Many insurance agencies and benefits brokers have embraced disability insurance for its market opportunities, strong profitability and natural fit with their other product offerings. If you aren’t yet one of them, here are some questions to help you evaluate whether it’s right for you.
1. Do you have clients that fit common DI markets? The markets for disability insurance are expansive. Almost anyone with a salary might benefit from the coverage. Some of the most common groups include those who:
- Have jobs with moderate to heavy physical requirements – including doctors, dentists, chiropractors, athletes and pilots, to name a few.
- Own a business, especially if that business is small, reliant on only a few key people, has significant overhead expenses or is carrying business loans.
2. Do your clients’ have a gap in their protection portfolio? Your clients rely on you to help them protect their most valuable asset: their earning power. Often, they’ll have life insurance without also having disability protection. Truth is, according to the Social Security Administration, today’s 20-year-old is 3.5 times more likely to be disabled than to die before reaching retirement age.
- Many have no DI coverage. According to the Bureau of Labor Statistics, just 42% of private sector employers offer short-term disability insurance. Even fewer – 34% — offer long-term disability.
- Many others are underinsured. Even if workers have group DI through an employer, most plans pay only a percentage of salary (often 50%-70%) in the event of a claim. That amount can be reduced even further by taxes. Most group long-term disability insurance plans are fully paid by the employer, which makes their benefits taxable as income, a fact that many workers don’t realize.
3. Does DI fit with existing product lines you already offer? Disability insurance can be a natural complement for:
- Life and health producers who offer executive bonus life, key person life, buy-sell life funding policies, individual health insurance for self-employed individuals and the like.
- Employee benefit brokers who offer executive carve out plans, group medical, group life and other such plans.
- For property & casualty agents who offer BOP coverage, commercial property and other types of business insurance.
4. Are you seeking more balance in your compensation model? If your product line-up is dominated by offerings that involve larger upfront commission with little or no trail, DI may offer you greater balance. Disability insurance compensation normally involves a generous first-year commission with a strong trail of 5%-15% that typically lasts 10 years. This can allow you to build a residual income that lasts a full decade.
5. Would you like greater prospecting opportunity? Adding DI to your product mix allows you to take advantage of the power of cross-selling. The probability of making a sale is 60%-70% to an existing client, but just 5%-20% to a new one. And, there’s no need to incur the expense of buying those leads or making cold calls.