March 25, 2025 • 21 mins
Part 2 of our deep dive into Disability Insurance (DI) on the ShiftShapers Podcast goes beyond the basics—diving into strategic implementation, evolving underwriting standards, and revenue-generating opportunities for advisors.
In this episode, host David Saltzman continues the conversation with Don Schamay, Regional Director of Executive Benefits at The Principal, to explore how disability insurance can be a transformative tool for both clients and advisors.
Don shares his insights on how DI is becoming more accessible and relevant across demographics—from young professionals starting their financial journey to high-income executives looking to protect complex compensation packages. He explains how advisors can offer real value by aligning DI solutions with life stages, business needs, and long-term financial goals.
Whether you’re an advisor looking to enhance your client relationships or a business owner considering executive benefits, this episode is packed with actionable insights and forward-thinking strategies.
✅ Key Takeaways from the Episode:
- Young Professionals and DI
DI isn’t just for high earners—young professionals stand to gain the most by locking in coverage early, when they’re healthy and premiums are lowest. Don shares how DI can be a cornerstone of early-stage financial planning. - Business & Executive Solutions
Business owners and C-suite professionals have unique income protection needs. Learn how DI solutions can be customized to protect not only personal income but also business continuity and executive benefits. - Underwriting Improvements
Traditional DI policies were often viewed as complex and hard to secure, but times have changed. With faster, more flexible underwriting options, advisors can now help clients get covered more efficiently than ever before. - Revenue Potential for Advisors
DI is more than a risk management tool—it’s a practice-building opportunity. By positioning themselves as income protection strategists, advisors can deepen trust, retain clients, and grow revenue. - Advisor Education and Client Communication
Don emphasizes the advisor’s role as an educator—helping clients truly understand the risks of income loss and the powerful ways DI can protect what they’ve worked so hard to build.
⏳ Episode Timestamps:
📌 00:00 – Introduction to Disability Insurance
👩⚕️ 01:03 – Understanding the Needs of Young Professionals
🏢 04:52 – Business Solutions for Disability Insurance
💼 09:07 – Executive Benefit Solutions Explained
📝 13:14 – The Underwriting Process and Its Evolution
💰 15:17 – Revenue Opportunities for Advisors
🎓 18:27 – Learning Resources and Final Thoughts
📢 This Episode is Sponsored by BenePower
BenePower is an AI-powered platform that helps advisors build high-impact, self-insured health plans quickly and seamlessly by integrating the best point solutions, eliminating inefficiencies, and improving collaboration. It streamlines plan creation, reduces costs, enhances member outcomes, and positions advisors as industry leaders.
🔗 Learn more at Benepower.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Is disability insurance the forgotten but
essential piece of your client'shealth insurance strategy?
We'll find out on this episodeof Shift Shapers.
Speaker 2 (00:11):
Change either energizes or paralyzes.
The choice is yours.
This is the Shift Shaperspodcast, bringing the employee
benefits industry interviewswith individuals and companies
who are shaping the industry'sshifts.
And now here's your host, davidSaltzman.
Speaker 1 (00:32):
And to help us answer that question, we've invited my
old friend Don Chimay, who isRegional Director of Executive
Benefits at the Principal.
So now that we've talked alittle bit about some of the
fundamental aspects ofdisability, income group and
individual, et cetera, and wherethe market stands, let's talk a
little bit about you know whatthree areas.
Where's the need?
(00:53):
And I think you and I talkedoff air.
There are three different areasthat I'd like to explore.
The first is youngprofessionals, and then we can
talk about business solutionsand then executive benefit
solutions.
So let's talk a little bitabout young professionals.
What's that need look like?
Speaker 3 (01:08):
Right.
So we do a lot of work in theindividual side for what we
describe as young professionals.
These are folks that are eitherin their medical residency,
their dental residency, theirveterinary medicine residency,
their dental residency, theirveterinary medicine residency,
folks that are doing some of theyou know support around that,
(01:29):
like the CRNAs, the you know.
Those are folks that franklydon't get a lot of group
disability insurance from theirperspective, maybe hospital or
medical practice or dentalpractice, a lot of dental
practices don't give any groupdisability insurance.
