Beware of the Disability Income E&O Lawsuit

Fifteen years ago, the DI rules were intuitive. Physicals and blood work were the status quo and those with quadruple bypasses or diabetes could run marathons easier than they could qualify for disability income insurance.

Flash forward to 2010

Heart patients, diabetics, alcoholics, drug addicts and antidepressant users now receive disability income insurance coverage every day. And, they're doing it honestly - with no physical examinations and no blood work. Moreover, they're getting quality disability income coverage with short elimination periods; Own Occupation definitions; survivor benefits; hospital indemnity benefits; home health care benefits and all the other bells and whistles they might like.

The old rules no longer apply - in fact they're downright counterintuitive.

Brokers' books are full of clients who previously would have been declined, but today, with the right partner, would be accepted. Why worry about these people? For one, it's the right thing to do and for two, it earns extra commission. But the most compelling reason of all may be this: Errors and Omissions. Insurance brokers who don't offer their clients the coverage they need can be sued if a client suffers disability and is not adequately protected. This is a bit like a doctor's requirement to keep her license current - brokers are obligated to be informed of available coverage and to protect their clients with the best options available.

With that duty to be informed in mind, here are the facts:

One-third of all people between the ages of 30 and 64 will become disabled sometime in their lives. (Source: Health Insurance Association of America)
At age 32, the chance of being disabled for 90 days in 6.5 times greater than the chance of death. (Source: National Association of Insurance Commissioners)
75 percent of disabilities are caused by an illness rather than an accident. (Source: Commissioner's Disability Table)

Most Americans readily understand the need for life insurance.

Now, with these facts and statistics, disability producers can easily illustrate that disability income insurance is more important than life insurance for the lion's share of working Americans. Many mistakenly believe that they are adequately protected by Social Security or Long-Term Disability plans. However, the income from these plans is often taxable and can be subject to long waiting periods. In fact, many plans leave income gaps as wide as 72 percent of gross income. Most people won't relish the thought of living on 28 percent of their gross pay!

Now is the time to take another look at disability income insurance!

Forget that the market for medically impaired disability income insurance is huge. Forget that the commissions are generous. Forget that this is an amazingly easy sale when one presents factual data about the risks involved. And remember this one simple truth: Insurance professionals have a duty to protect their clients. Now that you know what's available, don't you owe your previously declined clients a phone call?

Daniel C. Steenerson, CLU, ChFC, RHU, is the President of Disability Insurance Services, headquartered in San Diego, Calif. For more information about disability insurance and to obtain free sales tools and articles, visit http://www.diservices.com.

Is Disability Insurance a Mature Enough Industry That You Need to Trust in Its Ability to Assist?

Disability insurance, in case you look at it, need to figure on our list of issues to do, just like a lot as medical care insurance does, shouldn't it? About one in five Americans experiences some form of injury each and every year that keeps them from working for a period of time. Depending on who is advertising, it is possible to get to hear figures anywhere between 30% and 80%, as an estimation of your personal chances of being struck by some form of disability in your lifetime. Disability insurance exists, to produce up for whatever shortfall in salary you experience, whenever you can't function. And all of this, is when most of all Americans get by with no disability insurance of their own. They can count themselves lucky if their employer occurs to cover them, but which is all. Most individuals who cover themselves paying premiums out-of-pocket, never can afford enough.

The disability insurance industry, can consider of no far better method to respond to all of this, than by inflicting grisly advertisements on us, that make them sound like vultures circling inside sky. They put out statistics that go, 'Every second in America, there's a new disability that occurs". They get that figure from the National Safety Council that has sort of a broad definition for disability injury. If you ever get anything that keeps you away from any everyday activity for a lot more than one day, they call that a disability injury. For instance, in the event you feel you cannot go to the movies one night, due to the fact you were roughhousing with your kids, and got punched inside nose, that counts being a disability injury. Lots of persons look at to put in fake claims to obtain their hands on some undeserved disability payouts as well, to generate points worse. For whatever reason, doctors seem to acquire a great deal of disability insurance for themselves as well, and they claim on them generally. If most of our estimates of how likely we are to need to have disability insurance comes from those who take these into account, how do we actually know just how much we require it?

