DIBroker East / Eskra & Associates

Disability Insurance For Life

disability insurance

The Disability Insurance Market is Healthy and Growing

  by  DIBroker East

new-annualized-policies
2016 annual survey of the U.S. individual disability income insurance market – Milliman, Inc., September 16, 2016

Last week I had the pleasure of attending the International Disability Insurance Society (http://internationaldisociety.com) conference in Charleston, SC—one of the most charming cities in the U.S. The city is full of charming little restaurants (Mike Cogdall found us a great little one called Le Farfalle, http://lefarfallecharleston.com) and the weather was fabulous. I went for a run and saw the students of the Citadel running a race around Hampton Park.

IDIS is an organization devoted to promoting the growth the income protection industry. If you are not a member, I encourage you to consider joining. The conference will be in Tempe, AZ next year and they have ongoing study groups that provide training about IDI.

The conference offered the chance to connect with our partners at the Principal Financial Group, Standard Insurance Company, Ameritas, Assurity, Illinois Mutual, Petersen International, Fidelity, and Mutual of Omaha. It was weird not seeing MetLife there, but great to catch up with everyone else.

I also had the opportunity to see one of our favorite producers, Matt Wiggins of OnCall Advisors (www.oncalladvisors.com), give an excellent presentation as part of a panel discussion on “Big Ideas.” If you need someone to come speak on income protection, especially in the physician market, you would have trouble finding someone better than Matt.

There were a number of informative presentations, but the one that was most interesting to me (lots of graphs and numbers) was by Dan Skwire of Milliman. He is an actuary who presented the results of a recent study by Milliman (http://us.milliman.com/IDI-survey/) that surveyed nearly all of the major carriers in the IDI market.

The first highlight of the study reads:

New IDI annualized premium for the 15 contributors combined was $392.2 million in 2015, which is the highest volume of new premium since the 1990’s. It surpassed the last high point for $379.3 million sold in 2008, which was right before the recession hit and new IDI sales dropped by 13%.

The industry is growing and that is very good news. The authors note that the carriers they surveyed continue to be satisfied with the profitability of their IDI business in 2015—very good news. This good news is true despite the very low interest rate environment of the last few years. As a side note, as I have written before, MetLife’s departure had nothing to do with the profitability of the industry—just poor planning on their part.

The other piece of news that I found interesting in Dan’s presentation is that the industry has a new shared disability claims table from which to work, compiled from the participating carriers. For years the published table was from 1985 (which means that most of the data was from the 1970’s). Because the carriers now have more up to date, industry wide information, they will be able to more accurately price their products. Dan said the data suggested the number for claims has gone down in recent years, but the length of claims has gone up a bit. And Lifetime benefits are never likely to return—the experience with those claims has been particularly bad.

Physicians continue to make up a significant portion of our industry—about 31% in 2015. Executives were only 25% premium and attorneys only 7.7% in 2015–potential areas for growth.

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Metlife Suspends Individual Disability Insurance Sales—What Will the Impact be?

  by  DIBroker East

MetLife-insurance-logo-585x216For roughly the last dozen years, MetLife has been an integral part of our operation. We are wholesalers in disability insurance. We only do one thing, and we do it very well. At DIBroker East-Eskra & Associates, we add value by providing access to nine or so insurance carriers (the number changes a bit depending upon the year—Pan American also exited the market a few years back and we do very little business with Guardian at this point), by providing expertise in case design and approaches to selling, and by providing consistent top quality service. We make it as easy as possible to complete what can be a complicated sale. We focus on the professional, the small business, and the executive markets, but provide products for all walks of life and all circumstances related to disability insurance.

DIBroker East-Eskra & Associates represents nearly all of the carriers in this market (at least nearly all of the one’s willing to work with a wholesaler, so not NML for example). MetLife, along with the Principal Financial Group and the Standard Insurance Company together have made up approximately 80% of our business. Most years we have been the highest producing independent wholesaler for MetLife (we also lead Principal and are usually in the top five with the Standard). So what does the loss of MetLife mean to us?