I always think it's weirdbecause it's available and it's
really not that expensive, butthey really just don't offer a
(01:54):
lot to the staff but also thoseprofessions.
As they get more and moreembedded, you know, more and
more embedded in the skill,obviously those incomes really
start to go up.
So they always outrun the groupinsurance as well.
So there are a lot of advisorsthat will work with them when
they're young in their careersby, let's say, a very modest
(02:15):
disability policy on them.
But then they maintain therelationship over time with
those young professionals and astheir income will grow and
their families grow and theirexpenses grow, they're just
adding to those policies A greatway for somebody you know, in
the individual financialprofessional realm to get some
high network clients very earlyin their careers and establish
(02:37):
relationships with them.
By the way, you don't see itquite as much.
But I would say the same thingabout young entrepreneurs right,
they're young professionals,but there's really not a lot of
people you know going after thatyoung entrepreneur set early in
their careers.
But you know, I ensure people'sincomes, I look at people's
(02:58):
incomes all day long and I'mgoing to tell you that there are
some small business owners, alot of small business owners,
frankly, that are in weirdoccupations you would never
think about and they make waymore than any doctor or any
surgeon or any.
It's kind of you know, don'tsleep on that.
My point is.
Speaker 1 (03:15):
Well, and it also covers the sticky.
I mean, it does create a longerlasting employee employer
advisor connection.
It sure does lastingemployee-employer advisor
connection.
Speaker 3 (03:23):
It sure does, and you can watch companies grow, you
know, over time and you neverknow.
You know when I was at PaulRevere and it was not in my
office but it was in the DCoffice you know there was an
advisor who started working witha small company called AOL when
it was only 10 employees, right, and you can imagine what
(03:46):
happened with that right.
It's not technically around muchin its same form today, but
just think about if you can getwith a young professional person
who you know is working, youknow, in a space that's kind of
have the ability to reallyexplode over time, what a great
client to have.
And a lot of times you knowthey need individual disability
(04:08):
insurance protection, they needgroup insurance with those small
businesses.
For sure it's a great way toget your foot in the door and
maybe from a competitivestandpoint right, because
everybody's selling healthinsurance Maybe you can offer
something that's a little bitdifferent that gets your foot in
the door and can, like you say,start a very long-term
(04:28):
relationship.
The persistency on theseindividual policies is excellent
.
I've had a chance to look atsome folks' blocks of business,
some of my GAs, over time.
They built great businessesover time with the disability
products, because they just arestinking, as you said.
Speaker 1 (04:48):
And we'll.
You know we'll talk a littlebit about kind of comp when we
get further into ourconversation, but the area where
I spent a lot of my time was inbusiness solutions.
Talk a little bit about thatand what else.
You know how that's anotherthing that an advisor can bring
to the table and create a longerterm relationship with a client
.
Great, because you know howthat's another thing that an
advisor can bring to the tableand create a longer term
relationship with a client.
Speaker 3 (05:06):
Great, because, you know, think about the business
owner.
The business owner really hastwo assets, right?
They have the ability to work.
That's probably their mostimportant asset, right?
So that's one asset we need toensure.
But the reality is, as abusiness owner, they have this
other asset the business itself.
As a business owner, they havethis other asset the business
(05:29):
itself.
What happens if they get sick orhurt, can't work for an
extended period of time?
That business wants to survivetheir absence as well, right?
So the individual market hasalso allowed for buy-sell
planning.
Right?
We've got owners that havepartners or additional
shareholders.
They all have obligations toone another.
They usually have a buy-sellagreement almost always and
(05:51):
buy-sell agreements are legaldocuments.
Everybody signed them.
They obligate you to somethingyou might want to know what it
obligates you to.
It often obligates you to buyyour partners out if you get
sick or hurt.
We have overhead expenseinsurance, which replaces the
expenses that are needed tomaintain or continue that
(06:11):
business's day-to-day operationThings like rent, the utilities,
employee salaries.
There's overhead expenseinsurance that pays those.
We have loan protectioninsurance in the marketplace now
, where you have the ability topay off a business loan if
somebody gets sick or hurt.
