Disability Income: How to Sell it Kenny Russell DI Wholesaler Crump Disability Solution Center

How likely is it that your client will become disabled? What are the chances of being disabled? The chart below shows the chances of being disabled for 90 days or more. The chart shows the importance of purchasing coverage when you are young, since your chances of being disabled decrease over time, as you grow closer to your retirement years. But even at age 50, there is almost a 1 in 3 chance that you will be disabled, with the average duration a little over 3 years. Certainly, the chart shows the importance of planning for a disability. Your Age Your chances of being disabled Average duration of a Disability (past 90 days) (past 90 days) 25 58% 1.2 years 30 54% 2.5 years 35 50% 2.8 years 40 45% 3.1 years 45 40% 3.2 years 50 30% 3.1 years 55 25% 2.6 years 60 14% 1.6 years Source: Commissioner's IDA Morbidity and Commissioner's SO Mortality Tables, Society of Actuaries

What is your most Important Asset WHAT IS IMPORTANT TO YOU? Priority of what is important differs from person to person. What is more important to one person can be down the list of importance for the next individual. Of the following items, please rank highest to lowest what is most important to you: __ House __ Car __ Retirement __ Income __ Travel __ Entertainment __ Children’s Education

Rethinking Importance Now please rank them again assuming you were hurt or sick and couldn’t work __ House __ Car __ Retirement __ Income __ Travel __ Entertainment __ Children’s Education

Your Money Tree What if you had a tree in your back yard that grew money? What would you use that money for? Food, Shelter, Automobile payments, Clothing, Entertainment, Children’s Education and countless other things Now if I told you that you could only purchase insurance on one thing in your life, what would it be? Your income is your Money Tree

What is Disability Income Insurance? Protection against an Illness or Injury that may cause you to miss work for a period of time Paycheck Insurance - How long could you afford to go without an income? How long could you continue to pay your Mortgage if you were unable to earn money? Would you have to borrow money from your retirement savings if you were disabled for longer than 6 months? Lifestyle protection - Would you be able to maintain a reasonable level of your current lifestyle if you were unable to earn an income?

How Solid is Your Financial Foundation?

Potential Earnings

Question ... Do you get up every morning and come to work only because you love your job, or do you need at least part of your paycheck? Why do you work? What would happen if you couldn’t work?

When Disability Strikes Income Expenses Food Medical Bills Housing Insurance Utilities Educational Costs Auto Clothing NEEDS

Where Will the Money Come From? Savings One year of disability could wipe out 10 years of savings Spouse’s Income Today most families depend on two incomes Borrow Borrowing can be difficult without income Social Security 70% of all Disability applicants are rejected (Source: Social Security Handbook) Sell Assets Assets sold under forced conditions are often sold below market value Disability Income

You Don’t Get Something For Nothing If it were free, everybody would have Disability insurance to protect their income. 98%

Should You Buy Disability Insurance? If you purchase Disability insurance and DO NOT become disabled, how will your lifestyle be affected? If you do not purchase Disability insurance and DO become disabled, how will your lifestyle be affected?

What types of coverage are available? Short term individual Disability Long term individual Disability Business overhead expense (BOE) Buy-Sell Key Person Loan indemnification Contract indemnification Critical illness Kidnap and ransom Accidental Death and Dismemberment High Limit coverage Simplified DI, BOE and Buy-Sell Guaranteed issue Multi-life discounts (3 or more lives)

Quoting Process Collect client information Classify risk based on age, state, occupation, income and contractual needs of the client Input information in the quoting software Email or fax to the producer or sales person

How can I make the underwriting process quicker? Submit complete application packets. Understand that underwriting Disability is not like underwriting Life. Expect a standard turnaround time of 4 to 6 weeks from receipt of application to policy issue. A complete application packets can cut this time by up to 50%.

Medical conditions to be aware of Many conditions that are acceptable for life may cause problems when submitting DI. Some examples are but not limited to the following: Depression or Anxiety* Counseling of any type* Alcohol or drug history Diabetes (type 1 and 2) Irritable bowel syndrome or Colitis Cancer history less than 5 yrs from date of last treatment Heart attack or Angioplasty MS * mental/nervous conditions account for 9% of overall Disability claims but the subjectivity of diagnosis causes carriers to be overly cautious.

Financial Underwriting Financial documentation is required for Disability underwriting. Normal requirements are two years tax returns. Based on earned income AGI used for self-employed individuals Unearned income counts against earned income Increasing income will be averaged Decreasing income will not be averaged

Occupational Underwriting Part of underwriting Disability is based on the client’s occupation. The better the risk and the better the claims history, the better the occupational classification. Better occupational classification equals lower premiums. Most carriers use an occupational classification range of 1a to 5a. Most carriers consider better risks as higher occupational classes. A 5a being the best risk and a 1a being the worst risk.

Occupational Underwriting Some examples of high occ classes are: Attorney CPA Engineer Pharmacist Actuary Executives Some examples of lower occupation classes are: Construction workers Truck drivers Plumbers

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