DI Sales Concepts That Work

1
DI Sales ConceptsThat Work
For producer use only. Not for use with the
general public.
Disability income insurance underwritten and
issued by Berkshire Life Insurance Company of
America, Pittsfield, MA a wholly owned stock
subsidiary of The Guardian Life Insurance
Company of America, New York, NY or in
California, provided by Guardian
8540-03-08
2
DI Sales Concepts that Work

• LIMRA International, the leading insurance
  marketing research organization, found in a
  recent study that people who considered
  purchasing DI reported difficulty in making a
  decision due to one of three factors. They were
  unable to determine
• if they really needed DI
• how much coverage they should purchase
• if the cost of coverage was justified

U.S. Buyers and Non-Buyers of Disability
Insurance (2004).
3
Why is Income Protection Important?
YourGoals
Earned Income
Building Wealth
Surplus
Expenses
4
Why is Income Protection Important?
Earned Income Stops
Draining Wealth
Deficit
Expenses Continue
5
What Are Your Tomorrows Worth?
Potential earnings to age 65 with 3 cost of
living increases
Annual Salary Annual Salary Annual Salary Annual Salary Annual Salary Annual Salary
Age 50,000 75,000 100,000 150,000 200,000 250,000
30 3,023,104 4,534,656 6,046,208 9,069,312 12,092,416 15,115,520
35 2,378,771 3,568,156 4,757,541 7,136,312 9,515,083 11,893,853
40 1,822,963 2,734,444 3,645,926 5,468,889 7,291,852 9,114,816
45 1,343,519 2,015,278 2,687,037 4,030,556 5,374,074 6,717,593
50 929,946 1,394,918 1,859,891 2,789,837 3,719,782 4,649,728
55 573,194 859,790 1,146,387 1,719,581 2,292,775 2,865,969
6
What Is Your MostValuable Asset?
Asset Value Is it insured?
Auto 35,000 Yes
Personal Property 100,000 Yes
Home 500,000 Yes
Income 3,000,000 ?

• Your income makes it possible for you tohave all
  these other things.
• Doesnt it make sense to insure yourmost
  valuable asset?

7
Which of these is yourgreatest asset?

• Which of these is currently uninsured?

8
The Building Blocksof Your Financial Life

• What are the building blocks of your financial
  life the assets and other things you work so
  hardto acquire?

Investments
Education
Business Interests
Home
Autos
Personal Assets
Income
The entire structure rests upon the one
fundamental building block your ability to earn
an income.
What will happen to your financial life if this
building block is pulled away?
9
Which Job Would You Want?
PaycheckOption A Paycheck Option B
Healthy and Working 100,000 98,000
Sick or Hurt andNot Working 0 58,200(Tax-Free)

• Which Paycheck Option Do You Have Today?
• Which One Would You Want?

Premiums and benefits available will vary
according to the proposed insureds circumstances
and coverage applied for.
10
What Is the Risk?

• The chances of suffering a serious long-term
  disability are much greater than most people are
  willing to admit. The truth is that people do
  become disabled, and a long-term disability can
  bring serious financial and emotional
  consequences. Consider the following
• Nearly one out of every three workers over age 30
  will suffer a disability lasting three months or
  longer at some point in their working career.

Source Americas Health Insurance Plans, 2004
11
What Is the Risk?

• Approximately one out of seven people between the
  ages of 35 and 65 can expect to become disabled
  for five years or longer.
• Contrary to what people believe, the vast
  majority of serious disabilities (92) are the
  result of illness rather than accidents.
• In a recent study, disability caused nearly 50
  of all mortgage foreclosures, compared to 2
  caused by death.

Source AHIP, NAIC U.S. Commerce
Department Source Council for Disability
Awareness, Disability Claims Survey, 2006
Source Health Affairs, The Policy Journal of the
Health Sphere, February 2005
12
What Is the Risk?

• 72 of Americans dont have enough savings to
  meet short-term emergencies.
• In 2006, 71 percent of those who appliedfor
  Social Security disability benefitswere denied
  at the initial level.

