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In this case study, the goal was to ensure the proper amount of coverage was in place for a commodities firm whose business was rapidly expanding.  As a result of the rapid growth, the CEO’s share value increased by 250% since the last buy-sell agreement.  It was determined by the board that the disability buy-out exposure would cripple the company should the CEO become disabled.

The annual premium on this case was roughly $110,000 + taxes and fees.

Client

A large firm located in Texas whose business involves grain, energy, freight and other commodities.

Situation

The client maintained a buy-sell agreement that failed to keep pace with the rapid growth of the business.  The size of the insurance portfolio that was constructed to protect the shareholders required significant increases.  The company board, consisting of a dozen shareholders, wanted $33 million of coverage to fulfill the funding obligations on the commodities company’s founder and CEO.  The existing life insurance on the CEO only protected $13 million, and his disability buy-out insurance rested at an even lower level, thus there was the need for additional protection.

Assessment

It was agreed that should adequate coverage not be in place and the CEO become disabled, that the cash strain would cripple the organization.

Solution

This risk was alleviated by designing a disability buy-out plan providing the additional benefits required to protect the organization from the $33 million disability exposure.

Result

The advisor procured additional term life insurance protection to fully fund the death repurchase clause of the buy-sell agreement.  A disability buy-sell policy was funded to a $33 million limit to pay a lump sum benefit if the CEO were to become disabled, pursuant to the definitions and trigger language of the disability repurchase clause.

Sales Tip: For productive business succession planning discussions, ask your client/prospect the following 4 questions:

Do you know the value of your business?
Do you have a buy-sell agreement?
Has your agreement been impacted by any change in the value of your company?  Or have you added/subtracted any partners?
Without a buy-sell agreement, did you know that you could go into business with your partner’s spouse in the event they die or become disabled?

As always, please feel welcome to contact your DI Associate regarding solutions and strategies.

While it may seem counterintuitive, purchasing Long-Term Care (LTC) in a down market is actually more important than ever.

A well thought out, written plan for LTC not only provides clients with protection for the future, it also enables them to help protect their remaining savings and assets.

Interestingly, this protection extends to financial planners and RIAs who are able to keep assets under management and alleviates the need of having to systematically deplete assets under management due to checks being written from a client’s account.

One thing is for sure: for better or worse, current economic conditions will change

What will not change is the need to be prepared for a long-term care event.  When savings, rainy day funds, and investment portfolios are down, now is not the time to have to liquidate assets to pay for unexpected long-term care.

By reallocating a small amount of funds today, rainy day pennies can protect investment portfolio dollars against a future long-term care event.  A hybrid long-term care plan can provide accessibility, flexibility, and dependability.

An LTC plan that offers lifetime protection also provides certainty.  During these uncertain times, we all want certainty.

For additional ideas on how to start the LTC conversation, please reach out to your representative for sales and support!

The small business owner market accounts for a 44% of the United States economic production*.  Small business owners are the perfect target market for Individual Disability Income Insurance because, they are approachable, typically unprotected by Worker’s Comp, and a favorable risk to all DI carriers as Business Owners are more likely to return back to work to run their business.

Your Opportunity

There is a very high probability that nobody else is talking to your business owner clients about individual disability insurance.  A 2019 LIMRA study showed only 18% of business owners carry individual disability insurance to protect their income or supplement their group LTD plan that has limitations for business owners.  Among those that do, half reported using it as a way of providing business protection only for their other partners or stockholder.  Leaving 82% unprotected to protect their own income, which leaves an open market for you.

The key to fully protecting them is to help them overcome their perception of invincibility.

Once you ask, what will happen if you get sick or hurt?  You can help them understand the value of disability insurance and introduce them to the variety of comprehensive business protection products including Individual Disability Insurance, Keyman Replacement, Business Overhead Expense and Disability Buy/Sell Funding Insurance.

Expand Their Awareness

Some disability insurance customers like physicians, dentists and attorneys, are well educated about the importance of disability insurance.  However, they still need to be updated on the new advances in coverage options.  With small business owners on the other hand, the need for protection does not differ.  You, as their advisor, need approach these valued clients and let them know they need to protect their income if they get sick or hurt.

The key to the disability insurance sale with this market is to get the owners to see their vulnerability and understand why they need the protection in the first place.

Don’t get me wrong, some business owners will just not get it, and some will see the importance right away.  Don’t waste a lot of time with that business owner that just doesn’t get it.  There are many that will.  You, as their advisor, owe it to them to at least bring the need to the table.

State Your Case

Many people underestimate their risk of disability.  Here are some facts you can share:

While injuries are typically perceived to cause many disabilities, they represent less than 10% of disability claims.
Diseases of the musculoskeletal system, such as arthritis, tendonitis, carpal tunnel, and lupus continue to be the leading cause of new disability claims approved in 2019.
Cancer remains the second leading cause of new disability claims.

To help you tap into this market, we have information and marketing support you can use.  Contact your Disability Income Department for additional information and support.

