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Ever presented Disability Income Insurance to a client, and found that with one look at the price-tag they are reluctant to purchase?

While it is true that a DI plan could be costly for some – it certainly doesn’t have to be.

Avoid the “sticker shock” with your clients

The general rule for the amount a client should spend on their Income Protection plan is 3% or less of their annual income.

If the premium is higher than the 3% amount, the client is more likely to experience “sticker shock” – and, even if you are able to place the policy, the likelihood of it lapsing is much higher.  The client will then have no protection and you will not have a renewal commission.

How to keep premiums under 3% of a client’s income

1) By adjusting both the Benefit Amount and Elimination Period (EP), you are able to make the policy more cost effective.

• Adjust the benefit amount to cover just the basic monthly expenses such as rent/mortgage, utilities, groceries, etc.
• Approximately 75% of fully underwritten policies have a 90-day EP – if your client has enough savings, offer a 180-day EP.

2) Creating a mixture of Base Benefit and Social Insurance Supplement (SIS) coverage, is another solution to keep a client’s premiums low.

• The idea here is to get the most coverage for the lowest premium. Since the SIS coverage can be offset by Social Security, State DI or Workers Compensation, the premium is less expensive than that of the Base Benefit.
• A good mixture of SIS and Base coverage can generally keep the premium within a client’s budget, yet provide them with the coverage to ensure their financial stability in the event they are unable to work.

A Fun Fact to share with your “sticker shocked” clients

Over 80% of disability income claims are settled within 5 years because the client recovered and returned to work, or they passed away.  In lieu of a less than 20% chance your claim will go past 5 years, a 5-year benefit can be very affordable.*

Not every client needs all the available costly riders the carrier offers – choose only the riders that will actually benefit a client.

And if in doubt of which rider(s) would be the most suitable – contact your DI Specialist to discuss the best options.  We are here to help!

*Council for Disability Awareness

Nobody gets help with college costs nowadays unless they first fill out a lengthy and bothersome form known as the FAFSA (the acronym stands for Free Application for Federal Student Aid, just in case it ever pops up when you choose the Governmental Financial Assistance category on Double Jeopardy).  The information entered therein drives all consideration for aid under all Federal and many State educational programs.

FAFSA has certain eligibility criteria that determine, based on your income and net worth, how much you should be contributing to your child’s higher education.  If the amount they determine you can pay is too high it renders you ineligible for assistance.

If you are poor and haven’t paid much of the tax that supports the assistance programs, then you’ll probably get financial support.  If you are rich and paid a great deal of the tax to fund the programs, then you probably won’t get any aid – but no big deal because you’ve got enough to pay the piper anyway.

The people that get hammered are those in the middle who have paid their fair share of the tax and, in addition, have been responsible enough to save, invest, and accumulate against the day of their anticipated retirement – only to find that the net worth that their sound economic behavior has created disqualifies them for assistance.

Here is where you can help your clients, especially those with liquid net worth considerable enough that it proscribes or prohibits assistance:

The instructions for completion of the FAFSA form direct that in reporting financial information, “Net worth means current value [of includible assets] minus debt.”

For example, a commercial building worth $300,000 with a $100,000 mortgage would add $200,000 to the net worth calculation. But more important – when adding the value of investments the instructions state that, “Investments do not include . . . the value of life insurance . . . [or] annuities . . .”

How many clients do you have with considerable amounts of net worth in low-performing assets like CDs?

And now the value of those assets are creating a roadblock to financial aid.  One simple solution to recommend is the transfer of funds to an annuity contract or an over-funded life insurance policy (they may not have adequate coverage anyway).

The timing of a purchase doesn’t appear to be an issue.  In researching this strategy calls to the FAFSA information line drew the response that an annuity or life policy was exempt so long as it was in force at the time of the completion of the FAFSA application.  Needless to say, a client should do his or her own spadework in this regard before making a decision.  Once the child is graduated or no longer in need of assistance, funds can be transferred back into the investment opportunities of choice.

Call us to learn about the best product opportunities available for clients who are prospects for this FAFSA Net Worth Minimization Strategy.

Note: The deadline for the 2020-2021 FAFSA is midnight, Central Time, June 30, 2021. The earlier you file, the more grant money you are likely to receive (up to twice as much).