There's nothing in those loandocuments that say if you get
(06:32):
sick or you can't work, thebank's not coming for their
money.
They are right.
So we have that.
And then we have key persondisability insurance as well,
proportion disability insuranceas well Same right.
You've got key people withinthat business.
They're valuable.
They're no longer able tocontribute to the success of the
business.
The business needs to becompensated for their absence,
(06:54):
to survive their absence.
So good solutions that are outthere.
I still will tell advisors lookat the individual first, look
at the group insurance, look atthe individual first, but don't
neglect those business solutionsbecause they're very much a
needed conversation for Moza forthat business.
Speaker 1 (07:17):
Well, you know, we oftentimes advisors will ask you
know how do I start thatconversation, how do I get into
that?
I cannot tell you although youand I have talked about it, how
many clients I picked up and howmuch money I made when I was
selling by asking when was thelast time your buy-sell
agreement was reviewed?
Because I knew, going in whatthe business owners had not
(07:38):
really paid any attention to.
And that is, you said,correctly.
So it creates an obligation,but it creates an obligation.
Almost all of the agreementsare stock agreements.
They create an obligation inthe event of death, but also in
the event of disability, andsince largely they're sold by
life insurance folks, they don'toften fund them for disability
or they frequently leave thatopen.
(07:59):
And when you can show a clientthat exposure, you're their new
best friend, You're their agentfor life.
So there's a lot of opportunitythere and it doesn't take a
heavy lift to do it years old.
Speaker 3 (08:08):
Just a reality.
So you know those obligationsunderneath those buy-sell
agreements it's real, it happens.
You know, I was in a lawyer'soffice a few years ago out in
Athens and we were talking aboutthis and you know it was
(08:35):
actually we were talking aboutit for his firm and he, in the
course of the conversation, hegoes.
You know, I know what you'retalking about.
He goes yeah, we just had thiswith one of our clients and you
know we got that guy some money.
He said it that way to me.
He said it to me.
I said, oh, you got that guysome money because he didn't
have a buy-sell agreement thatwas funded and you guys had to
go into negotiation.
When you say it that way, Ifigure not all the parties were
(08:59):
happy with the money that yougot the guy.
Right, and yet you could havefunded it for pennies on the
dollar.
The same as with the lifeinsurance, the same thing that
you get where there's really nodifference.
Speaker 1 (09:08):
Now the third area is an area that's, you know,
somewhat newer, at least interms of the parlance, and
that's executive benefitsolutions.
How do those, what are they andhow do those differ from the
business solutions?
Speaker 3 (09:18):
Yeah.
So think of the executivebenefits as really an extension
of the group.
Disabilities we talked aboutearlier that the group
disability insurance for maybe5% or 10% of an employee
population just can't cover theincome adequately.
So what we have now in themarketplace generally, starting
at five or more lives, almostall the carers now will offer
(09:40):
you some type of guaranteedissue protection if the employer
pays for those individualdisability policies on a group
of individuals, right.
So again, starts at usuallyfive or more lives, it's
typically employer paid,although there's some
opportunity to do this even on avoluntary basis on a guaranteed
(10:00):
issue platform.
But that's the key is we'rejust enhancing the group for the
most highly compensatedindividuals where again earlier
I talked about, where maybe thebonuses aren't covered, maybe
the K-1 distributions have notbeen covered, maybe the K-1
distributions have not beencovered.
We're coming in and layering inthese individual policies.
(10:22):
Kind of think of it as sold asa group, that they're really
still individual policies, butyou're gaining the guaranteed
issue and typically mostcarriers are discounting the
product either 15, somewherebetween 15 and 30 percent,
depending on the size of thegroup and how the carrier goes
about their discount structure.
Speaker 1 (10:42):
So you're getting savings, you're getting
guaranteed issue benefits again,starting at about five or more
lives, and those discounts aresignificant because it's not an
inexpensive product to purchase.
Speaker 3 (10:55):
It's not, and you know where I talked about the
group being about four tenths ofone percent on average.
The individual tends to beabout one and a half percent
somewhere in there.
But again, a little bitdifferent.
The individual product portable, the individual product premium
is guaranteed at least age 65and age 67.