There's not a whole whole lot of independent info on the subject. There was a book known as How to Insure Your Income, released a lot more than 10 years ago, that gave you statistics that weren't all that various. The site of the Council for Disability Awareness has an on the internet quiz, that says that if you've an office job, you just have a 10% chance of getting that unlucky. So just how much is enough? About one in three workers inside the country has some form of coverage that their employers pay the premiums on. Everybody has Social Security, but you don't get far more than a couple thousand dollars a month, and it's extremely, quite hard to qualify. If you're counting on worker's compensation, they'll only care if you're truly injured whilst at your post. Private disability insurance, even if you ever do purchase it, could be challenging to claim on. They have all kinds of exclusions to look at to disqualify you. They'll test to tell you, "Oh! so you cannot work as a lathe turner anymore? We cannot pay you, unless you attempt (and fail) at finding do the job as being a holiday gift wrapper at the mall". Seeing as how complicated it's to come by correct coverage, perhaps it's just very best to let items take care of themselves.

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How to Sell Disability Insurance - Plan Design Key to Corporate Executive Market

If you're looking for a disability insurance market that is both lucrative and under-penetrated, consider the corporate executive market. Many of the nation's millions of small to mid-size businesses offer employees no disability income protection whatsoever. And, of those that do, the coverage is often inadequate, particularly for middle- and upper-management.

As a result, numerous opportunities exist in the corporate executive market - opportunities you can take advantage of through creative, expert plan design.

A good disability plan design is one that is custom-tailored to fit the unique needs of your client company. Usually, it will include a blend of group and individual features that provide the most coverage at the best price. Such "combination plans" emphasize the strengths of group long term disability and individual non-can while minimizing the drawbacks of each, and are excellent door openers in the corporate executive market.

Ask the right questions.
To begin, approach your prospective clients with questions: What are their problems? What do they want to accomplish? How much coverage would they like to provide? Do they want upper-level executives to have more favorable treatment than others? How much money are they willing to spend?

Questions help clients clarify their disability insurance needs and enable you to explain many of the options that are available. Often, you will need to take an educational role. Group insurance is the only disability product that's been introduced to many employers. The concepts of combination plans, underwriting concessions, and discounting are new to them.

Combination plans are especially attractive because of their flexibility. They can be structured to meet a variety of needs, thereby giving employers great control over their benefit programs.

Determine the right coverage mix.
Traditionally, the standard approach to combination plans has been to add a small amount of individual disability insurance to long term disability - say 20 percent individual added to 40 percent LTD. But more recently the group/individual mix has become more varied, and there is really no longer a "standard" approach. The right mix is determined by the unique make-up and goals of the client company, as well as any concessions the underwriting department is able to offer.

After you have determined the insurance goals of your clients, the next stop is to work closely with a risk manager or advanced underwriter. Always remembering that the primary strength of combination plans is flexibility - both in product blending and in underwriting - it is important to work with underwriters who are thorough professionals in plan design. The knowledgeable underwriter will look at the dynamics of each case to determine the optimum package for the client company and to establish the guidelines under which the case will be underwritten.

Consider Guaranteed Issue.
In large cases, guaranteed issue (GI) frequently replaces individual underwriting. GI means that a disability policy is issued at the standard rate with no restrictions. The size, occupations, incomes, and ages of the group are carefully evaluated in order to establish specific underwriting concessions. Guarantee to issue is a variation on the guaranteed issue offer, in that it is the standard policy but with certain rights reserved by the insurer.

Ensure continuity and flexibility.
If you're looking to replace or enhance an existing disability insurance plan design, the underwriter will want to be certain that nobody loses under the new plan. This is especially important in smaller cases, where the individual portion of the plan design is individually underwritten. Your goal should be to create seamless coverage for everyone in the plan.

A good plan design should also stand the test of time. It must be flexible enough to cover promotions, salary increases, future employees and other personnel changes. In many cases, a well-designed disability plan provides the best coverage for your employer clients. Learning to develop good plan designs can also be highly rewarding for you: You will profit from multiple cases in one sale, add-on sales, and new enrollments. What's more, your client base will grow, as you are able to offer precisely what your customer wants.

To develop and offer the best paycheck protection plan designs, it's important to work with an experienced carrier or distributor. The best carriers have been developing combination plans for many years and have entire departments dedicated to helping producers devise the best plans for their clients.

Offer the best of all worlds.
By developing first-rate disability insurance plan designs, you will be able to offer your clients flexibility and quality - the best of both worlds. And you will have the necessary skills to open new doors in the corporate business market.

Daniel C. Steenerson, CLU, ChFC, RHU, is the President of Disability Insurance Services, headquartered in San Diego, Calif. For more information about disability insurance and to obtain free sales tools and articles, visit http://www.diservices.com.