*Source US Small Business Administration https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/

Have you ever approached a Federal Employee about their income protection plan?  The typical response from the prospect might go a little something like this.  You ask, “Is your income protected if you get sick or hurt and could no longer work?”  Prospect says, “I have disability income protection through my work. I am a Federal Employee and you know, we have great benefits.”

Many would think the conversation ends right there.  The reality is, most Federal Employees don’t know what their long term disability plan would pay if they got sick or hurt.  Don’t get me wrong.  I think it is great that the Federal Government has a plan in place at no cost to the employees to pay them if they get sick or hurt.  But, these federal employees carry around this false sense of security when it comes to their Disability Income Plan.

After reviewing the facts about what benefits are actually paid out, there could potentially be a big problem for most of these employees if they had any kind of a long term illness or injury.

Federal Employees are covered under a plan called, Federal Employees Retirement System (FERS).  It pays the employee 60% of their income (taxable) to the sick or injured employee for the first 12 months after a 30 day wait.  Then the benefit drops to 40% after 12 months payable to age 62.  Benefits will be offset up to an additional 60% of what is received by Social Security.

Consider This

I recently spoke with a 43 year old client of mine that is an Investigator with the Department of Labor.  She told me that she has been with the DOL for 8 years and would probably be there until she retires.  We sat down and did the math together on what here benefits would be if she got sick or hurt and couldn’t work.  Her current taxable monthly income is $7,850.  If she were to get sick or hurt for a period over 1 year, her FERS Disability Plan would pay her, $3,140 taxable income until she is 62 years old.  After a modest combined tax rate of 25%, her net monthly income would be $2,355.  Her exact words were, “I had no idea. I could barely make my Mortgage Payment with that”.  I then reminded her that if she qualified for social security, her FERS benefits could be reduced by up to and additional 60% of what she receives from Social Security.  That’s the Shocking Reality.

There are currently over 2,853,000* civilian federal employees with Disability Income Protection under the FERS plan.  Over 84% of those do not carry any supplemental coverage.

We work with carriers that specialize in offering supplemental coverage to Federal Employees.  Call me today and I can show you how to grow your business by offering coverage to the Federal Employee Marketplace.

*Source: U.S. Bureau of Labor Statistics

Cardiac related impaired risk cases can get somewhat challenging in underwriting.  There are many different types of heart conditions – from coronary artery disease to arrhythmias to congestive heart failure and everything in between.

With each of these conditions, there are many different factors the carriers consider when determining their underwriting decisions.  We know just what to look for in these cases, and which carriers to seek out for the best possible outcomes.

Take for instance this recent cardiac success story:

72 year old male, lifelong non-smoker
Applying for $3 million of permanent coverage
Has a history of two-vessel Coronary Artery Disease and an abnormal EKG finding of Right Bundle Branch Block (heart block)
Good compliance with recommended cardiac follow up and testing
We put our noses to the grindstone and worked the emporium to match the case to a carrier willing to offer a Standard rating!

It is a win-win when our Underwriting Team is involved with your cases, we leverage our experience to win it for your clients and for you.  Get to the heart of the matter – we get the offers you need, to get your clients the insurance they need.

It can take a lifetime to save enough for retirement – and just a few minutes to deplete it should an emergency strike.

Do your clients have a plan in place should they sustain an illness or injury that affects their ability to work?  What would they do if their income stream suddenly came to a screeching halt?

Help protect your clients’ retirement dreams with DI Retirement Security – crafted specifically to replenish lost retirement savings when an individual is too sick or hurt to generate a salary.

DI Retirement Security is an innovative program that helps clients ensure their ability to continue saving for retirement in the event of any type of long-term or total disability.  The plan will pay up to 15% of a client’s income for retirement – even if that client has reached the maximum benefit of their current individual DI plans.

Below are some sample rates – a small price to pay to secure retirement plans:

Age
Male Rates
Female Rates
Multi-Life Rates

30
$17.62
$32.03
$16.84

35
$20.79
$35.59
$19.27

40
$26.28
$42.19
$24.84

45
$33.05
$45.68
$29.47

*Rates from Principal Life assuming AZ resident, $1,000/month benefit, 5A occupation class 180 day waiting period and benefits to age 65

**Multi-life rates are for 3+ lives that share a common employer-unisex rates with the 20% Multi-Life Discount

Contact your Disability Income Sales Rep for assistance with illustrations, case design, and product questions.

Activities in life often require some compromising of principles.  For example, in the past no candid follower of college football was without some discomfort when he or she watched a bunch of unpaid kids (at least prior to existing NIL licensing opportunities) generate millions in revenue for an athletic program, all the time having to keep fingers crossed that they didn’t blow out a knee before getting a shot at the Big Show and its big compensation packages.

And what about inflation?  After a 40-year low-level-lull, the rate jumped to 7% in 2021 and is projected to be well over 8% for 2022.

And there is no end in sight as the federal government continues to print and spend money like a drunken sailor.

There’s a joke about the politician who claimed inflation was our friend because . . . “it will eventually make us all millionaires!”  True but, as we all know, probably while causing an actual reduction in our real wealth.

So, we don’t like inflation, but as life insurance advisors we probably tend toward the college-football fans’ mushy-middle moral ground when we consider it provides at least three increased opportunities for more and larger sales.

