Insurance sales are often made because of a combination of persistence and timing. It can take time to go from first meeting your client to developing a good relationship to making your case for the need for certain products and ultimately to making the sale.
This is often the case with producers who sell individual disability insurance (IDI). This much-needed but somewhat-overlooked form of income protection is a must-have for high-wage earners or for those who may not have a base disability insurance policy.
The sales process of what is often called a fully underwritten sale of IDI can last months before a policy is in place. But advisors who have done it can tell you their tenacity in making this sale paid off in the end. This is especially true for advisors who sell to high-income clients, such as C-suite executives, and end up turning that sale into what could be considered the holy grail of IDI sales: the guaranteed standard issue (GSI) sale.
I’ve counseled many advisors over the years on how they can not only approach executive-level clients but also open the sale to the entire boardroom. Here are a few strategies that can help ensure success.
Presenting the need for income protection to executives. Top business executives have a lot on their minds. Regardless of the size of the company or industry, their jobs often come with demanding workloads and high-stakes decision-making. Most likely, planning for a potential disability is not even on their radar. But these highly compensated executives are ideal candidates for IDI to protect their livelihoods in case of a debilitating injury or illness.
Many high-level executives wrongly believe their company’s group long-term disability (LTD) plan will fully cover them. While LTD is a great employee benefit, C-suite executives may need the additional safety net of an IDI policy for more comprehensive coverage should a disability occur.
These executives may not realize that relying on their employer’s LTD policy and its maximum monthly benefit may not fully cover their high salaries. This is because an LTD policy’s maximum monthly benefit often places a cap on the benefits payment the group provider will pay out and may include restrictions on the types of income that can be considered part of an executive’s annual salary.
Sharing the facts. The best time to discuss IDI with these executives is when you are already talking with a well-paid executive or professional about financial planning or life insurance. During your meeting, ask about their company’s LTD coverage and share these eye-opening facts:
Payments from most employer-paid LTD plans replace only 60 percent of an employee’s earnings.
Group LTD policies have a maximum monthly benefit payout — typically $10,000 to $12,000 — that may not cover the full salary of a highly paid individual.
LTD benefits are usually subject to income tax, which can take a significant bite out of what could be an already limited benefit payment.
Benefits don’t cover bonuses or incentive pay, which often makes up a significant portion of a successful executive’s annual income.
Once you’ve opened an executive’s eyes to the limitations of LTD coverage, explain how an IDI plan can help fill these gaps and protect a substantially larger percentage of income. By securing an IDI policy on top of the group LTD plan, your client can have peace of mind that their full income will be protected in case of a disability. IDI not only helps protect income during a disability leave but also secures future income should the executive be unable to return to work due to a long-term illness or injury.
Thinking Beyond One-on-One
Helping one executive realize the importance of additional disability coverage can open the door to additional sales. Once you’ve gained commitment from an executive to learn more about IDI, ask whether there are other executives or leaders in the company who might want information, too.
Companies often have several highly paid executives — perhaps a vice president, chief operating officer or chief financial officer — who may be in a situation similar to your client's. By scheduling a luncheon meeting to explain IDI to a group of business leaders, you have the opportunity to sell the entire boardroom on the need for coverage.
A similar approach is effective for professional groups, such as law firms or dental clinics, which likely employ several high-salaried individuals who could benefit from IDI coverage.
Making the Guarantee Issue Sale
When multiple executives or professionals are interested in IDI, you have the opportunity to sell GSI policies instead of individual, fully underwritten policies.
GSI policies have numerous benefits for customers. One of the chief benefits is that clients do not need to go through medical underwriting or extensive lab work or tests before securing a policy. Instead, an advisor simply needs to understand the employer’s census, as well as the ages and gender mix of applicants, to help craft the right coverage for the group.
In addition, there is a significant premium discount that GSI applicants can receive by submitting an application together. This type of premium discount can be secured only through a GSI sale and is difficult to achieve when a client is submitting an application individually.
At this point, employers often want to get in on the sale and help supplement the coverage offered as part of an employee benefits package. Depending on the group and the employer, GSI policies can be entirely employee-paid, a mix of employee-paid and employer-paid, or paid for solely by the employer.
GSI policies benefit the advisor by generating increased commissions with multiple policies. Unlike with group LTD plans, the advisor cannot be replaced on GSI policies. So you have locked-in income from GSI sales.
Don’t overlook the profitable opportunities in the C-suite. By informing executives of a need they may not have previously considered — and providing a solution — you can build strong relationships and establish trust that will lead to future referrals and sales. Your clients who purchase an IDI policy will have the comfort of knowing they’ve made a smart investment for themselves and their families, and you’ll enjoy the profits for years to come.
Steve Brady is national accounts director, individual disability insurance, at Standard Insurance Company (The Standard). Steve may be contacted at [email protected].