MetLife was seen by us as something of a lumbering giant. Slow to roll out new products. Slow to fix silly little things like the software to run their Buy-Sell quotes. Too often willing to reorganize a working org chart into something that made no sense. And lacking in creative, useful marketing materials. But in the most essential ways, they had figured out how to be a major player in the IDI market.

Met has had an excellent product the last few years. Their product has sold very, very well for us in the physician market (especially with surgeons) and they have also had the most aggressive participation limits with Group LTD—participating all the way up to $40,000 for their top occupation classes at a time when most carriers would only participate up to $30,000 (Principal goes to $35,000 and the Standard just matched that amount this week).

MetLife also had developed in house expertise that puts them among the best in the industry. We have had excellent underwriters and sales reps there and we had developed relationships with many levels of management at MetLife. We felt as if we were partners with them in this great field of providing the undersold and very important product know as IDI. When they announced the spin-off of the domestic Life, Annuity, and IDI products, we had calls and visits from them to assure us that nothing would change in our world. I believe that these assurances were genuine at the time, but nonetheless somehow they made the reality of their announcement to suspend all non-GSI related sales even more of a shock.

MetLife’s departure is not good for the industry in my opinion. There are so few carriers in the industry already; we need more carriers, not fewer. Our biggest source of competition is not the NML agent or the Guardian agent trying to take business we have quoted, rather it is the reality that most people in the country do not even know what disability insurance is and have never been asked by an agent or a financial planner about their need for it.

So, we are saddened for our friends at MetLife who have had to scramble to find new jobs and we will be slightly less competitive in certain occupation classes than before. But we are ready for the challenge. Our production with Ameritas has lagged that of our previous big three for a variety of unique circumstances, but that will change. They have an excellent product (True Own Occ, very strong Residual Benefit, a Cobra Benefit—and they include a Good Health Benefit that reduces the elimination period and a non-Disabling Injury Benefit) and we have a very good underwriter with them.

Standard just announced that they will launch their new product, the Platinum Advantage, early next year. They assure us that they will be very competitive in the physician market again. The Platinum product is clearly one of the very best on the market and we are very happy to hear that they will be price competitive in the physician market. And there too we have an excellent underwriter and we love their electronic policy delivery.

Our relationship with Principal is as strong as ever. We have sent more production to them than to any other carrier and we do not expect that to change. They have a way of doing business that makes things easy and underwriting that is as good as it gets in the industry,

We were growing our production with all three of these carriers this year before the MetLife announcement and now we look forward to giving them even more production.

DIBroker East-Eskra & Associates will continue to prosper as far as we can see and our brokers who relied upon MetLife will feel only the slightest of bumps as they adjust to selling Principal, Standard and Ameritas. We still have great products and great service to offer. In fact, compared to where we were a dozen or so years ago when MetLife become a player for us, we are much better situated.

*Please note that MetLife will continue to offer GSI and buy-ups to GSI and will continue to service existing policies, including purchase options.

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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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Disability Insurance Is Not Bought, It Needs to Be Sold

  by  DIBroker East

Business man offering cup of coffee.That disability insurance, unlike something like a nice dinner or even a cup of coffee, needs to be sold is a long accepted truth in the world of disability insurance agents and financial planners. Clients do not walk in the door of their insurance agent and say “We should review my need for disability insurance.”

Except when they do, which is not very often. The exceptions include physicians and people who have recently had a health scare or who know someone that was recently disabled. Often, if the client has experienced the health scare him or herself (say a heart attack or cancer), they are no longer insurable.

Why is this so? Why do so few of us seek out such a protection? (I will return to the topic of physicians and why they do buy disability insurance in a future post).

…disability insurance is, well, insurance. A subject known to make eyes glaze over by the mere utterance of the word…

My unscientific thoughts on this subject begin with the fact that disability insurance is, well, insurance. A subject known to make eyes glaze over by the mere utterance of the word. If I am on a plane and not feeling chatty, usually a mention to the person in the next seat that I am an “insurance agent” will quickly lead said flyer to quickly put their headphones on and look out the window (and on occasion will lead to an interesting exchange).