You know, we can't come backand re-rate anything if we've
(11:16):
had, if we made a mistake.
So there's a reason that thatpremium is a little bit higher
and sometimes the individualproduct is even a little bit
more liberal in its language.
So yes, a little bit moreexpensive, but there's value in
that difference in premium.
Speaker 1 (11:34):
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Find your power with Benapower.
And now back to ourconversation.
For a long time, for someproducers, the big boogeyman of
disability income, especially onthe individual side, was
underwriting and you'd hearpeople wail and moan about how
(13:25):
difficult it was to get a casethrough underwriting and how it
took forever and how they wereforever chasing little bits of
information.
Has that changed?
Has it gotten better?
What can an advisor look forwith a properly completed
application?
Speaker 3 (13:39):
Thanks for asking that because it's gotten a lot
better.
You know, when the industrysort of crashed and burned back
in the 90s and like we werestill struggling in the early
2000s, there were some healthissues, especially the mental,
nervous or anxiety anddepression related claims that
were weighing on the industry.
I will tell you that over timethat has sort of been put in the
(14:03):
rearview mirror a little bitand I think this is my own
feeling about this.
I think people are dealing withmental health much better than
they ever have been andtherefore we don't have quite as
many claims from that.
It's hard to put your finger onthat, but you know that was
something that if you had youknow, been on any kind of
(14:24):
antidepressant medicine for awhile.
There you were getting a decline.
Today, no care really declinesyou unless you're on a heavy
antidepressant medicine.
And there's all kinds of othermedical things, issues that have
improved as well high bloodpressure, cholesterol, things
that created waivers andmodifications on policies and
(14:45):
ratings.
We don't do that anymore.
You know we basically.
You know big pharma.
Say what you will at timesabout big pharma, but big pharma
has helped a lot of people aswell.
We've seen it in some of thethat risk history.
So we're not quite as concernedas about some of those issues
that we may have been in thepast.
Obviously, it makes it a littlebit easier for us to issue
(15:09):
these policies at our best rates, with very modest, if any,
modifications.
Speaker 1 (15:14):
Let's talk about what is decidedly an upside of these
products, and that is therevenue stream for the advisor.
It can be an extremelylucrative product line to add to
what you're offering yourclients, can't it?
Speaker 3 (15:25):
And you know whether it's group disability or
individual disability.
You know, I think most of yourfolks know that group disability
you're probably somewherebetween 10 and 15 percent
revenue on the group, dependingon kind of, you know, bonus
structures and those kinds ofthings with different carriers.
With individual, you'reanywhere from 40, to excuse me
(15:46):
well, 50 to 75% on medicallyunderwritten business and then
when you get into thatguaranteed issue you're
sometimes in that 40 to maybe asmuch as 70% first year come and
maybe 5 to 10% renewals percentfirst year come and maybe five
to ten percent renewals.
Um, and and we talked aboutearlier that the businesses
stink right these, theseproducts.
(16:06):
You know once the people havethem they tend not to get rid of
them.
I've had my disability policyfor almost 40 years, actually
two of them for almost 40 years.
You know, once they're in there, because those premiums aren't
changing, people keep them.
So it's a great way to buildrecurring revenue right because
of that renewal infrastructurethat both the group and the
(16:28):
individual have.
But on the individual side, alittle bit more heavy commission
on the front end, the timereally to convince them,
convince people to buy it.
I think that's the biggestissue that you know people you
know advisors have is hey, I'vegot to.
Maybe you know I'm super busywith my group solutions and my
(16:50):
employee benefit platforms thatI'm putting in place.
Well, you know I've got to stopand now have maybe a little bit
more of an intentionalconversation, but the industry
is going to reward you for thatmonetarily.
Speaker 1 (17:01):
There's enough reward so that if you have a small
office, you could have somebodywho specializes in DI and you
open the case and then you turnthem over to somebody, or you
bring them with you and you doit together.
Speaker 3 (17:11):
You know I think that's a great point.
You know I work with a lot offirms that have one individual,
like you say, is just become anexpert in that area and you know
we're going to share therevenue between the advisors on
that.