Surprises can be fun, but not when they’re thrown into the Life Underwriting process.

As producers, we all have experienced the challenge of making a recommendation, completing an application kit, and working through days, even weeks, of underwriting – only to learn that the client cannot qualify for preferred rates due to family history, or that they must pay a substandard premium because of multiple driving violations.

After all the work, how many of your applications actually end up being placed in-force?

Eliminate any unexpected surprises during underwriting

We can provide you with tools that will aid in accurately assessing and qualifying your clients’ insurability.

Improve the percentage of applications that are converted into placed policies by performing a basic life needs analysis; asking the right field underwriting questions, and setting reasonable expectations with your client.

Qualify your impaired risk clients more accurately with one page fact finders we call Quick Quotes – with over 30 customized fact finders available online, there is a questionnaire available for almost any client profile.

Completed forms are analyzed by our dedicated Underwriting Department

When appropriate, a member of the Underwriting Team will speak with you personally about your clients and provide directed questions about their health and medical history – the goal is to obtain tentative carrier offers before you make a carrier recommendation or take an application.

Completing a life insurance needs analysis and gaining an understanding of your clients desired premium outlay allows us to work backwards – maximize the insurance policy benefits while not going a penny over the client’s intended budget, even if they are adversely approved in underwriting.

Don’t assume all of your clients are healthy and will qualify at preferred best rates

The reality is that less than 10% of all applicants qualify for the top tier rate class and the majority of clients are approved at standard rates.  Take advantage of our services and expertise to avoid any underwriting surprises.

Contact us today to learn more about the resources available, and how you can improve your life application placement ratio.

If you were an underwriter and received the following application on your desk, what questions would you have?

• Female, age 35
• Noted to be retired with no annual income; Net worth left blank on the app
• Seeking $8 million of term coverage; Purpose of coverage left blank on the app

I know you’d be scratching your head wondering why is this woman retired at such a young age and why is she looking for $8 million of coverage?

What the producer forgot was a good cover letter explaining the purpose of the coverage. This client just inherited a very large estate and recently quit her job.  Estate taxes were a concern.  Based on the inheritance, the $8 million applied for was justified.

How can we help in this situation?

We are here to provide our expertise when it comes to writing good cover letters.  We can even write them for you.  We will help explain the purpose of your applications to our carrier underwriters.

However, the most important source of information about a proposed insured is you, so we’ll need your help to prove your applications are financially justified.

Key information we’ll need includes:

• What is the purpose of the insurance?
• How was the face amount determined?
• Who will be the policyowner and premium payor?
• What is the current amount of in-force and applied for insurance?
• Do you have any other pertinent documentation you can provide to explain how the amount of insurance was determined?

Give us the opportunity to help you move your applications smoothly through underwriting.  If we answer our underwriters questions before they ask them, who knows?

Quicker approvals leading to faster receipt of commissions – then we move on to your next big app waiting to happen.

Are you aware that 70% of people who reach age 65 will need Long-Term Care at some point during their lifetime?

While nursing homes and assisted living are popular, there is no place like home – 80% of all LTC is provided in the home, either at the home of the person receiving care or at the home of a family member.

Considering home is where the heart is, it’s important to highlight the flexibility that home care benefits provide.

Here are a few of the benefits included in most policies:

• Home Modification
• Home Safety Checks
• Durable Medical Equipment
• Provider Care Checks
• Caregiver Training
• Medical Alert Systems
• Household Duties such as Laundry, Meal Preparation, and Bill Paying
• Managing Medications

Some home care agencies will also include the following:

• Social activities
• Transportation to the Doctor’s Office
• Report of Doctors office visits to family members

Emphasize these home care benefits and you’ll appeal to your clients’ desire to maintain their independence and quality of life, while increasing your potential for a successful sale.

For more information about home care please contact your LTC Specialist today!

When most producers and their clients think about Buy-Sell Planning for their business, they consider Life Insurance as the only vehicle needed in order to provide a source of funding for the buy-out of an owner.

