Presentation on theme: "For Producer Information Only. Not For Use In Sales Situations INCOME PROTECTION SALES MADE EASY Individual Disability Insurance."— Presentation transcript:
For Producer Information Only. Not For Use In Sales Situations INCOME PROTECTION SALES MADE EASY Individual Disability Insurance
For Producer Information Only. Not For Use In Sales Situations What you’ll learn today 1.Why you should sell Individual Disability Income (IDI) protection 2.How to simplify the conversation 3.Policy design options and approach techniques 4.Multiple needs of business owners and approach techniques 5.Sales pieces to share with clients
For Producer Information Only. Not For Use In Sales Situations 1 It’s a great door opener. 2 Upon a disability, it helps clients pay daily living expenses and bills, including premiums on other insurance products they have with the producer. 3 It helps diversify your portfolio offering and provides attractive compensation. 4 It’s part of a producer’s due diligence. 5 Solutions are available in sought-after markets (e.g., business owners and higher-income individuals) Top Reasons to Sell IDI
For Producer Information Only. Not For Use In Sales Situations Why people need income protection 4 1 in 4 of today’s 20-year olds will become disabled before retiring. 1 The average long-term disability lasts 2.5 years 2 50% of Americans would be in financial trouble in one month or less following a disability 3 1 Social Security Administration Fact Sheet, Feb. 2013 2 2010 Gen Re Disability Fact Book 3 The Life and Health Foundation for Education (LIFE) survey, conducted by Kelton, April 2012
For Producer Information Only. Not For Use In Sales Situations Building a solid financial foundation Income is the financial foundation. Without an income, how would your clients be able to meet their financial obligations?
For Producer Information Only. Not For Use In Sales Situations Who is a likely prospect? Almost everyone in the working population, but specifically those who: Are ages 30 to 50 (typically available to ages 18 to 60) Earning a minimum income of $40,000/year Are interested in protecting their most important asset – their ability to work and earn an income Have other risk and/or protection products with you
For Producer Information Only. Not For Use In Sales Situations The Income Protection Conversation It’s up to you to talk about income protection. –If you don’t, someone else will. Compensation potential Producers who take a comprehensive approach with clients earn 30% more than those who do not. 3 Market potential 67% of the private sector workforce has no long-term disability insurance. 1 Nearly 50% of those who look into income protection, after being approached about it, buy some type of policy. 2 1 Social Security Administration, Fact Sheet, March 2011 2 LIMRA MarketFacts Quarterly, 2012. 3 2010 Principal Life Insurance Company retail sales data
For Producer Information Only. Not For Use In Sales Situations Approach techniques I Can’t Afford It Premium coffee a day Date night Lunch every day Smart phone Why Do I Need It? Illnesses, not accidents Sharing a real story Divide your income in half I’d Never Use It Life insurance Auto insurance Home insurance www.principal.com/incomeprotection
For Producer Information Only. Not For Use In Sales Situations Policy Design Options Sell the premium – Typically 1% to 3% of gross income Sell the product –Have the proposal ready and work off the proposal –Explain the elimination period and benefit period (and how they can be used to customize the policy) –Policy pays in three ways Total Disability Partial Disability Catastrophic Disability –Guaranteed benefits and premium –Ability to add riders to fit their specific needs – inflation protection, ability to return to work part-time, etc.
