The 4 Commandments for Disability Insurance Advisors

Two stones listing the 10 commandments
Our commandments aren't as rigid as these ones set in stone.

Written by Jack Schmitz and Emma Schmitz

With decades of disability insurance expertise under our belt, we humbly suggest that we know a thing or two about the DI market. And every industry needs a list of rules to operate by, right? Here are our four commandments for selling disability insurance.

1) Ask (the Right Questions) and You Shall Receive (an Approval)

Today’s disability insurance market still offers valuable products with liberal definitions of eligibility, especially for a target audience of business owners and medical professionals. However, a big hesitation behind not selling disability insurance depends on an agent’s ability to ask the right underwriting questions before sending in an application. A good agent knows that prequalifying clients prevents headaches and imminent declines. Typically, life insurance agents do this the best since they’re used to medically underwriting their clients already. Do yourself and your client a favor by asking the sticky health and lifestyle questions instead of blindly sending an application on their behalf—unless you’re a pro at delivering bad news.

2) Know Thy Products—or Simply Ask a Specialist

You may think sticking to health insurance is the better route to go since it allows you to avoid medical underwriting and thus, the personal questions. Think again. Firstly, individual disability insurance compensation can be far greater than health insurance compensation. Secondly, (and don’t tell Commandment #1 we said this) you actually can avoid asking the hard questions if you really want to. General agents (hi!) specializing in DI are ready to help advisors with every aspect of the process, from prospecting to placing. You can even direct the client to an online application and thereby avoid asking the questions yourself (hello, 21st century). Another plus: guaranteed standard issue is available to more and smaller groups, so simplified underwriting could be the bread and butter that lets you slide right by any super difficult conversations.

3) Do Unto Yourself as You Would Have Others Do Unto Themselves

It’s not easy to sell a product without knowing why anyone would want it in the first place. Unless you’re as sly as a used car salesperson, we suggest putting your money where your mouth is and getting insured before expecting clients to. Protect your income. Have a succession plan. Have a buy/sell agreement for your own business. Think like a business owner! Your clients probably spend resources on marketing and networking for their own business, so they’d expect you to as well. Be insured first, set goals, and put yourself in the field. Game recognizes game.

4) Thou Shalt Spread Awareness Through Education

Once you have your own insurance policies in place, you can better relay to your clients the importance of getting coverage. Let them know the reasons why you have a disability insurance policy—whether it’s to cover a mortgage, to be ready to care for a relative in need, or to help with family expenses if you’re out of work. Aristotle said, “Educating the mind without educating the heart is no education at all,” which we’re pretty sure is a quote about selling insurance. Ask about your clients’ reasons. Chances are they’re responsible for something they care about.

As an advisor, the best way to “sell” disability insurance products is to simply educate your clientele. Not only does a DI product description kill two birds with one stone by defining what it is and why one would need it (e.g., “business overhead expense insurance” covers your overhead business expenses while you’re disabled), but teaching your clients about the differences between group LTD, social security DI, individual DI, and so on will give them an idea of which product fits them best—and where some products may come up short. Here are some basic points to make:

  • Individual DI is portable, guaranteed renewable, and may have guaranteed rates. Eligibility for benefits may require only a loss of income due to disability, with no total disability requirement.

  • Group LTD plans discriminate against high earners. A sixty percent (taxable) LTD benefit can be capped at half or less of the high earner’s salary. They need to know about this coverage inadequacy. High incomes come with high expenses and big obligations.

  • Other business products like key person DI (KPDI), business overhead expense (BOE), buy/sell (DBS), or loan indemnity coverage may be more attractive to entrepreneurs and small businesses. BOE keeps office rent and employees paid, and DBS eliminates the need to find a new partner or having to work with the family of the disabled partner (remember the movie Tommy Boy?).

Write a book, start a podcast, do whatever suits you to spread awareness of the products you’re selling; understanding (or just awareness of) these products is half the battle for most clients. Ask them what their disability plan is—the low frequency, high impact event that can lead to financial ruin. The number one reason people don’t buy DI is because they were never asked, or they don’t know they need it. Your DI BGA can help.