General Disability Question

[mariemerganser]

I had a current client come to me looking for a disability policy. She currently has a plan with Illinois Mutual and has had it for 6 years. She wants to switch. When she got that policy she was making 72K, now she is making 56K. If anything had happened to her on her old policy, would the benefit amount have adjusted to her new lower salary? Also, what would the disadvantages be to a client who just wants to switch carriers? Probably dumb questions but I don't do much disability.

 

[bluemarlin08]

If you don't do much disability I wouldn't recommend you be advising her or anyone else regarding their coverage. The best thing one can do is read the policy, in most policies the full benefit would be paid regardless of current income. I can't think of any advantages in switching policies, unless you can offer better benefits and or better rates for the same coverage.

 

[mariemerganser]

Ok, I hear where you're coming from. I do specialize in individual health and employee benefits but from time to time my established clients will come to me for other products (which was the case here). I will defend myself by saying I would never advise anyone on anything unless I knew what I was talking about which is why I came on the board to ask specific questions. The obvious answer you gave, "don't switch her unless the benefits and rates are better" does not really help. What is it that you specialize in BlueMarlin?

 

[Dave020]

First of all, you don't mention WHY she wants to change policies. Just because her income dropped would not be justification to change plans and expose herself to potential decline, rating or new contestability period. I would assume that it has to do with the amount or premium she is paying?

You also need to look really close at what she has versus why you might even use to replace. Does the current policy cover own-occ or any-occ? What are the provisions of how the current policy will pay? What is the waiting period? What is the total benefit period.

If it's premium, she can ask the carrier for a reduction in the benefit amount commensurate with current salary if that is what she wants. She's been in the thing 6 years, DI rates have not gone down (nor has the morbidity index) so, unless her current contract is own-occ, long elimination and/or short benefit period, I can't see much justification for replacing it.

LGilmore does some DI, I believe, perhaps he will add something here.

 

[bluemarlin08]

Disability, life, LTC and health.

The obvious answer you gave, "don't switch her unless the benefits and rates are better" does not really help

If a policy doesn't provide better rates and/or benefits, or you are switching from a company that might have inferior financials, what possible reason would there be to switch companies? My experience, 28 years, has shown that if a prospect has a disability policy with a quality company, and had that policy for 5 years or more, I can't think of a time it would be wise to switch.

 

[mariemerganser]

Thank you both for your feedback, it was helpful. The reason she wants to switch is actually personal, nothing else. Apparently she bought the policy through her friends husband and they have recently had a falling out, which is why she approached me. She doesn't have a copy of the policy nor does she know any of the specifics other than the cost and the income it was based on. I have just asked her to call the company to inquire about benefits. I quoted her with Met and Union and the rates were very high in comparision to her current rate with Illinois Mutual, so I was interested in finding out if her current plan was quality. OR, it could just be so as it is 6 years later.

 

[bluemarlin08]

She could have you become agent of record.
I suggest you add disability to your practice, it is a necessary part of most anyone's financial plan. Do some joint work with someone that specializes in disability, then do it yourself. I would be glad to point you in the right direction, IMO, just PM me.

 

[padthaiforlunch]

As fro learning about DI, you might want to take a class and earn some CE credits, even an online self-study like webce will help you understand the variables surrounding DI.

Another good resource is dibroker.com. It is a GA with a nice online presence and good carrier selection. They are very good about running quotes and answering questions.


Ask you client for a copy of the policy for you to review before making any recommendations. Good learning tool.

And be sure to inquire about spine or depression issues when a client wants a quote for IDI.

 

[LGilmore]

first have her call the carrier and ask for a policy to be sent. Until you go through the policy/summary hold tight. In DI definitions are everything and nothing. Simply put the shorter the definition the better for the policy holder, the longer they write, the less they cover.

Honestly, I don't know if I would replace it unless I was absolutely certain I could replace or improve the policy definitions/price/benefit. With DI words are more important than price. Tread lightly. Be careful.

If the only reason is she doesn't like the agent, she can make you agent of record or deal direct. Her dropping the policy really doesn't hurt him at all.

If it's cost, She may be able to contact the carrier and ask for a reduction in benefit and premium. I would think most carriers would consider this as it lowers their risk.

Good qualitly disability coverage is hard to get and seemingly getting harder. Review the policy before you offer any direction.