% of respondents say that becoming disabled and not being able to work for a living is a “devastating event.” Yet only 22% have disability coverage.

It’s up to us to approach these clients, discuss the benefits of income protection and ask for the disability insurance sale. If you do, not only will you be helping them take an important step toward financial security, you’ll be differentiating yourself from the competition and benefiting as a result. Producers who take a comprehensive approach with clients – including offering individual disability insurance – earn 30 percent more than producers who do not.

Over the years I’ve heard a variety of reasons why producers are hesitant to discuss income protection solutions. I’d like to debunk the top three:

1. “It’s not my market.”

Income or paycheck protection is for everyone who works and earns an income. Unless you’re talking with individuals who don’t work or have a condition/illness that prevents them from qualifying for a policy, most likely there’s a carrier that offers an income protection solution to meet your clients’ needs. Historically, most individual DI insurance has been sold to specialized occupations, such as attorneys, dentists and physicians. These types of occupations have less manual duties, are higher-income earners and tend to understand the importance of the coverage. Fifty-one percent of the U.S. population is considered middle-income (earning between $39,000 and $118,000 a year). That is a huge, yet largely untapped, market with tremendous growth potential. As technology has evolved, so have job duties. This segment also tends to be educated – most middle-income earners hold at least an associate’s degree. Because of these factors, more carriers are offering affordable DI solutions to middle-income occupations – broadening the market potential for income protection sales. The best and perhaps easiest tip for approaching this audience is to simply ask for the sale; they are underinsured and need your guidance.

2. “It’s too complicated.”

If you’re selling investments, life insurance, retirement plans, etc., you can and should be selling individual DI insurance.

My best advice is to start the sales conversation by describing the benefits a policy can provide to your clients and their families – security in the event of the unexpected, a paycheck when they need it most. If you start the sales conversation by dissecting the policy components, you may find yourself in a complicated discussion that leaves both you and the client discouraged.

Think about it: The last time you purchased a car, did the salesperson start talking about how the engine was constructed? Probably not. I’m guessing it was more of a discussion about the benefits of the car – the comfort of the seats, how quickly it accelerates, the many extras available, etc. The same holds true when approaching clients about income protection.

Consider sharing a personal story of someone you know who has been impacted by a disability, whether he or she had coverage or not. Are you not sure you know someone? Trust me, I’m sure you do. Common causes of disability tend to be illness-related (cancer, heart disease, back pain, etc.), not a serious accident. If you can’t think of anyone, just scan the newsstand. You’re bound to find a celebrity or athlete whose life has been changed by an illness or injury.

If you find closing the case too complicated, there are a variety of ways to make the sale, application and underwriting processes easier:

  • Use the streamlined underwriting program many carriers offer when available. Your clients will deal with less medical requirements and financial documentation.
  • Show clients several options for how a policy can be tailored to meet their needs. Several producers we work with have perfected a process of showing clients a “base, moderate and comprehensive” illustration. Each offering gets a little more robust in coverage. But, bottom line, regardless of the option they choose, having some income protection coverage is better than having none.
  • Take advantage of sales and marketing assistance from carriers and/or third-party organizations like the Council for Disability Awareness. Use local wholesalers for case help and use tools, such as videos, testimonials and online calculators, to help you explain the importance of the coverage.

3. “I’ve tried selling DI before, but it’s too expensive.”

Let your clients decide what’s too expensive by putting costs in the proper perspective. Ask clients, “What’s more costly – purchasing an affordable DI policy today and being protected in the event of the unexpected or incurring a disability and no longer having an income?” In today’s marketplace, consumers have no problem paying $4 a day for coffee. Over a month, that’s about $120 for coffee.

You can give a client meaningful income protection for less than half that amount each month. Take the case of this hypothetical client who:

  • Earns $60,000 a year as a computer consultant
  • Is a healthy, active 40-year-old man
  • Has group disability coverage through his employer protecting 60% of his income (up to a set cap; any benefits received are taxable)

For about $56 a month, or about 1 percent of his annual salary, this client could purchase individual income protection that provides an additional $1,350 a month in tax-free benefits if he becomes disabled. That’s an affordability story that’s not often told.

Have a client who’s not a coffee drinker? Consider a comparison to personal technology expenses. Many Americans spend as much as $300 a month on the latest technology – Internet and smartphone service, premium cable, Netflix, etc. By putting the purchase of income protection into tangible terms, you’re starting a dialogue with your client that will benefit both of you in the long-run.

Help your clients today

Take time to step back and consider saying to clients, “Has anyone talked to you about protecting your income? If not, I’d like to today.” If you don’t have that conversation and the unexpected does occur, are you prepared to explain why you didn’t offer them the opportunity to protect their ability to work and earn an income? And, consider this: If they are no longer earning an income, could they afford to pay the premiums on other insurance products or investments they have with you? Income is the foundation of a successful financial strategy; it’s up to you to help your clients protect it.

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