DIBroker East / Eskra & Associates

Disability Insurance For Life

Carrier Updates

A Great But Little Known Free Business Valuation from the Principal Financial Group—by Michael J. Eskra, III

  by  DIBroker East

MichaelRecently a good producer by the name of Brock Jolly came to me for help with a group of Podiatrists he works with.  Brock’s primary company is Mass Mutual, but Brock shops every case for his clients to find the best fit.  His clients all had personal disability insurance and were now looking to insure their business. More specifically, they wanted to fund the buy-sell agreement their attorney had recently drafted for them.

 

The four partners all had equal ownership interest in the business.  When Brock approached me about the case my first questions were “how much are they looking to insure the business for” and “what is the business worth”?  They did not know the answer.  Without some idea of what the business is worth, I was unable to prepare options for them and Brock was also unable to prepare options on the life insurance side which they also requested from him.

 

At that point I told Brock about the Business Valuation that Principal offers at no cost to the client.  He loved the idea and his clients loved that they would not have to spend the $5,000 to $10,000 that accountants typically charge for such a valuation. Although this process may not meet all the needs that arise when seeking a business valuation, it more than served the purpose of helping these clients decide on how much coverage they needed.

 

I had Brock collect the last three years of business returns, a current balance sheet, and a profit and loss statement and sent them to Patti at Principal Life.  Patti is a CPA and a terrific resource for valuing small businesses.  She is very knowledgeable and provides an excellent product. The process took about 3 weeks. The end result was a first class, very professional report.  Principal valued the business five different ways to give them some options.  The clients were thrilled with the report and of course loved the cost.  They purchased both life and disability insurance policies to fund the liability created by their buy-sell agreement.

 

At DIBroker/Eskra & Associates we handle cases like these every month if not more.  To date the clients have always been satisfied with the valuation report.  Sometimes they go forward with insuring themselves and sometimes they buy policies to cover the risk, but they always leave happy….

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Metlife’s Departure from Individual Disability Insurance sales leaves a Gap

  by  DIBroker East

As reported on April 20, 2016, Metlife will discontinue individual disability insurance sales on September 1, 2016 (they will continue to offer GSI and underwritten policies that supplement GSI policies).

Most of the remaining insurance carriers that offer individual disability insurance, only participate with group LTD to $25,000 or $30,000. A few go to $35,000, but as you can see in the chart, MetLife participates up to $40,000.

    MetLife
IDI Max Issue IDI Max Participation (w/IDI) IDI Max Participation (w/GLTD)
6S/6A, 5A, 4A ** $20,000 $35,000 $40,000
6M, 5S/5M, 5D $17,000 $30,000 $35,000
5I, 4M $15,000 $30,000 $35,000

This aggressive I & P limit has meant that a high earning executive or attorney (for example) with a group LTD plan that maxed out at $15,000 (for example) and with perhaps another $10,000 in individual coverage from another carrier, could still add on up to $15,000 more in individual coverage.

Do you or any of your clients earn enough to buy this level of coverage while it is still available?

$40,000 of monthly benefit means $480,000 a year. This amount is of course a large number to most wage earners—but if one is earning $900,000 (for example) a year it would represent a significant reduction in income.

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E-Apps, E-Delivery and Artificial Intelligence Are the Future (and it is happening now)

  by  DIBroker East

E-apps and E-delivery are here now at last.  AI will arrive later, but arrive it will. A future blog will address AI.

The insurance industry is not known for being on the cutting edge of technology–to put it mildly. And the individual disability insurance market, our small portion of this vast industry, tends to be even slower when it comes to technology. But change is arriving.

The big plus to the e-app is speed. E-apps allow for pre-filling of significant portions of an app; clients do not have to be in the room with you to sign; the e-app makes a quick pit-stop on our office for review (with most carriers); we then send it onto the respective home offices and  we are committed to passing e-apps on within 2 hours of receiving them (during the business day). And since e-apps do not need to be printed out and entered manually into our CRM and into the database at the home office, everything moves faster.

Underwriting decisions are made faster; polices are issued faster, so coverage is in force sooner, the client is protected sooner and the agent receives her commission sooner.