It may increase how much insurance you can sell on a new case

Most times carriers are reluctant to approve any portion of applied-for coverage based on anticipated future need.  One exception is insurance to fund future death tax liabilities.  Guidelines allow calculation of future need based on current net worth increased for over a reasonable number of years at a reasonable rate of growth.  Since a reasonable assumed growth is tied to inflation (remember, we’ll all be millionaires!) it can be more aggressive resulting in a greater future death benefit need.

It will increase the likelihood that current coverage in not sufficient

Inflation erodes the effectiveness of static death benefit levels in a policy.  It may be time to consider more, possibly in the form of a entire, more effective policy.

“Inflation check-ups” may reveal need for increased coverage from other causes

Often regular policy reviews don’t take place as often enough.  So coverage exams prompted by inflation concerns may uncover additional or increased estate or business planning needs for which current coverage is insufficient or non-existent.

One advisor told us she recently explained to her client, “When I was young the tooth fairy left enough money that I could buy a new doll.  Today the doll would cost me ten teeth.  You need more coverage!”  Another advisor had a son who asked him for ten dollars.  He replied, “Twenty dollars!  What do you need fifty dollars for?”  And we know of one client who had to close his balloon store because of the cost of inflation.

We will keep you supplied with more inflation jokes since demand has increased after a period of low interest!  Otherwise call to discuss any tax, or business and estate planning questions you may have regarding your casework with CPS at 706-354-0401 or tom@cpsadvancedmarkets.com.

Parkinson’s disease affects about one million people in the United States and ten million worldwide.

The cause remains largely unknown.  Although there is no cure, treatment options vary and include medications and surgery.

One of our A+ carriers takes a responsibly aggressive approach to underwriting Parkinson’s disease and can offer favorably on those cases that are well controlled with other favorable risk factors.

Take a look at this recent case study:

65-year-old female
Applying for $500k of Term coverage
Non tobacco user
Diagnosed with Parkinson’s disease two years ago
On low dose of Sinemet daily with no progression of symptoms
Initial underwriting assessment of Table 2

With the application of the following credits:

Controlled blood pressure
Good cholesterol ratio
Routine physicals and preventative screenings
Good family history
No tobacco use in the past 10 years

Underwriting offer after credits: STANDARD!

Contact our Underwriting Team today to see how we can help you place your next impaired risk case.

With summer officially here, your clients are most likely looking forward to soaking up the sun, and enjoying their favorite outdoor hobbies like mountain climbing, rafting, boating, etc.  What they probably don’t consider much about their favorite hobbies is the risk of injury that comes with them.

Accidents are bound to happen, and there are income protection policies geared towards these types of situations.

Consider This:

Let’s say your client gets a “boo-boo” – there is coverage that will provide them with a sufficient amount of time to recover, and tax-free income every month.  There are options for shorter term benefit plans which last from 6 months, to plans that would cover your client for up to 2 years.

Monthly benefits amounts are predicated on the client’s income with a max benefit of $5,000.  For most, this will keep the mortgage paid, lights on, and kids fed while they can recover.  For example, a self-employed 35 year-old carpenter with an annual income of $60K qualifies for $3,500 tax-free monthly income, for a $39 monthly premium.  VIEW FULL EXAMPLE HERE

If your client should get sick or injured, lands in the hospital and doesn’t have an Income Protection Plan in place, it’ll be too late.

Contact your Disability Income Sales Rep today to find out exactly how affordable Income Protection can be to fit any and all clients’ needs.

Epilepsy is a disorder characterized by recurring seizures.  Diagnosis is typically made when a person has had two or more seizures.

Seizures are a result of disturbances in the electrical activity of the brain.

There are many causes including genetics, traumatic brain injury, stroke and brain tumors.  Epilepsy is termed as ‘idiopathic” when the specific cause cannot be identified.

There are two major groups: focal seizures and generalized seizures.  The difference between the two is how and when they begin in the brain.

Focal seizures involve activity limited to only one area of the brain:

Simple or Partial Focal – affects a small part of the brain without affecting consciousness or awareness.  They may alter emotions, smell, feel, taste, sound.  Involuntary jerking or sensory symptoms may also occur.
Complex or Partial Focal – similar to simple focal, but also involves impaired consciousness.

Generalized seizures involve widespread activity in both sides of the brain:

Tonic-clonic or grand mal – involves body convulsions.  Muscles will stiffen (tonic phase) and the body will jerk and twitch rhythmically (clonic phase).
Absence seizures or petit mal – a milder, brief type of activity that causes unconsciousness without convulsions.

Here are two case studies:

A 52-year-old male

Has a history of childhood idiopathic epilepsy with mild absence type seizures that started at age eight.
Controlled with medication which was stopped at age 20.
There have been no seizures since.

Offer: Preferred

42-year-old male

He began having complex seizures at age 26.
His MRI was negative.
For the past five years he has been maintained on two drugs with an average of five seizures per year.
Does not drink alcohol.

Offer: Low substandard

Call our Life Underwriting Team to discuss the specific details of your client’s seizure or epilepsy history.  Let’s work together to get the offer you need!