It’s true that Life Insurance will provide for sufficient funding of a business continuation plan if the insured owner dies while the policy is in-force, but what happens if the partner doesn’t pass away and instead, they become injured or sick to the point where they are no longer capable of working in their normal capacity?

If you have used Disability Buy-Sell Insurance coverage as a companion to Life Insurance planning then your clients will be prepared for exactly this situation.

Including a Disability Income Policy in a Buy-Sell Arrangement Can Serve Two Main Purposes

It provides a source of funds to their business for the purchase of a disabled owner’s interest in a business while also providing compensation to a disabled owner for his or her equity in the business.

We can provide you with fact finders, valuation questionnaires and approach letters to help you to either review an existing Buy-Sell arrangement or to help you plan for the implementation of a new business continuation plan.

Once you have discussed and assessed the company’s need for including DI inside of their Buy-Sell arrangement, you can use it as a spring board to then promote Key Person Disability coverage, as well as personal DI coverage for any employees.

Success Story

Recently, we were contacted by a producer looking to secure a basic Term Life policy on a business owner.  In discussing the need for the coverage, we brought up the concept of including Disability Income inside of the Business Continuation Plan.

The result was an individual DI policy for the owner and we are now working on providing plans for all of the Key Executives.  Prior to this case, the producer had never sold a DI policy with us.

Getting Started

If you have written Buy-Sell Insurance Policies in the past but did not include any Disability Income Protection, it is never too late to reach out to your clients and offer them a complimentary policy review to ensure that the planning is still sufficient for their business.

While reviewing the Life Insurance inside of the plan, you can discuss the need to have DI policies including in the Continuation Planning.

Helping to protect your client’s business interests in the event of an untimely injury, sickness or death will further solidify your role as their primary insurance professional and will likely lead to additional sales opportunities within the business and referrals for new client opportunities elsewhere.

Call us today for help in starting the review process or for ways to enter the business insurance marketplace.

Term Insurance is designed to provide coverage for only a specific duration of time (10, 15, 20, 30 years).  However, almost every term policy sold through us includes a provision allowing clients to convert their term policy into a permanent insurance policy – without requiring any new medical underwriting.

One of our brokers shared how they use this provision to create additional sales while also providing clients with a solution that they can rely on for the rest of their lives.  During the initial sales discussions, they promote this conversion privilege, working with the client to determine how much coverage they would need and how quickly they could afford to exercise this option.

Since the pricing for the permanent insurance is based on the client’s attained age at the time of conversion, the sooner that the client converts their coverage, the less expensive it will be.

The client does not need to convert their entire term policy at once and can make use of multiple partial conversions to help keep premium costs low while providing added flexibility.

For example, if the client decides to purchase a 10 term policy for a $1M face amount, they could potentially convert $500K next year, $250K more in 5 years, and then make a decision whether they want to convert and maintain the remaining $250K towards the end of the level term period.

Many of your clients do not know that their term coverage includes this feature

Far too often, the discussion of how and when to exercise a term conversion option is a reactive one, taking place when the level term coverage is about to end or shortly after the client has experienced a change in health for the worse.

Don’t set your term sales on auto-pilot

Talk to your clients about why it makes sense to take advantage of the conversion provision.  Explain how they can keep their initial term policy rating for the rest of their life without having to re-qualify in the future.  It’s another great reason to stay in contact with your client and could even create new sales and/or referral opportunities with their family and friends.

Oh, and did we mention that you collect a new commission for each conversion sale you make?  Your Life Sales Rep is here to help – contact us today.

Diabetes is a metabolic disease in which a person has high blood sugar either because the body does not produce enough insulin or because cells do not respond to the insulin that is produced.

The most well known types of diabetes are:

• Type 1 (treated with insulin)
• Type 2 (treated with a combination of diet, exercise and oral medications) and
• Gestational diabetes (a type of diabetes which occurs during pregnancy.)

When diabetes is coupled with a client who is not an ideal weight, the underwriting class will increase.

We have an A+ carrier will give credit where credit is due – applying health and lifestyle credits to provide the best possible offer.