Regardless of what the numbers say, do you really
want to count on luck? Or does it make sense to
plan for the unforeseen?
Source National Investment Watch Survey, A.G.
Edwards Inc., 2004 Source Social Security
Administration
13
The Leading Causes of Disability
Major Disablers Claim Musculoskeletal
/ Connective Tissue 22.7 Cancer 13.6 Cardiovascu
lar 10.3 Injuries / Accidents 7.8 Mental /
Psychiatric 6.5 Neurological 5.7
92.2 Illness
7.8 Injuries
Source 2006 Long-Term Disability Claims Review,
Council for Disability Awareness.
14
How Would your Life beAffected by a Disability?

• Financial
• Your Career
• Loss of income
• Loss of promotions professional development
• Loss of job
• Your Lifestyle
• Mortgage
• Credit rating
• Basic household expenses
• Increased medical expenses
• Your Family
• Childrens education/college
• Spouses employment
• Your Financial Future
• Retirement plan
• Investments
• Savings
• Insurance
• Your Business orProfessional Practice

• Emotional
• Your Emotions
• Self-esteem
• Depression
• Stress
• Your Relationships
• Spouses worry
• Strain on the marriage
• Loss of friendships
• Less contact with otherfamily members
• Less time for children
• No contact with colleagues
• Your Future
• Uncertainty
• Your Familys Future
• Uncertainty
• Change

15
Questions to Consider

• If sickness or injury prevented you from working
  in the business
• How long could you continue to take income from
  the business?
• Could you be replaced? How long could the
  business afford to pay a replacement and at the
  same time pay you?
• How will your creditors be paid?
• Could you continue making retirement
  contributions?

16
Questions to Consider

• If sickness or injury prevented you from working
  in the business
• How long could you afford to keep your employees?
• How long would your business be able to stay in
  business?
• How long will your partners want to keep you in
  the business?
• Where will your partners get the money to buy you
  out?

17
Questions to Consider

• If a key employee went out on disability
• Would you feel obligated to continue his orher
  pay?
• For how long could you continue payments?
• Do you have the paperwork that would makethis
  possible?
• Do you have a funding vehicle to makethis
  possible?

18
Where Will the MoneyCome From?

• If you become sick or injured and cannot work,
  which drawers will you be able to open?What
  will you find in them?

19
Where Will the MoneyCome From?
20
What Are You Saving For?

• Retirement
• Vacations
• Dream home
• Auto
• Childrens education
• Short-term emergencies

If you dont have disability insurance, maybe you
are saving for disability.
21
How Much of Your Income isUsed on Expenses?
100 of income
Expenses
Group Plan 60 of income

• Will your group disability plan really do the job?

22
Whats the Break-Even Point?
Cost vs. Benefits
Years ofPremium Paid Months of Benefits Receivedto Break Even
2 years 0 months, 20 days
4 years 1 months, 10 days
5 years 1 months, 20 days
7 years 2 months, 11 days
10 years 3 months, 11 days
20 years 6 months, 22 days
Assumed Age 35, Monthly Benefit 5,000, Monthly
Premium 140.04 Monthly Guard-o-matic premium
for ProVider Plus coverage (1400) for a male age
35, select risk Class 5, 90-day EP, to age 65
benefit period, with Residual Disability Benefit
rider.
23
Why Should I Buy Now?

• There are three potential costs of waiting
• You become disabled without having coverage.
• Your health changes and you can no longerobtain
  coverage.
• You purchase coverage at a later date. But the
  longer you wait the more you will pay for less
  cumulative benefit.

Age Monthly Premium Increase Over Age 30 Potential Cumulative Benefit
30 110.71 2,085,000
40 168.92 53 1,485,000
50 255.79 131 885,000
Male age 30, Class 5 5,000 per month, 90-day
EP, benefits to age 65 ProVider Plus base policy
with Residual Disability benefits. Premiums shown
are for Guard-o-matic monthly premiums.
24
What Costs Do You Want Waived?

• When you purchased life insurance, you likely had
  a waiver of premium rider added to the policy.
  If you become seriously disabled, the policy
  premium will be paid for you.

25
What Costs Do You Want Waived?

• Question If you are too sick or injured to work,
  what other costs do you want to be waived as
  well?
• Living Costs Monthly Amount
• Groceries ______________
• Mortgage or rent payments ______________
• Car payments ______________
• Utilities ______________
• Credit card/loan payments ______________
• Clothing ______________
• Education ______________
• Entertainment ______________
• Other ______________
• Thats why Disability Income Insurance aka
  waiverof living costs was invented.
• What Costs Do You Want Waived?

