Of all the markets that make up today's multi-faceted insurance business, it's unlikely that any is filled with as many passionate salespeople as the disability market.
I have observed over the years that many of the most successful disability salespeople either have experienced a personal disability or someone very close has experienced a personal disability. In either case, they've learned firsthand about the challenges that face a family or business when someone becomes disabled. And the most successful producers, fully understanding what a severe disability can do to a person and the lives of the people he or she cares about, make it a mission to tell the world and put together plans that will protect against the all-too-common potential for serious hardships owing to a disability.
To help present a picture of how today's top producers view their own disability business - and where the opportunities are right now - we invited the following successful disability salespeople to participate in this month's discussion: Ann Baker Ronn, LUTCF; Steve Crawford; and John F. Nichols, CLU, DIA.
Question #1
Charles K. Hirsch: Can you share a bit about how you became so deeply involved in the DI market?
Ann Baker Ronn: Years ago, I was known as the "DI Queen" at our agency. It was an important part of my practice for many years. For some reason I drifted away from talking about this vital coverage, but then two years ago I was reminded of the importance of income protection when a client of mine (50 years young, a marathon runner and mountain climber) was diagnosed with a brain tumor. He and his wife had purchased a life insurance policy from me. I had never spoken to them about the importance of income protection.
Steve Crawford: I started out as a wholesaler for Guardian after graduating from college representing their DI contract to brokers in the Washington, D.C. area. I really walked into the DI marketplace just as Guardian was starting to take over their large market share in an area that was very under-represented. I was fortunate to have a lot of success early on, and one day I walked in to work to discover that the Web site I had built for my brokers had become the No. 1 search result on AOL.com for "disability insurance." (This was when AOL still meant something.) Consumers from all over the country were asking me for quotes for themselves through my brokerage Web site. A week later, I handed off all of my brokers to some junior associates and went into personal production full-time. I've been one of the top three producers nationwide for Guardian every year since because of the volume of people we get requesting disability insurance quotes online. I'm also a diabetic, diagnosed at age 24, so I have a real belief in and passion for the product. I've never accepted from a single person that it is okay to not have individual disability insurance, and that comes across to everybody I work with.
John F. Nichols: Three events brought me into the market. First, it was an opportunity to work in the medical marketplace with my mentor. Second, I had experienced a personal disabling accident. Third, it gave me the opportunity to be a specialist.
Question #2
Hirsch: Where do you see the biggest opportunities in the DI business, and what are you doing to take advantage of them?
Nichols: There are a number of good opportunities.
There is health care. The advisor community is scrambling to figure out how the legislation being produced in Washington is going to impact them and their customers. Some in the advisor community are reconsidering DI and its benefits to them and their customers. The value of this product is easily conveyed when discussing a holistic approach to an individual's health care protection.
There is so much time and energy spent on how a doctor or facility will be paid if something serious happens to a family, but that is where the discussion stops. It needs to be taken a step further, to a policy that will pay the household during rehabilitation, long-term loss of income, and the long return-to-work periods that may occur. I am trying to take advantage of this opportunity by focusing my efforts on educating the advisors and consumers that we work with in our firm.
There is the middle market. The biggest market we have always had continues to be the middle income market. We continue to saturate the medical and professional market, but it is the middle market/small business markets that have been left off the radar for years. We constantly strive to turn every one-person case into a discounted multi-life case. After all, who doesn't like paying less premiums and going through less underwriting for a product?
There's an opportunity in educating brokers on how to approach their clients. The No. 1 reason more of the public does not have DI coverage is because they have never been asked. Simply asking the client if they have any DI coverage is the No. 1 opportunity in the market today. This product needs to be discussed with each and every client. This expansion needs to encompass all types of insurance professionals and financial advisors.
There's an opportunity owing to the fact that DI can be sold in conjunction with any other product and make complete sense. For example, consider these scenarios:
o With life insurance, the producer might ask, "What if you don't die but you become disabled?"
o With investments, the producer might ask, "What if you become disabled? Will you still be able to invest?"
o With health insurance, the producer might ask, "Sure, pay the hospital and the physicians, but who is going to pay you?"
o With group long-term disability (GLTD) coverage, the producer might say, "This is inexpensive and catastrophic in nature. Let's fill the gaps and get a higher percentage of income replaced with an individual policy that will also fill the holes in a GLTD policy."
Finally, there's an opportunity to re-name the product (in place of disability insurance). Consider these options: income protection, asset protection, business protection, or paycheck protection.
Baker Ronn: We recently became involved with guaranteed standard issue, insuring a group as small as five people with only two qualifying questions. This arena can open up many other opportunities and is a cost-effective method of providing base benefits to key employees.
Crawford: This industry loves the medical marketplace, and that is where the vast majority of individual DI business is being written. It is also where all of your competition is focused, so I see the biggest opportunities in other areas.