Assurity and Illinois Mutual have been using electronic apps for sometime now. Principal is in the midst of rolling out their e-app right now. The Standard has one planned and for now is allowing agents to use Docusign (we have to set you up in advance if this interests you)–which has worked quite well It does not provide all the benefits of an e-app in terms of speeding up processing of apps, but it does simplify getting signatures long distance.

So far we have only seen big volume producers who do business long distance make much use of the e-app. But like the teleapp (which we love), we expect the e-app to be the norm in coming years.

E-delivery is also here now. The Standard has been delivering policies electronically for the last four years or so, and we also love this. It has shaved days or even weeks off of the process and has significantly improved placement rates. Principal has a similar system planned. In the past when a mistake was made in issuing a policy, we would have to mail it back and then wait a couple of weeks to get it reissued and mailed back to us. Now the fix takes a couple of hours usually.

E-app and E-delivery–sign up today.

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MetLife to suspend IDI sales Sept 1st

  by  DIBroker East

My second blog post was planned as a happy retelling of our reward trip this week to Key Largo for our top Sales Partners here at dibroker east (Clarke Morris, Tim Murray, and Michael Tyler qualified)–that will have to wait.

Kieran Mullins Senior Vice President at MetLife sent out an email today announcing the suspension of individual disability insurance sales at MetLife:  (W)e have decided to suspend Individual Disability Insurance (IDI) sales, effective September 1, 2016. This date will be the final date to submit business, with the final date to place business on October 31, 2016. This suspension affects the fully underwritten IDI line under U.S. Retail. The Group, Voluntary & Worksite Benefits business will continue to manufacture and sell Group Disability Insurance/Guaranteed Standard Issue business as they do today. 

We are disappointed by this news and saddened for our friends at MetLife who will be out of a job. MetLife has an excellent individual product, excellent underwriters and a strong team of support, starting with our rep Chris Ginocchio.

From conversations we have had with folks at Metlife, they are not planning to sell the block of business and say the block is performing well–this could bode well as a sign that they plan to return to the market in the future. But at this point, they don’t seem to be making a firm commitment to that.

MetLife’s product has been an important of our portfolio. We do business with nine disability insurance carriers, but they have consistently been in our top three, and have been a strong partner whom we had come to rely upon. We only hope that the suspension is short and that they return to the market with a renewed effort and focus.

The number of carriers in the IDI market has been pretty  steady in the last decade and carriers report a good return on investment–and they all seem to have weathered the financial downturn in 2008 without too much stress. But the market is a fraction its size in its heyday (say the ’80’s). It is not good for the market as a whole to lose a strong player such as Metlife.

I remember a number of years ago when Steve Brady of the Standard Insurance Company was visiting our office. Metlife had only just started to be a real player in the independent brokerage market. I recall Steve making a comment along the lines of…”If MetLife ever got really serious about the individual disability insurance market, they could dominate it.” The had gotten more serious, and from what we are told, it is a very profitable line of business for them. Now they are saying that they don’t have the resources to develop in the internal systems they need to support individual disability insurance sales. Pennywise, pound foolish?

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Welcome to the Initial DIBroker East Blog: Buy-Sell

  by  DIBroker East

Welcome to my initial blog for dibroker east/Eskra & Associates.

This blog will show up occasionally when something interesting happens in the disability insurance world that I want to share with you.

I was hoping to get my father, Mike Eskra, Jr. to take on this blog. He was a bit of a legend in our industry and a consummate marketer—and he loved to write (his book on Disability Insurance is a testament to that). Sadly, he passed away unexpectedly in September 2015. This blog is dedicated to him.

I want to start this blog with an unsung product in the disability world—disability buy-out.
Often, often, often we can see clients who have are the owners of small business, and often (though not often enough), they will have a buy-sell agreement that covers what happens to the firm in the event of the death of one of the partners. And often, they cover the risk created by that agreement with a term life insurance policy—great. So far, so good.

But so,so often, the agreement will also cover disabilities (which a good agreement should), and that liability with not be covered by a disability policy—but it can and often should be.

A number of carriers have excellent buy-sell products, including MetLife and the Standard. But the Principal Financial group has just released a new version of their buy-sell product (“DBO”) that has really fantastic pricing, and it now allows for one-way buy-outs.

If you have clients who own a small business and who have partners, talking with them about buy-sell needs is very important, and now is a great time to do it.

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