26
Should I Accept a Modified Policy?
Policy with Exclusion or Rating
Do not accept policy
Accept policy
Worse
Same
Improve
Same
Worse
Improve
You Lose
27
Should I Accept a Modified Policy?
Policy with Exclusion All Other Conditions
Do not accept policy
Accept policy
Become disabled from another cause
You Win
28
Nuggets of Wisdom

• Your attitude and sales philosophy
• People buy not because they believe but because
  the sales person believes.
• Ben Feldman, CLU
• People dont care what you know until they know
  that you care.
• Your prospects will not want disability insurance
  until they understand why they need it.

29
Nuggets of Wisdom

• Your attitude and sales philosophy
• You are not selling disability insurance to your
  prospect. You are helping your prospect to buy
  it.
• If they dont buy the concept, the details are
  irrelevant.
• Identify the problems. Then put price tags on the
  problems.

30
Nuggets of Wisdom

• Your attitude and sales philosophy
• Do you want me to tell you what you want to hear,
  or should I tell you what you need to hear?
• If you dont own it, why are you trying to sell
  it? Until you own or have tried to get disability
  insurance, you will not be as effective as you
  should be.
• It doesnt matter what the odds of becoming
  disabled are. If you do become disabled, the odds
  are 100.

31
Nuggets of Wisdom

• Getting your prospects attention
• Could you afford to retire today and never work
  again? That is what a disability means forced
  retirement.
• If you owned a printing press capable of
  producing 100,000 legal and spendable dollars
  each year, would you insure it?

32
Nuggets of Wisdom

• Getting your prospects attention
• If you owned a goose that laid golden eggs, which
  would you insure the golden eggs or the goose?
  Many of us wouldnt think twice about insuring
  the golden eggs, but would you agree that it
  would be wise to insurethe goose?

33
Nuggets of Wisdom

• Getting your prospects attention
• Since your income is your most important asset,
  your financial strategies must begin with the
  protection of this asset. Failure to insure your
  income would be tantamount to malpractice on my
  part.
• You are either insured against the risk posed by
  a serious disability, or you assume the burden of
  being self-insured. My job is to help you decide
  which is the best way.

34
Nuggets of Wisdom

• Dealing with objections
• . . . the business will take care of me. What
  would happen to your business if you took a
  twelve-month vacation?
• The premium is not the problem. It is the
  solution to the problem. The premium is minimal
  compared to the problem. If you cant afford the
  premium, how will your family be able to afford
  the problem?

35
Nuggets of Wisdom

• Dealing with objections
• It is difficult enough to live within your
  income. How would your family live without your
  income?
• Disability insurance is like a parachute. You
  have to have it before you need it.
• You never want the low-cost bidder when it comes
  to parachutes, life preservers, brain operations
  or disability insurance.

36
Nuggets of Wisdom

• Dealing with objections
• Doing something costs something. Doing nothing
  costs something. Sometimes doing nothing costs
  more than doing something.
• Ben Feldman, CLU
• If you buy disability insurance and never become
  disabled, you will have made a little mistake. If
  you dont buy disability insurance and you do
  become disabled, you will have made a big
  mistake. Which would you rather make a little
  mistake or a big mistake?

37
Nuggets of Wisdom

• Dealing with objections
• Do you have medical insurance? Good.
• That means that you have gone to the expense to
  see that your hospital and doctors are taken care
  of, in case something happens to you. Doesnt
  itmake sense for you to take care of your family
  too?
• Healthy people might not believe in disability
  insurance, but disabled people do.

38
Nuggets of Wisdom

• Dealing with objections
• The more you are worth, the more you and your
  family stand to lose. The less you are worth, the
  less you can afford to lose.
• You speak of disability insurance as a luxury. Do
  you consider food, clothing and shelter to be
  luxuries? These necessities are what disability
  insurance provides.

39
Nuggets of Wisdom

• Dealing with objections
• Disability insurance makes your money work for
  you when you cant work.
• Its good that you dont need disability
  insurance. If you did need it today you couldnt
  get it.

40
DI Sales ConceptsThat Work

• Thank You

For producer use only. Not for use with the
general public.
Disability income insurance underwritten and
issued by Berkshire Life Insurance Company of
America, Pittsfield, MA a wholly owned stock
subsidiary of The Guardian Life Insurance
Company of America, New York, NY or in
California, provided by Guardian
0000-11-07