I was recently having a conversation with a colleague about which of company to sell for a client’s Disability Insurance. After a lengthy conversation about the merits of both companies we came to the same conclusion... Both are large and reputable insurance companies and at the end of the day will pay legitimate claims and give competitive decisions. Other than a few industries where one is more competitive, and a few optional riders the products were very similar.
That led us to a bigger question; it’s not whether to sell one company over another but rather why isn’t Disability Insurance being sold more often? As an industry only between 8% and 10% of advisors are making Disability Insurance a part of their practice on a regular basis. What a great tool to have to set you apart from your competition.
Consider some of the facts that your clients are facing right now. At the age of 35 there is a 50/50 chance of your client becoming disabled before the age of 65. The average duration of that disability will last 2 ½ years. Just imagine the ramifications of not having an income for 2 ½ years, how would your clients survive financially? At the age of 35 with an annual income of $60,000 (assuming a 5% annual increase) your client will generate just shy of $3,000,000 over their lifetime. Now what happens if that disability lasts longer than 2 ½ years? That $3,000,000 is at jeopardy.
The need for Disability Insurance is clear, so why don’t we sell more of it?
When asked about Disability Insurance, many clients will respond with: “I have benefits at work”, or “The government programs will pay me a benefit”. While these statements are true, they are only a starting point for the conversation. In my experience asking a client “when and how much will you receive from those sources” is a great way to start talking about the merits and pitfalls of their work place benefits and government benefits. Considering that WSIB will only provide a benefit for disabilities sustained at the work place, or that most group plans have non-evidence maximums which will not provide adequate amounts for high income earners, these sources cannot be relied upon when doing full financial planning.
Cost is another issue that often times is raised. On average the cost of a high quality Disability Insurance policy is in the neighbourhood 1%-3% of their gross annual income. Considering that 1%-3% will protect 80%+ of their income, the cost should not be hindering the sale.
Finally I hear that underwriting makes it difficult to have a policy issued. While I agree that underwriting (especially for any living benefits product) is rigorous, many companies now have instant issue policies that can be used when there is a medical impairment.
To me we need to stop asking which company should be sold for Disability Insurance, and start asking are we selling enough of it.
Speak to your business development specialist to find solutions for your clients.
Senior Business Development Specialist