For Producer Information Only. Not For Use In Sales Situations $5,000/month benefit replaces 60% of $100,000 annual income For 1.94% of annual income
For Producer Information Only. Not For Use In Sales Situations Policy Comprehensive Coverage Moderate Coverage Basic Coverage Monthly Benefit $5,000 (maximum available) $3,000$1,200 Total Monthly Premium Male $138.73$83.24$33.30 Female $207.86$124.71$49.89 Assumptions: Colorado resident, HH 750 policy, $100,000/annual income, 5A occupation class, Nonsmoker, age 35, 90 day Elimination Period, To Age 65 Benefit and Your Occupation Period, Residual Disability rider Different coverage for different needs and budgets
For Producer Information Only. Not For Use In Sales Situations Quick and easy application process –Up to $4,000/month benefit for single-life –Up to $6,000/month benefit for multi-life No routine medical requirements 1 No financial documentation required (If client earns under $150,000/year 2 ) Underwriting decision within 48 hours (Once the application and TeleApp are completed and received) 1 No blood, urine, exams, EKGs or APSs required unless a significant medical condition is reported by MIB, significant medical information is obtained from the TeleApp or other available information, or any other disability coverage has been issued or applied for on a nonmedical basis. Applications could be rated, ridered or declined based on all underwriting information available; this is not a guaranteed issue program. Urine/HIV test is required in Maine. Subject to Issue & Participation limits and minimum premium requirement. Combined Simplified DI and Simplified OE benefits cannot exceed $10,000/month. 2 Financial documentation required for certain occupations regardless of income. Approach Technique #1 Simplified Underwriting Program Meet your clients’ income protection needs faster
For Producer Information Only. Not For Use In Sales Situations Approach Technique #2 Benefit Update rider Issue ages: 18 to 55 Available to all occupation classes No cost rider — Provides benefit review opportunity every three years without medical requirements 1 Two advance option triggers: –Losing group disability insurance –Having at least a 50% sustainable increase in income All definitions, discounts, provisions and current rates (at attained age) of the original policy apply No cap 2 or age restrictions for benefit increases To keep the BU rider inforce, the client must accept 50% of the BU offer 1 – Advanced Options available every three-year period for Individual DI insurance 2 – Up to available Issue & Participation limits.
For Producer Information Only. Not For Use In Sales Situations Approach Technique #2 continued Benefit Update rider Year Annual Income Monthly Benefit Total 123123 $90,000 $95,000 $120,000 $4,750 $4,940 $5,750 456456 $125,000 $130,000 $160,000 $5,980 $6,220 $7,350 789789 $165,000 $170,000 $195,00 $7,650 $7,950 $8,950 10 11 12 $200,0000 $205,000 $250,00 $9,300 $9,675 $11,450 As your client’s income increases, so does the potential for BU increases – without evidence of medical insurability. Example of how benefits can grow
For Producer Information Only. Not For Use In Sales Situations Approach Technique #3 Offer DI and DI Retirement Security together Disability occurs Begin receiving traditional DI insurance benefits DI Retirement Security benefits paid to trust 3 Begin receiving assets from trust Elimination period satisfied To Age 65 Funds diminish 2 To Age 67 Trust assets are distributed as retirement income and continue until the funds are depleted. 2 If you become disabled, 1 monthly DI benefits are paid to you and the trust. 1 Assumes To Age 65 Benefit and Your Occupation periods. ׀ 2 Any remaining assets go to your estate if you die while receiving benefits. ׀ 3 DI Retirement Security is issued as a non-cancelable, guaranteed renewable, individual disability income insurance policy. It is not a pension or retirement program or a substitute for such a program. Retirement Security is not available for government employees, individuals with Group LTD coverage that includes a “retirement supplement” or anyone who is over insured based on Principal Life’s current Issue and Participation guidelines. It may not be available or the benefit amount may be reduced for certain occupations if there is existing DI coverage with lifetime benefits. Additional underwriting guidelines may apply. Invested based on risk tolerance.
