DISABILITY INCOME
Outside the comfort zone ; Selling high-limit disability
The disability insurance marketplace may seem relatively obscure to many life and health insurance advisors active in the industry today . However , the true nature and importance of income protection is not lost on successful agents and brokers willing to step out of their proverbial comfort zones and market products that are not only pivotal safeguards to millions of consumers , but also provide robust , long-lasting commissions to its prescribers .
Disability insurance is arguably the greatest financial resource to the American workforce . A well-structured and thorough DI portfolio protects an income earner ’ s greatest asset — their paycheck and their ability to make a continued living in case of unexpected disablement . The average American is three times more likely to suffer a short or long-term disability during their career than die during that same period of time . And the potential loss of earnings through those income accumulation years can be economically devastating to not only the disabled person , but to his or her family members and financial dependents .
Not an obvious prospects
Joseph Russo is an Underwriter and Account Executive at Petersen International Underwriters . With over 15 years in the financial services industry , Russo is a “ specialty market ” life and DI expert , as well as Editor-in-Chief of the company ’ s weekly publication . Contact : Joe @ piu . org .
Although DI should be a requisite insurance protection for every working person , the high-limit market poses the greatest opportunities to the financial advisor as well as potential shortcomings and underinsurance dangers to the consumer . High-net-worth individuals may not seem to exhibit the most obvious needs for income protection like other Americans who typically live paycheck to paycheck and lack dependable savings and retirement vehicles , but prospective clientele making over $ 250,000 annually stand to lose more in the long-run in the wake of disablement because they simply have more to lose . Their more affluent lifestyles typically require levels of protection that cannot be solely acquired amongst usual disability insurance resources .
U . S . disability carriers commonly maintain insurance participation limits that discriminate against high-net-worth individuals with aggregate benefit caps frequently at 60 % of income on the high end , but more commonly in the 30 % to 50 % range . With rightful goals of family wealth preservation and lifestyle maintenance , these income protection levels are not sufficient by any means . Agents should strive for 65 % to 75 % of income covered by comprehensive disability plans . Yet , those figures are not possible in the U . S . group and individual markets alone . Specialty disability marketplaces like Lloyd ’ s of London must be tapped to properly accommodate the high-limit disability niche .
Lloyd ’ s and other European-market carriers developed DI programs and products over the last half-century for the American market that have effectively evolved to complement and supplement the limited offerings of our domestic insurers . Although these specialty carriers cannot by law and regulation compete with U . S . insurance companies for dollar-one business in the life and health space , they are permitted to provide excess insurances as well as baseline coverage when domestic carriers fail or decline to do so .
44 Perspectives Q4 2021