There are several carriers now who will offer competitive individual disability insurance plans to federal government employees, and there is almost no competition there. I have also seen a large increase in the amount of business being written on consultants, small business owners, and attorneys. Accountants have always been difficult to get through to, but consultants, SBOs, and attorneys are excellent markets with much less competition.
Many people who know me understand I advertise a lot online to our Web site, but they probably don't realize how much we advertise directly to specific occupations. We have print ads in industry-specific trade journals advertising our company name, "Guardian Disability Insurance Brokerage," with nothing more than our telephone number and Web site URL. We know these ads work, and we know exactly what the ROI is on each one because we have a unique URL for each ad.
We'll buy banner ads on industry-specific Web sites, write articles for their newsletters, sponsor an event, or man a trade show booth. Everybody needs content for their newsletters; that is the easiest and cheapest way to get free advertising for your own business. My only tip would be to never accept their first offer for any advertising. Everybody needs money right now, and if you are in a position to advertise you can negotiate some excellent deals right now to promote your firm on their Web site, newsletter, or conference.
Question #3
Hirsch: What is the most effective DI sales idea that you've used recently?
Baker Ronn: A client who had recently purchased life insurance for business purposes came in telling me that he did not want to put the DI policy in place. I showed him two simple charts. One showed the dollar amount of future income he was protecting if he never receives a raise. It came close to $3 million! I also showed him the odds at his age (40) of dying vs. becoming disabled. The $3 million sold the need. To share why I am so passionate, I proceeded to tell him the story of my client with brain tumors.
Crawford: The most effective thing I have done recently is to go back through my book of business and mine it for business overhead expense (BOE) sales opportunities. Many of my clients either did not buy BOE when they first secured a DI policy from me, or they were not owners of a business at the time. Today many of them own their own businesses, or have grown their businesses to a point where BOE is a bigger concern.
My suggestion to everybody else out there would be to have a brokerage rep or junior associate come into your office, and have them crawl through your files looking for BOE sales opportunities. I bet you will be surprised by how many of your existing clients are more than willing to apply for a BOE policy when they learn it is tax-deductible and how it works.
Nichols: Again, there are several. Here are some that work for me:
I position income replacement as completion of a consumer's health care plan.
I sell need vs. product. If I show the need for something, the product will take care of itself. I call this concept a health circle process. I don't mention the word insurance at all, but instead walk a client through the dangers, opportunities, and strengths of his personal and professional life in regards to his health. By walking a client through this process, inevitably the client will see the need for a solution, which most often is a disability product. If the message of "why" this type of protection is delivered, the product almost becomes secondary. Don't talk about features and benefits, talk about what the end product does if something happens to the client. And then ask, "Don't you want to put things in place that will do this?" Build the total health insurance platform for your client; it should include health insurance and income protection!
I show less-costly alternatives to the maximum benefit or most liberal contracts. Showing clients "a fully loaded" contract and a more streamlined option has been working quite well. Sticker shock has, initially, scared away too many potential clients. Showing them a lower-cost option alongside the max has helped close the sale, and many times, the coverage sold ends up somewhere in between the two options shown. Offering a stripped-down product without all the extra-cost features has also been effective. Again, this helps reduce the premium and remove the sticker shock often associated with a loaded disability policy.
Ask your client what they are doing to help protect their income and assets in the event they are too sick or too hurt to work. You would be surprised how many doors open with that simple question.
Make a single-life case a multi-life case. Anytime I am asked to quote a human resources person, a CEO, a CFO, or an owner -- basically any decision-maker at a company -- I always show a discounted multi-life rate. The discounts for three or more lives are substantial and always create further conversations with the client.
Question #4
Hirsch: What are the biggest challenges your DI business is facing right now? In other words, what about the business "keeps you up at night?"
Crawford: I think the biggest challenge at this moment is the competition. Carriers are playing the leapfrog game again in disability insurance, and everybody is trying to come out with the latest and greatest.
I remember 10 years ago we may have one product change a year in the entire industry. Today, I can barely keep up with all the program and product changes happening monthly with my primary carrier, let alone all of the competition.
I am worried that the major DI carriers did not learn their lesson in the 1980s and early 1990s, and we're heading down the same path again. I look at some of the pricing in the industry right now and cannot figure out how some of these carriers will be in business five years from now. Morbidity doesn't fluctuate all that much, and it certainly isn't improving over time. Down economies increase morbidity. Medical technology is also increasing morbidity because what used to be a death sentence now results in a disability.
How carriers are reducing pricing, especially in medical markets, is beyond logic, and I'm worried about the ramifications industry-wide. There are just too many products on the street right now that don't make any sense to me, and the only way I can think of to generate a profit on them is to "manage the claims."
Nichols: There are a number of challenges. There is the slow transition of carriers utilizing technology to increase penetration of markets and processing efficiency.
Companies are slow to change from a product standpoint.
There is the challenge of marketing to the consumer the need and ability to take control of his or her health care, which is in the forefront of their minds due to the U.S. government.
