The Why Occupations
Their Importance To You And To The Standard
by Steven L. Brady, RHU, 2nd Vice President IDI Sales & Marketing
Physicians are the most prolific purchasers of disability insurance. They understand the reality of disability because they see it every day. Physicians seek out disability insurance and know what definitions to look for. The rest of the population may not be immediately attracted to the purchase of disability and may not yet know why disability insurance is a good choice for them. For the purposes of this article, I’ll refer to those as the Why Occupations. People engaged in the Why Occupations represent the risks sought by every insurance company, including The Standard.
Diversity Of Risk
When disability insurance carriers have Why Occupations representing the majority of their book of business, the result is more than just the smoothing out of the peaks and valleys of risk prediction. The Why Occupations also represent the desired diversity of risk. Just as with investments, too many contracts held in one market segment increase vulnerability to influences like the economy.
How To Sell To Why Occupations
When you are prospecting for new Why Occupation customers and selling individual disability insurance to them, there are five necessary steps that will lead you to a successful sale.
Step 1: Determine Your Prospects' Purchasing Power
By "purchasing power" I do not mean someone wealthy. Usually those with a high net worth and unearned investment income are not good prospects for disability insurance. They tend to self-fund disabling events. In this context, purchasing power has everything to do with the need for financial protection and the power to solve that need.
Business owners rely solely on their trade to produce income. Find any business owner who is the rainmaker for a business and you have found purchasing power. Look at the loss of revenue the business would suffer if the rainmaker experienced a prolonged disability.
Step 2: Establish that the need is recognized by Why Occupation prospects
Why would your prospects purchase disability insurance when they do not know they are at risk? The apparent need, at this point, may only be seen by you. It is invisible to your prospects.
Generally, we are inclined to consider ourselves invincible. When something serious happens, our first reaction is denial, before we progress to anger and then finally reach acceptance. When we attempt to make the need for disability insurance apparent, we are asking our prospects to jump to acceptance while they are still at the denial stage.
How can they buy if they have not made the transition to a recognized need? Making that transition from apparent to recognized need is the core of selling. Selling is the transference of belief.
If you truly believe that a disabling event may occur sometime in a Why Occupation prospect’s working life, and that that disabling event would have a financial impact that only insurance can mitigate, then you will be able to transfer that feeling to your prospects, so they feel it, too. The brain needs an emotional trigger for information to be accepted as a longterm truth.
Caring is also core to a successful disability insurance sale. You must care enough about your prospects so they also feel that you care about them. They are then able to accept the reality of disability and to trust you. People don’t care how much you know until they know how much you care.
Step 3: Educate your prospects until they believe in the value
How can the Why Occupations buy when a recognized need has not yet been translated in their hearts and minds to a believed value?
Insurers use Human Life Value to determine how much life insurance individuals might need when they are no longer creating monetary value by working and earning a living. For example, let’s say you have a 35-year-old customer who qualifies for a $48,000 annual ($4,000 monthly) disability insurance benefit with a $2,000 annual premium. (Compare apples to apples; monthly benefits with monthly premium or annual benefits with yearly premium.) The income of this customer is $80,000 a year. Using the Human Life Value concept, we would multiply that $80,000 by the 30 years before retirement to arrive at a Human Life Value of $2.4 million (without a raise in salary between now and age 65).
Using the Pennies on the Dollar concept, I might say to the customer, "For only $5.50 a day I can give you $1.4 million dollars tax-free if you were disabled today." ($4,000 a month, assuming the disability happened today and lasted through age 65. The payout is $4,000 × 12 months × 30 years. Divide the $2,000 annual premium by 365 for the daily figure.)
The result is the cost of lunch at a fast food restaurant protects your customer’s most valuable asset.
Selling Insurance Even During The Depression
Ben Feldman was one of the greatest salesmen in our industry. He sold insurance during the Great Depression with one simple concept: Pennies on the Dollar. The concept sees insurance as the least expensive way to transfer risk of a long-term disability.
Ben Feldman obtained his idea from an insurance pioneer named Solomon Huebner, who is credited with inventing Human Life Value.
As disability insurance sales representatives, we must find ways to convey the need and value to our prospects before we move on to the next step in our disability insurance sales.
Step 4: Close the sale
If you have followed the steps above, the buying decision will now be possible for your Why Occupation prospects.
The Why Occupations have less need to see spreadsheets and compare provisions and premiums. They trust you because you helped them discover the need. If you overcomplicate the buying decision with spreadsheets, you will cause analysis paralysis. Then you will witness the disappearance of the emotions you need your prospects to feel.
Show your customers just one insurance carrier's product. Tailor benefits to meet their needs and budget. You will be their hero for life (and disability insurance).
Do not be concerned if they do not buy from you immediately. The buying process is a combination of emotion and logic. If you’ve followed the steps, the seeds of disability insurance are now deeply planted. Trust that those seeds of truth will grow. Keep them watered with information. Give them space to breathe. Stay in touch. Within six weeks you will harvest the hesitant.
Step 5: Manage the transaction process of underwriting and policy delivery
The transaction and underwriting are now key. Most individual disability insurance rookies fumble the ball on this two-yard line after carrying it 98 yards during the previous steps of the process.
Individually underwritten disability insurance can become ugly when we do not prepare our customers for what is involved.
The fumble occurs when insurance brokers stop selling while they are filling out the applications with their customers. This is how I sell this complicated process. I draw a square box on the back of the illustrated proposal. I explain that the box represents all disability insurance applications submitted to a given carrier. I write 100 percent at the top of the box. I explain that the premiums I have just shown to the customers in the illustrations are based on three assumptions: health, occupation and income. Based on those three items, underwriters will make a decision on the future of the company.
I explain that premiums in the illustration are based on expectations that are only met about 50 percent of the time. So I draw a line through the middle of the box and put 50 percent on that line. 100 percent apply and 50 percent receive exactly what they applied for. The remaining 50 percent are split into three groups:
- 10 -15 percent are declined coverage because their health or occupation or income disqualify them
- Some applicants quit the underwriting process or do not provide all the information needed so the underwriters can make a decision
- The majority of that 35-40 percent receive an offer that is different from what they expected. Usually this is because a health history creates the need for an exclusion or rating limitation. Sometimes income is the cause of a modified policy. Mostly policies are modified because of the applicants’ health.
Of the remaining 35-40 percent:
I tell the customers my hope is that they are in the group that receives policies as applied for. I make sure my customers know that if they receive policies that are modified, then the folks at The Standard are making their best effort to give them the best coverage possible for every contingency that is not excluded, limited or rated.
Modified Polices Are Special
Modified offers state that the customers are imperfect and have some risk of disability but The Standard is still willing to assume the risk to keep the customers as whole as possible.
With the conversations in Step 5, we are not only preparing our customers for what might happen, we are also encouraging full disclosure.
The transaction is completed with a conditional receipt accompanied by the funds the customers commit to invest in themselves.
I challenge each of you to try this formula for success with the important Why Occupations:
- Find those with purchasing power
- Internalize their apparent need until you can emotionally feel the appropriate concern for them
- Transfer to them the knowledge of the impact a disabling event could have on their lives
- As your customers recognize the need for individual disability income insurance, show them the value of disability insurance as the only viable tool to mitigate the unknown
- Walk them through the buying decision and transaction/ underwriting process
- Communicate with them during that underwriting process even when no news is available – you want them still feeling good about their decision at time of policy delivery.
Can’t get the Why Occupations to give you a moment of their time? Tell them that disability insurance is doctor recommended.