I'll tell you, the other thingthat's happened is to hear the
term maybe broker's broker, butyou have folks that are now
(17:33):
working with employee benefitfirms.
They're not employed by thefirm but they have a
relationship with the firm sothat when the employee benefit
advisor has identified a needfor a business owner or a set of
executives that need thisconversation, they partner with
that another broker who maybeagain specializes in this
(17:53):
individual market.
They just split the business.
So again, really, you knowthere's good opportunities for
somebody to have theconversation.
Whether you want to build yourown expertise or whether you
want to I use your term lay offthe risk a little bit to another
advisor and ask them to helpyou out.
Speaker 1 (18:13):
There's a lot to learn and there's a lot involved
in these contracts.
Involved in these contracts.
If you're a baby advisor or ifyou're just thinking, hey, I'm a
seasoned advisor, I'm lookingfor new conversations to want to
have with my clients, etc.
How do you learn about thisstuff?
I mean, I remember how we usedto do it in the old days and you
know we had the tablets thatMoses brought down the mountain
(18:35):
with the chiseling in them.
But today, how do you do that?
Speaker 3 (18:39):
Well, there's a variety of ways.
You know there's a couple ofresources that you know I throw
out there just as good resources.
You know the Council forDisability Insurance Advisors is
a independent third partyresource that has a lot of good
marketing material associated.
I think that's one of the best.
(19:00):
Um.
Um, you know resources outthere on our independent
platform.
Um, I know NAFA does LifeHappens.
Now, you know there's stuff onLife Happens that you can work
through.
I think that's a good resourceas well.
Um, you know NAVIP has you knowin in our um.
You know quarterly meetings andthings that you know your local
NAVIP chapters have you knowquarterly meetings and things
that you know your local maybepchapters have.
(19:22):
You know, I would go and and umjust pay attention to those
times when you have disabilityinsurance as a topic um.
The other thing you can do isjust align yourself with a good
bga, good broker general agencywho specializes in this, and
there's um several of theseacross the country the plus
group um, and then a lot, of, alot of the big bgas now national
(19:45):
bgas um have their own folksthat are specializing in
disability insurance.
So just ask, you know, hey, youknow, do I?
Speaker 2 (19:53):
you know how do I what?
Speaker 3 (19:54):
resources do you have that I can kind of lean on um.
And then obviously there'salways, you know, guys like me,
the carrier reps that are alwaysthere, that want to, you know,
partner with you as well.
So you know, any of thoseresources are great places to
start the one individual sidethere.
The one thing that I'll alsosay is you know, read a specimen
(20:17):
contract and it's an old schoolthing but ask your wholesaler
to provide you with a specimencontract.
It takes about, I would say,maybe 25 minutes to read through
a contract.
You'll be amazed, just byreading through the contract,
how much more confident you'llbe at what this product is, what
(20:37):
this solution is going to dofor your client.
You know how does it reallywork.
And I say the same thing on thegroup side as well.
You know, take a group contract, you know, same exact thing, a
little bit old school, just kindof reading through that
sometimes, I think, just givesadvisors a lot of confidence as
well.
Speaker 1 (20:57):
I think that's certainly a great place to start
and it's a great place to endour conversation for today.
Don Chimay, regional Directorof Executive Benefits at
Principal Financial Group.
Don, thank you so much forsharing your expertise with our
audience.
Thanks, dave, it's been mypleasure.
I want to give a quick shoutout to our sponsor and our
(21:19):
producer, hatcher Media.
Hey, if you need podcastproduction or professional
graphic design, josh Hatcher isthe expert to contact.
For more information, visit himat HatcherMedianet.
That's H-A-T-C-H-E-R Media dotnet.
Speaker 2 (21:35):
This Shift Shapers podcast is copyrighted content
and may not be reproduced inwhole or in part without the
express written permission ofShipChaper Solutions LLC.
Copyright 2024.
Is disability insurance the forgotten but
essential piece of your client'shealth insurance strategy?
We'll find out on this episodeof Shift Shapers.
Speaker 2 (00:11):
Change either energizes or paralyzes.
The choice is yours.
This is the Shift Shaperspodcast, bringing the employee
benefits industry interviewswith individuals and companies
who are shaping the industry'sshifts.
