Want a Raise? All You Have to Do is Ask!
How to Tap the Income-Boosting Potential of the
Disability Insurance Policy's Future Purchase Option
Are you familiar with the phrase, "Have your cake and eat it too?" It's a figure of speech that states the obvious — in life, there's no such thing as a continuous flow of cake.
However, I believe there's an important exception to this "cake" rule. That exception is the Future Purchase Option (FPO) rider found in many disability insurance policies. If you've sold DI policies containing an FPO, every anniversary date could mean a repeat first-year commission (aka: cake). Yes, it's as simple as it sounds. Below is everything you need to know to give yourself a raise!
- As you sell disability insurance policies, make sure they contain the FPO rider. This option (otherwise known as guaranteed insurability) allows insureds to purchase additional coverage, regardless of health, without the need for a medical exam or blood tests. The Future Purchase Option rider is a win-win for everyone! It allows clients to easily increase disability insurance coverage and it allows you to have MORE CAKE.
- Maintain a calendar of your client's anniversary dates. Sixty days prior to each anniversary, send your clients a letter informing them of the impending option to increase coverage. Make sure your letter includes a list of good reasons that they may want to increase disability insurance coverage. Ask clients the following questions:
- Has your income increased over the past year? If you were disabled, would you now require a larger disability benefit?
- Have your obligations increased over the past year? For example, if you've purchased a new home or you've had a child, would it require a larger benefit to sustain your lifestyle than it would have previously?
- Can you afford more disability insurance coverage? If so, it's smart to get it now before any health issues arise and before your Future Purchase Option opportunities expire.
- Your client's current disability insurance policy is for $10,000 a month of disability income coverage with an annual policy premium of $2,282.61.
- He can exercise the Future Purchase Option by applying for additional coverage up to $2,000 if he qualifies financially (e.g., his income is high enough). Remember, your client doesn't need to apply for the full FPO amount — he can apply for any amount up to the limit for which he financially qualifies.
- When you review your client's financial qualification, make sure to ask if there is other disability insurance policies in force because underwriters will be on the lookout for over-insurance issues.
As you can imagine, the Future Purchase Option represents a great opportunity to build your income level. But, the FPO can also represent a great opportunity for other brokers to get a foot in the door. Did you know that competing brokers can also offer your clients the Future Purchase Option? Many disability insurance policies contain the FPO. It's true – and if they do, they'll be enjoying your cake. Don't let this scenario happen to you. Be the first broker to tell your clients about this exciting upgrade opportunity.