For Producer Information Only. Not For Use In Sales Situations Multiple Needs of Business Owners Solutions for Business Owners and Employee Benefit Needs Business Protection Overhead Expense (OE) Business Loan Protection (BLP) Rider 1 Exit Planning Disability Buy-Out (DBO)
For Producer Information Only. Not For Use In Sales Situations Approach Technique #4 More Disability Coverage, Less Cost 20% Multi-Life Discount Assumptions: CO residents, non-smoker, 4A occupation classes DI: 90 day Elimination Period, To Age 65 Your Occupation and Benefit Period OE: 30 day Elimination Period, 12 month benefit factor KP: 180 day Elimination Period, lump sum benefit
For Producer Information Only. Not For Use In Sales Situations Informal Business Valuation –Provides the business owner with an informal valuation of his/her business using five common valuation methods –Conducted by team of CPAs and consultants Buy-Sell Agreement Review –Conducted to ensure Buy-Sell agreement is effective and properly funded. Any gaps can mean sales opportunities for you. – Conducted by team of Principal Life CPAs and attorneys Approach Technique #5 FREE Business Planning Services
For Producer Information Only. Not For Use In Sales Situations Get Started Today Get to know the market See the tools available at www.principal.com/TargetBusinessOwners www.principal.com/TargetBusinessOwners Meet with business owners; use the comprehensive disability fact finder Offer complementary business planning services Identify products and solutions
For Producer Information Only. Not For Use In Sales Situations Sales Pieces to Share with Clients Principal Life has tools available to cover the top three objections: “I won’t need it – I won’t get disabled” “I can’t afford it” or “It’s not worth it.” “I have other coverage so I’m protected”
For Producer Information Only. Not For Use In Sales Situations Use ? “I’ll Never Use It” 2 – The Principal Financial Well-Being Index, First Quarter 2013. | 3 – Data from model year introduction 2008 through July 2010, Highway Loss Data Institute. | 4 – Data from ISO, a Verisk Analytics Company. | 5 – Average premium for 2009, National Association of Insurance Commissioners. | 6 – Average premium among top Individual DI insurance carriers (Principal, MetLife, Standard, Guardian and Ameritas) for $1,000/month benefit, 45 year-old male, Colorado resident, non-smoker, $60,000 annual income, To age 65 benefit and Your Occupation periods, 90-day elimination period, non-cancelable. | 7 – $30,000 is the total payout of a $1,000/month benefit policy claim that pays for 2 ½ years, the average long-term disability claim length (2010 Gen Re Fact Book). | 8 – The policy offers the potential to pay ongoing monthly benefits until the end of the benefit period; To age 65 or 67 benefit period is the most common
For Producer Information Only. Not For Use In Sales Situations Which option would you prefer? PLAN APLAN B Annual salary $100,000 if working (before taxes) Annual salary $98,600* if working (before taxes) $0 Income while too sick or hurt to work $60,000* Income while too sick or hurt to work from your DI insurance policy (after taxes) If you become too sick or hurt to work tomorrow, what is your Plan B? Would you rely on co-workers to hold a fund-raiser for you? Plan ahead with income protection. *100,000 less $1,400 in hypothetical annual disability income insurance premiums. Premiums and $5,000 monthly benefit amount depend on various factors. Your local representative can illustrate the exact amount you’re eligible for based on current underwriting guidelines. This a hypothetical example only.
For Producer Information Only. Not For Use In Sales Situations Individual DI insurance can protect more of your client’s income Full paycheck. Healthy and working. Group LTD benefits before taxes Group LTD benefits after taxes For the cost of 1 to 3 pennies… Group coverage is a great start, but often not enough
For Producer Information Only. Not For Use In Sales Situations The Cost of Doing Nothing What’s more costly? Purchasing an affordable DI policy today and being protected in the event of the unexpected? Incurring a disability and no longer having an income? Consumers spend $4/day or $120/month on coffee. 1 For half that amount, about $56/month, they could protect their income 2 1 –National Coffee Drinking Trends 2010, National Coffee Association – average cost for a brewed cup of coffee is $1.38 and consumers drink an average of 3.1 cups a day. | 2 - Male, Colorado resident, $60,000 annual income, $1,350 monthly benefit, To Age 65 Benefit Period and Your Occupation Period, non-smoker, Residual and Recovery Disability Benefit rider, 90-day elimination period, 4A occupation class.
For Producer Information Only. Not For Use In Sales Situations Questions? Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group, Des Moines, IA 50392. Disability insurance has exclusions and limitations. For costs and complete details of the coverage, contact your Principal Life Financial Representative. DI 2298| 2778042009