And now here's your host, davidSaltzman.
Speaker 1 (00:32):
And to help us answer that question, we've invited my
old friend Don Chimay, who isRegional Director of Executive
Benefits at the Principal.
So now that we've talked alittle bit about some of the
fundamental aspects ofdisability, income group and
individual, et cetera, and wherethe market stands, let's talk a
little bit about you know whatthree areas.
Where's the need?
(00:53):
And I think you and I talkedoff air.
There are three different areasthat I'd like to explore.
The first is youngprofessionals, and then we can
talk about business solutionsand then executive benefit
solutions.
So let's talk a little bitabout young professionals.
What's that need look like?
Speaker 3 (01:08):
Right.
So we do a lot of work in theindividual side for what we
describe as young professionals.
These are folks that are eitherin their medical residency,
their dental residency, theirveterinary medicine residency,
their dental residency, theirveterinary medicine residency,
folks that are doing some of theyou know support around that,
(01:29):
like the CRNAs, the you know.
Those are folks that franklydon't get a lot of group
disability insurance from theirperspective, maybe hospital or
medical practice or dentalpractice, a lot of dental
practices don't give any groupdisability insurance.
I always think it's weirdbecause it's available and it's
really not that expensive, butthey really just don't offer a
(01:54):
lot to the staff but also thoseprofessions.
As they get more and moreembedded, you know, more and
more embedded in the skill,obviously those incomes really
start to go up.
So they always outrun the groupinsurance as well.
So there are a lot of advisorsthat will work with them when
they're young in their careersby, let's say, a very modest
(02:15):
disability policy on them.
But then they maintain therelationship over time with
those young professionals and astheir income will grow and
their families grow and theirexpenses grow, they're just
adding to those policies A greatway for somebody you know, in
the individual financialprofessional realm to get some
high network clients very earlyin their careers and establish
(02:37):
relationships with them.
By the way, you don't see itquite as much.
But I would say the same thingabout young entrepreneurs right,
they're young professionals,but there's really not a lot of
people you know going after thatyoung entrepreneur set early in
their careers.
But you know, I ensure people'sincomes, I look at people's
(02:58):
incomes all day long and I'mgoing to tell you that there are
some small business owners, alot of small business owners,
frankly, that are in weirdoccupations you would never
think about and they make waymore than any doctor or any
surgeon or any.
It's kind of you know, don'tsleep on that.
My point is.
Speaker 1 (03:15):
Well, and it also covers the sticky.
I mean, it does create a longerlasting employee employer
advisor connection.
It sure does lastingemployee-employer advisor
connection.
Speaker 3 (03:23):
It sure does, and you can watch companies grow, you
know, over time and you neverknow.
You know when I was at PaulRevere and it was not in my
office but it was in the DCoffice you know there was an
advisor who started working witha small company called AOL when
it was only 10 employees, right, and you can imagine what
(03:46):
happened with that right.
It's not technically around muchin its same form today, but
just think about if you can getwith a young professional person
who you know is working, youknow, in a space that's kind of
have the ability to reallyexplode over time, what a great
client to have.
And a lot of times you knowthey need individual disability
(04:08):
insurance protection, they needgroup insurance with those small
businesses.
For sure it's a great way toget your foot in the door and
maybe from a competitivestandpoint right, because
everybody's selling healthinsurance Maybe you can offer
something that's a little bitdifferent that gets your foot in
the door and can, like you say,start a very long-term
(04:28):
relationship.
The persistency on theseindividual policies is excellent
.
I've had a chance to look atsome folks' blocks of business,
some of my GAs, over time.
They built great businessesover time with the disability
products, because they just arestinking, as you said.
Speaker 1 (04:48):
And we'll.
You know we'll talk a littlebit about kind of comp when we
get further into ourconversation, but the area where
I spent a lot of my time was inbusiness solutions.
Talk a little bit about thatand what else.
You know how that's anotherthing that an advisor can bring
to the table and create a longerterm relationship with a client
.
Great, because you know howthat's another thing that an
advisor can bring to the tableand create a longer term
relationship with a client.
Speaker 3 (05:06):
Great, because, you know, think about the business
owner.
