Growing Your IDI Practice

Use the tips and techniques offered by this industry expert to move your practice to the next level of success.

In recent years, the individual disability income (IDI) market has experienced steady growth as employees across the nation have become more knowledgeable about the negative effects that a disability can have on their incomes. In this interview, industry expert Dawn McMaster describes a few of the trends that are shaping this important market and offers some best practices for boosting your IDI production.

Advisor Today: What is the size of the DI market in the United States and what is its rate of growth?

Dawn McMaster: The individual disability income (IDI) market has seen steady growth recently, as the unemployment rate has decreased and consumers are more aware of the consequences a disability could present to their ability to earn an income. Because of this, we’ve seen premium increase of about 5% across the industry in the last 12 months. As for the size of the market overall, LIMRA noted that 2015 annualized premium for IDI was more than $563 million.1

AT: What are the trends currently impacting the DI insurance market in general and the IDI market in particular? What can we expect to see in 2017?

McMaster: The DI and IDI markets are both benefiting from an uptick in sales with the improved economy, as the market had been flat for some time due to the recession. Because of this, clients in a number of occupations are more receptive to the concept of income protection insurance and looking into coverage options.

Overall, I think 2017 will be an exciting year for advisors who sell IDI, as the industry is adapting to the MetLife announcement. While MetLife’s suspension of its fully underwritten business left some advisors looking for a replacement carrier, longtime IDI carriers are continuing to make investments in the business and develop new products that can help boost sales. The Standard recently introduced a new product that provides advisors with more flexibility in product design to meet the needs of new clients in need of income protection.

AT: How does IDI insurance fit into a consumer’s overall financial and retirement planning? How can an advisor best explain this to a prospect?

McMaster : IDI is an extremely important component of a client’s financial plan. That’s because the most thorough and comprehensive financial plan will need to evolve as the client’s income does. Advisors really need to make the point that a client’s financial goals could be in jeopardy if they become too ill or injured to work, and analyze how a client’s life stage could impact their coverage options.

For example, I just met with my own financial advisor, who helped point out the balance between IDI and life insurance. While I had enough IDI coverage, she wanted to discuss my disability coverage instead of focusing just on life insurance. Many clients are conditioned to think about life insurance, but aren’t thinking to step back and see the bigger picture of the importance of income protection insurance. For me, my advisor brought this up because my son is in college and I’m in the prime of my career. If I were to lose my income to a disability, it could have a significant impact on my future.

AT: Who are the best prospects for IDI insurance?

McMaster: With insurance carriers developing new policies that can be tailored to a client’s occupation and unique needs, there are a range of client prospects for IDI. These include:

• Professionals in highly specialized professions, including physicians and attorneys

• Physicians and dentists with student loan debt

• Small-business owners

• Young professionals and medical residents

• Professionals in the sandwich generation who want to protect against losing income while caring for a sick or injured family member

These occupations often have larger percentages of income that may not be adequately protected by an employer’s long-term disability policy. Or, if the client is a small-business owner, he may not even have DI insurance and could think that he is adequately covered by workers’ compensation insurance. These clients can also benefit from other features of IDI coverage, including “own occupation” definitions or robust mental and substance abuse benefits.

AT: What are some best practices for approaching clients about buying IDI insurance?

McMaster: I always recommend that advisors bring up income protection insurance as part of every client meeting they have. Many clients have never heard of income protection insurance and may not know this type of DI insurance is even available to them. You don’t want to be the advisor who didn’t ask a client about protecting his or her income, only to have that client become disabled later. Disabilities happen, and not having DI coverage can have a huge impact on a client’s life.

My ex-husband was in a serious accident at age 27, and while we had life insurance at the time, he didn’t have DI coverage. It significantly altered his future and almost ruined us financially. It wasn’t just the injury that had the biggest effect; it was the residual impact of not earning an income and our ability to make ends meet. DI insurance would have provided him with the help he needed to recover, as our family’s expenses would have been taken care of.

Another best practice for advisors would be to not shy away from talking to female professionals. Women are increasingly becoming the family breadwinner and are more often the key insurance decision-maker. Advisors who aren’t approaching female professionals with IDI coverage could be missing a big opportunity.

AT: What are the most effective strategies for addressing common objections to buying IDI insurance?

McMaster: Many clients feel they don’t need IDI because they have group long-term DI insurance in place. I recommend advisors point out that, while it’s a great start, it may not cover the full extent of a client’s salary or set them up for greater financial protection in the future. IDI coverage can replace a larger percentage of a client’s income, provide tax-free benefits and include bonuses and commissions.

AT: What three things would you like readers to take away from this interview?

McMaster: Advisors who are selling — or are interested in selling — IDI can benefit from industry changes that are making it easier to sell an income protection product. New products in the market are including flexible provisions that can help advisors expand their client base and target new prospects. Also, IDI is an attractive product for advisors to sell because of its renewal stream and commission structure. Many term insurance products don’t have a guaranteed renewal stream. IDI products have notable commissions that can pay for more than 10 years.

1. Fourth Quarter US Individual DI Sales Participants Report, LIMRA.

Dawn McMaster is vice president of Individual Disability Insurance, The Standard.

By Elie Harriett