Selling disability income
insurance can be challenging. Finding the right policy and plan design for your
clients’ unique needs requires time, research and sometimes
professional advice. Fortunately, you’ve made the right choice and
you’ve come to the right place to learn more!
Disability insurance policies have many moving parts that affect
price, coverage benefits and policy features. These moving parts
often make polices very tough to compare. Here are the four most
common errors your clients should avoid when shopping for
disability income insurance.
Mistake #1: Not buying enough
When it comes to buying any
kind of insurance, people rarely overestimate how much they need.
If there’s a mistake to be made in determining a coverage amount,
most buyers of insurance — whether it’s life, property or
disability — will buy too little.
It’s an easy mistake to make. After all, nobody really wants to
buy insurance. Most believe they’ll never use it and don’t have
extra money in their budget for complete coverage.
But buying too little disability insurance coverage today can
cause major headaches if an injury or illness that impacts your
clients’ ability to earn a paycheck does occur. Your client could
easily lose half of their income or more between earnings before
the disability and the amount the insurance benefits pay. The
problem could be potentially compounded by any additional medical
expenses caused by the disability.
When assessing your clients’ disability insurance needs,
Their current and future
Their current and future
Any increasing expenses
resulting from a disability (e.g.—medical treatment)
Any increasing cost of
goods and services (i.e.—inflation)
Mistake #2: Relying solely
on group or employer-provided coverage
Many people make the mistake
of relying solely on group disability insurance they may have
through their employer or a professional association. Group plans
are cheaper than individual policies because the employer or
association is paying either part or all the cost. Also, group
coverage is easier than researching individual coverage because
the employer or association has already done most of the leg work.
Plus, since most people don’t anticipate ever becoming disabled,
it’s easy to believe group insurance is more than enough.
Group policies are a good way of supplementing disability coverage
but your clients should never rely solely on one. Doing so puts
them at risk of:
Losing coverage because
of a job or membership status change
Having the sponsor or
insurer cancel the policy
Only getting benefits
that cover a fraction of pre-disability income
Only getting benefits
for a limited time frame
Having limits on what is
considered total disability
Not having access to
additional key features and benefits available on individual
Paying taxes on the
benefits you receive if he/she becomes disabled
An individual policy, on the
other hand, is owned by the insured. It can therefore be tailored
to their specific needs and lifestyle. This type of policy
typically cannot be canceled and is guaranteed to renew, meaning
the only way to lose coverage is to stop paying premiums.
Mistake #3: Not comparing
disability income insurance options
Would you buy the first car
you test drove? Or make an offer on the first house you walked
through? Not likely. Most people spend time comparing multiple
options – especially when considering more expensive items –
before making a final decision.
The same should be true for disability insurance. While the cost
of disability insurance doesn’t equate to the cost of a house or
car, it’s a purchase many clients don’t consider often – or view
as optional. Your client should never limit their search to one
policy or recommendation. For every quote request we get, we
typically provide more than one quote/proposal from the different
companies we work with. Between the different carriers, we can
also find a plan to suit your clients’ needs.
When presenting options, your client should always consider more
than just cost. You should compare various contract provisions,
benefits, waiting/elimination periods, features included in the
base contract and any optional riders that may be offered.
Doing this without professional help could be a daunting task for
most people, but we’re here to help! We’re experts in disability
income insurance and we work with many different, top-rated
companies. We’re ready to answer questions and coach you on the
best way to present the product to your client.
Mistake #4: Not taking the
time to understand all of your policy's provisions
The worst time to be surprised
by what is — or isn’t — in your clients’ disability insurance
policy is when it’s time to file a claim. Take the time to review
the policy with your client before they sign the dotted line.
The policy details your client should absolutely understand
How is disability
defined – is it own occupation or any occupation?
When can a client
collect for residual or partial disability?
Length of waiting period
(AKA elimination period) – how long does your client have to
wait before collecting benefits from the insurance company?
Benefit length – if a
client becomes disabled, how long will he/she receive
limitations, including disabilities related to mental illness
and anything that might come up during underwriting
Future increase option –
will your clients’ income be increasing in the future? Make
sure clients can increase disability benefit amounts down the
road to avoid gaps in income.
Catastrophic benefit –
does the policy include extra benefits for a severe disability
that impacts daily activities?
adjustment on benefits – will benefits adjust each year to
keep pace with inflation?
have any questions, don’t hesitate to give your Local Sales Rep a