So many advisors are focused on retirement income planning for their clients – but what happens if the client ends up with no current income because they became disabled?
That was one of the points raised during a panel discussion on disability insurance at today’s NAILBA Engage virtual event. DI brokers talked about some of the techniques they use to raise awareness of the product among advisors, and gave an optimistic prediction on the DI market’s future.
“I always like to say to advisors, ‘What’s the most valuable asset your client has now and will ever have in the future?’ The answer is their income,” said Tom Petsche, president of Brokerage Solutions in Cedar Rapids, Iowa. “Advisors work with their clients on so many plans, but those plans all take money. If the client suddenly has no income, what do they do?”
The DI sale is a more personal relationship than the life insurance sale, said Jeff Mohr, president of Diversified Brokerage Specialists in Blue Ash, Ohio.
“Clients buy life insurance for someone else, but they buy DI for themselves,” he said.
He added that “DI is more technical” than life insurance, with more riders to explain and an underwriting process that can take time.
The economic downturn stemming from COVID-19 also has had an effect on DI, said Maxwell Schmitz, vice president of marketing and sales for DI+LTC Insurance Services in San Rafael, Calif.
With the economy tightening and many people experiencing pay cuts, a DI payout can be reduced, he said, as payout usually is based on two or three years of average income. However, he said, another result of COVID-19 is that carriers are writing more simplified coverage.
When consumers think of the possibility of becoming disabled, they usually think about disability resulting from an accident, Petsche said. But the reality is that more people become disabled from illness than from accidents. “COVID-19 has reemphasized the significance of sickness over accidents in terms of becoming disabled,” he said.
All the panelists were optimistic about DI sales in 2021 and beyond. Petsche said he has observed a phenomenon in which every time the economy is in a downturn, DI sales go up as people become concerned about their income prospects.
Ray Phillips, president of The Brokers Source in Pittsburgh, said he believes “this is a great time to be in the business. I’m bullish on DI sales.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.
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