Let’s take a look at this case study:

• 54-year-old female
• Non-tobacco user
• Applying for $1 million of Term Life
• Has type 2 diabetes; treated with Metformin
• Build is 5′ 3″, 220 lbs

Initial work-up – Table 4

On submission and review by this A+ Rated carrier, the client received Credits for:

• Lifetime non-smoker
• Income > $100,000
• Preferred or better driving record
• Negative cardiac testing
• Controlled blood pressure

Once those positive credits were applied, this client went from Table 4 to an Underwriting Offer of Table 2.

Contact our Life Underwriting Team today – let’s work together to make your next sale!

Highlighting the cost of care can be a powerful, yet non-threatening way to engage clients in a Long-Term Care (LTC) planning discussion.  It also can provide a convenient starting point for designing a policy that will meet your client’s needs and budget.

Since the future estimated average cost for multiple years of care can be quite high, it’s important that both you and your client don’t view LTC Insurance coverage as an all-or-nothing proposition.

Highlight The Cost Of Care

First, discuss with your clients where they would like to receive care should a Long-Term Care event arise.  Based on their response, show them what the estimated cost of three or more years of care is today and in the future.

We can help you and your client explore the cost of care, including:

• Current costs for Long-Term Care for all areas across the country
• Estimated costs for LTC events lasting 1-10 years
• Projected future costs for Long-Term Care based on inflation

Develop a Strategy

Once your clients have seen the financial impact that a long-term event can have on their assets, help them develop a strategy to insure some or all of the risk.  Base your plan design on what you know about your client’s financial goals, and adjust your recommendations based on their budget concerns.

Some clients may be willing to insure part of the risk by paying a portion of their future expenses out of pocket.  Others may prefer to protect all of their assets, to ensure a spouse/partner’s financial well being or to leave a legacy to their children.  In either case, LTC Insurance can provide a significant level of protection.

Manage the Premium

You have a surprising amount of flexibility when designing an LTC Insurance policy.  If you start with a policy that accounts for your client’s total estimated future cost of care, be sure to consider alternate plan designs that help to lower the premium, if needed.

Consider this approach:

If you started with a longer benefit period and compound inflation, consider shortening to 3-5 years to save money, while still providing ample coverage for most care needs.  Leaving off compound inflation protection can make a big impact, potentially cutting the premium in half.  With this strategy, consider a higher initial daily benefit to account for future cost of care increases.

Become a Resource

Become a “cost of care” expert in your community.  Leverage us as a point of reference in your prospecting efforts.  After seeing the potential impact that an LTC event can have on their assets, your clients may feel compelled to protect their future with LTC Insurance.

Contact your LTC Associate today for more information and resources.

The unasked question to small business owners is, What would happen to your business if you were to get sick or hurt and couldn’t work for a lengthy period of time?

Most small business owners could not get away for a long weekend, let alone several months.  Many would likely have to close the business until they recover and then asses if the business could be revived or if there is any business left to sell.

Business Overhead Expense (BOE) can help business owners protect their business and employees if the owner needs time to recover from a serious illness or injury.

If a small business owner suffers a disability and is unable to work, it not only affects the business, it impacts all of the employees as well.

Many small businesses are tight-knit families who rely on each other for support. If the business is unable to produce because of the missing owner, the employees may have to start looking for new opportunities.

The BOE Answer

The need is simple to set up: Many small businesses cannot survive without consistent production, and the owner is the primary producer. (Dentist, CPA, Attorney, Physician) What happens to the business when something happens to the owner?

The answer: Business Overhead Expense (BOE) Insurance.

A BOE plan helps to keep the business in operation in the event the owner becomes disabled and couldn’t work for a period of time.  BOE reimburses the business for all their fixed operating expenses in order to keep the doors open while the owner recovers from an injury or illness.

This assures there will be a business to come back to once recovered.  If a major illness or accident prevents the owner from coming back to work, there will still be a business to sell that has not depreciated because of the owners absence.

Also, BOE allows for tax deductible premiums when insuring for the potential disability of the self-employed person.  Often, small business owners are candidates for short-term and/or long-term DI as well.

Speak with your business owner clients today to see how you can help them protect the most important asset they have, their business.  Please contact your Disability Income Marketing Manager to start planning your client’s BOE plan today!

For this and more sales solutions visit www.cpsinsurance.com or send an email to tnicols@cpsinsurance.com.