DI Forum – Part II
A DI expert looks at the disability income market and what can be done to increase agent involvement in DI protection solutions.
What tips do you have for agents to increase success in the individual and high income markets?
Petersen International Underwriters does not write “traditional” types of coverages. Our programs only exist when the standard markets can’t (or won’t) write something. This usually translates into excess coverage where the traditional markets supply the maximum benefits, but based upon the income (or business valuation for bank loan, buy/sell, or business overhead), we layer coverages on top of these plans.
Start with your existing block of customers. Regardless of the area of focus – life insurance, medical insurance, etc. – your existing block of customers all have a need for disability insurance. Remember, financial planning begins with income protection! So reach out to those who know you and trust you already. Also remember that financial experts (not just insurance experts) agree that most people need two-thirds of their current income just to stay level. This is regardless of one’s income level.
If your customer is an individual, are they protected for two-thirds with disability insurance? If no, start building up the coverage. The traditional carriers do a great job for the vast majority of situations and occupations, but there are many times a customer needs more. Our firm works with producers and the top brokerage outlets around the country offering excess coverages. A person making $600,000 per year of income has a need for $32,500 per month in disability benefits. This will take two or three carriers. The traditional carriers will secure up to about $20,000-$25,000 per month. The excess is secured as a secondary plan with an additional $7,500 per month.
If your customer is involved in a business (ownership or partnership), then there should also be a discussion on the need for a disability buy/sell plan. They most likely already have life insurance to fund a buy/sell, but what if they don’t die? A permanent disability still triggers a buy/sell, and in the absence of a disability buy/sell plan, they are self-funding! The traditional disability carriers will usually offer up to a maximum of $3 million. A partner whose valuation is higher than this amount (know any companies worth more than $3 million?) can obtain excess disability buy/sell for this purpose.
At Petersen International Underwriters we always work hand-in-hand with the traditional carriers making sure they secure the base coverages before we provide the excess layers. We also work through the top brokerage outlets around the country who are the best resources for producers to find the “right fit” for each case.