Insurance, whether health insurance or car insurance or even disability insurance, requires us to plan ahead for a time when something has gone wrong. Unlike the cup of coffee that I consume right now (and enjoy the taste as well as the caffeine buzz), insurance is more elusive. I buy now. I pay now. It is protecting me now. But the benefits before making a claim are intangible. The main one being the oft-quoted ability “to sleep well at night,” a benefit which I fully endorse. But for most people imagining a future where they will need to collect a check from an insurance company does not offer the thrill of imagining what they will look like with that new pair of shoes.

Also, most people do not even know that disability insurance exists, or at best have a vague idea of what it is. They know about health insurance certainly. The idea of covering potentially bankrupting medical costs motivates many (but even here often the young and healthy not so much) to buy health insurance. But the idea of replacing lost income is a foreign idea to most of us. Or, we think we are covered through our jobs—and sometimes that is the case (more on that in another blog), but often much less adequately than we believe.

Disability pays us a check when disabled by illness or injury and unable to work. The idea is that most of us would very quickly find ourselves in dire financial straits without our paycheck. So the need for disability insurance is significant for most people. Thus, it needs to be “sold,” it is not usually bought. But how to do this?

When I bought my first car in Seattle back in the 80’s, after negotiating the price of a stripped down Camry – stick shift and practically no additions beside a radio – I had to face the finance guy. I recall seeing on his desk a sign that read: “Create Need.” He had more options to sell me – options that I felt I did not need (and could not afford). But the sale of disability is a different ballgame. There is no need to “create need”, but there is a skill that the best possess to get a reluctant client to consider shelling out 2% of their income for a future of disability as yet unforeseen, one that help avoids a potentially disastrous financial downside, but which offers very little upside.

There are many approaches to selling IDI and as for me I prefer the notion of helping the client to plan strategically and yet realistically for a future that is hard to predict. Whether it is setting aside money for retirement or buying insurance for a home or protecting your most important financial asset, i.e. your income; the idea is to identify and develop a plan for major financial situations in one’s life.

One very successful financial planner I know, one whose investment skills are much in demand, does it something like this:

At the first meeting with a prospective client, he asks if he or she has a plan in place in the event of a disability. He tells him or her that the very best investment strategy will come to naught if there is no income to fund the strategy, and for most people income is dependent on their ability to work. If the client in fact has a plan, he moves on; if the client does not have a plan, they review together whether or not he or she has a group LTD plan at work and if it is adequate for his or her situation (not all are). If it is, he moves on. If not, he says: “I have a solution. I work with only one disability insurance carrier—one that I trust (rather unusual). I can get you a quote. It will not be inexpensive, but it will be a good policy. You are free to go elsewhere if you want to review other products and come back to me for planning your investments, but I strongly recommend that you have a plan.”

This very successful financial planner does not make them buy a policy from him to work with him. He even tells them he is not an expert in disability insurance and encourages them to find an expert if they so choose. He just knows it to be important. He sells a lot of IDI.

 

 

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Lessons Learned from a Seasoned IDI Agent: Guest Video Blog by Steve Brady

  by  DIBroker East

Steve Brady
Steve Brady

Lessons Learned From a Seasoned IDI Agent          

By Steve Brady, National Accounts Sales Director at The Standard (Standard Insurance Company)

Steve Brady is one of the most creative disability insurance specialist in our industry.  Steve put the Standard on the disability insurance map in a significant way when he helped them bring back to the market in the early 2000’s a true own occupation definition for all physicians (among other innovations). Such a bold (and successful) movement is characteristic of his innovative approach to marketing and sales.

Not surprisingly, when he put together this training video of about 30 minutes,  he did it in his own unique way. Steve is our first guest to provide content for our blog and I feel very fortunate that he was willing to share this very special training video–it is a great introduction to IDI sales.

Join Steve on a ferry journey as he recounts real-life sales stories from his more than three decades of selling individual disability income insurance (IDI).  Steve discusses target markets in need of income protection, key IDI contract provisions, and sales strategies proven to work. Watch Video. (http://players.brightcove.net/1079186452001/default_default/index.html?videoId=4902637574001)

 

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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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