There is the challenge of finding innovative ways to reach and educate consumers and advisors about the importance of DI to their client's financial security.
There is the challenge of breaking through the biases and misconceptions about DI.
From an industry perspective, I would say that there is the continued struggle by carriers to find solutions for not only the most healthy 10% of the population, but to find ways to provide coverage to people who have some health issues without making coverage unaffordable.
Finally, I fear we may have an influx of claims within the medical markets, like we did in the early 1990s with the influx of HMOs and PPOs. We are getting back to the same products that we offered back then, and my biggest fear is we may have a contraction of companies like we did then. The carriers have a new aggressiveness with premiums, contractual language, issue limits, and guarantee issue programs. I just hope that these decisions are justified financially for these carriers. We certainly don't need carriers exiting the business like the mass exodus we saw 15 years ago.
Baker Ronn: My biggest challenge is helping prospects and clients understand the urgency of taking care of income protection on a timely basis.
Question #5
Hirsch: What can be done to promote further the need for DI?
Crawford: I have noticed a lot of producers looking to disability insurance with a renewed focus in the last year. As producers move away from the health insurance business, many are looking to DI. I think the market is wide open in non-medical occupations, and the producers out there who can find a way to reach non-medical occupations should be able to do so with little to no competition. If I was starting over, and trying to make individual disability insurance a big part of my practice, I would try to create a system that always gave me leads for new sales. Some agents buy their leads online, some have relationships with accounting firms, but don't forget about simple advertising in trade journals or industry-specific Web sites. The most successful DI agents I know all have systems, and not all of them spend all day in teaching hospitals anymore.
Nichols: If we make disability the pillar of a good financial foundation and explain the need to a client, we all will be doing our job as advisors. It is the most undersold product but the most needed, in my opinion.
In addition, campaigns like Disability Insurance Awareness Month (DIAM) are very important.
I encourage everyone to think of DI as part of a complete or comprehensive health insurance plan -- medical covers hospital bills and doctors; DI covers you and your family's lifestyle.
Advisors need to stop commoditizing themselves, because the product already is to a certain extent a commodity. This applies to almost all kinds of financial services insurance products!
Finally, the carriers have really sliced and diced this product a million ways. One carrier has as many as 11 different occupation classes, another just four occupation classes. There are different issue limits for employee-paid, employer-paid, and when coverage is stacked on top of GLTD coverage. Only certain riders are available based on certain income levels. Furthermore, only certain occupations can get certain benefits. It all creates confusion for those who don't sell this product line on a regular basis.
Baker Ronn: Since it is difficult for clients and prospects to believe they will have a need for income protection, it is important for us to share our "real life stories." If we share something real that has happened to someone we know and care about, it makes the possibility more real that it might happen to them. Although this is a tough topic to discuss and to underwrite, this is another way to separate ourselves from the competition.
Panelists to participate in live Web Seminar May 20
You are invited to join us for a live Web Seminar, "Opportunities in the DI Market," at noon EDT on Thursday, May 20. All three panelists from this month's Producer's Roundtable -- Ann Baker Ronn, LUTCF, Steve Crawford and John F. Nichols, CLU, DIA, are scheduled to participate in the online event, which will be moderated by Life Insurance Selling Editor Brian Anderson.
Panelists will provide tips on how producers can be successful in the DI market, and expand the discussion on hot niche markets for DI and how to break into them. They will also take questions from the audience.
To register for the free Web Seminar, see the ad on page 81, visit www.lifeinsuranceselling.com/disabilityinsurance or call 800-867-9287.
Charles K. Hirsch, CLU, is president of Hirsch Communications Consulting, LLC, in Florissant, Mo. His company provides consulting services to life and health insurance companies and marketing firms. Before launching his Hirsch Communications Consulting, Hirsch spent nearly 27 years in business-to-business media. He served on the editorial staff of Life Insurance Selling for 18 years, becoming editor in 1993 and publisher in 1999. He is also a former vice president of Summit Business Media, parent company of Life Insurance Selling.
Ann Baker Ronn, LUTCF, is an 11-year MDRT member with three Court of the Table qualifications. She is a partner at The AFP Group in Houston, where she has been since 1991.
Steve Crawford runs Guardian Disability Insurance Brokerage out of Rockville, Md. He has been quoted in The Wall Street Journal, The New York Times, Forbes, and CBS Marketwatch on the subject of individual disability insurance. He is a member of MDRT, GAMA, NAIFA, and The International DI Society. He has been one of Guardian's top three DI producers nationwide every year since 2001.
John F. Nichols, CLU, DIA, is a 10-year MDRT member with five Court of the Table honors and three Top of the Table honors. John serves as NAIFA National Board Trustee and has been named LIFE's 2010 Industry Spokesperson for DIAM. He is nationally recognized as a disability benefits consultant, the creator of disability products and administration systems, and an expert witness in disability proceedings. He serves as president of Disability Resource Group, Inc., in Chicago.