The business owner really hastwo assets, right?
They have the ability to work.
That's probably their mostimportant asset, right?
So that's one asset we need toensure.
But the reality is, as abusiness owner, they have this
other asset the business itself.
As a business owner, they havethis other asset the business
(05:29):
itself.
What happens if they get sick orhurt, can't work for an
extended period of time?
That business wants to survivetheir absence as well, right?
So the individual market hasalso allowed for buy-sell
planning.
Right?
We've got owners that havepartners or additional
shareholders.
They all have obligations toone another.
They usually have a buy-sellagreement almost always and
(05:51):
buy-sell agreements are legaldocuments.
Everybody signed them.
They obligate you to somethingyou might want to know what it
obligates you to.
It often obligates you to buyyour partners out if you get
sick or hurt.
We have overhead expenseinsurance, which replaces the
expenses that are needed tomaintain or continue that
(06:11):
business's day-to-day operationThings like rent, the utilities,
employee salaries.
There's overhead expenseinsurance that pays those.
We have loan protectioninsurance in the marketplace now
, where you have the ability topay off a business loan if
somebody gets sick or hurt.
There's nothing in those loandocuments that say if you get
(06:32):
sick or you can't work, thebank's not coming for their
money.
They are right.
So we have that.
And then we have key persondisability insurance as well,
proportion disability insuranceas well Same right.
You've got key people withinthat business.
They're valuable.
They're no longer able tocontribute to the success of the
business.
The business needs to becompensated for their absence,
(06:54):
to survive their absence.
So good solutions that are outthere.
I still will tell advisors lookat the individual first, look
at the group insurance, look atthe individual first, but don't
neglect those business solutionsbecause they're very much a
needed conversation for Moza forthat business.
Speaker 1 (07:17):
Well, you know, we oftentimes advisors will ask you
know how do I start thatconversation, how do I get into
that?
I cannot tell you although youand I have talked about it, how
many clients I picked up and howmuch money I made when I was
selling by asking when was thelast time your buy-sell
agreement was reviewed?
Because I knew, going in whatthe business owners had not
(07:38):
really paid any attention to.
And that is, you said,correctly.
So it creates an obligation,but it creates an obligation.
Almost all of the agreementsare stock agreements.
They create an obligation inthe event of death, but also in
the event of disability, andsince largely they're sold by
life insurance folks, they don'toften fund them for disability
or they frequently leave thatopen.
(07:59):
And when you can show a clientthat exposure, you're their new
best friend, You're their agentfor life.
So there's a lot of opportunitythere and it doesn't take a
heavy lift to do it years old.
Speaker 3 (08:08):
Just a reality.
So you know those obligationsunderneath those buy-sell
agreements it's real, it happens.
You know, I was in a lawyer'soffice a few years ago out in
Athens and we were talking aboutthis and you know it was
(08:35):
actually we were talking aboutit for his firm and he, in the
course of the conversation, hegoes.
You know, I know what you'retalking about.
He goes yeah, we just had thiswith one of our clients and you
know we got that guy some money.
He said it that way to me.
He said it to me.
I said, oh, you got that guysome money because he didn't
have a buy-sell agreement thatwas funded and you guys had to
go into negotiation.
When you say it that way, Ifigure not all the parties were
(08:59):
happy with the money that yougot the guy.
Right, and yet you could havefunded it for pennies on the
dollar.
The same as with the lifeinsurance, the same thing that
you get where there's really nodifference.
Speaker 1 (09:08):
Now the third area is an area that's, you know,
somewhat newer, at least interms of the parlance, and
that's executive benefitsolutions.
How do those, what are they andhow do those differ from the
business solutions?
Speaker 3 (09:18):
Yeah.
So think of the executivebenefits as really an extension
of the group.
Disabilities we talked aboutearlier that the group
disability insurance for maybe5% or 10% of an employee
population just can't cover theincome adequately.
So what we have now in themarketplace generally, starting
at five or more lives, almostall the carers now will offer
(09:40):
you some type of guaranteedissue protection if the employer
pays for those individualdisability policies on a group
of individuals, right.
So again, starts at usuallyfive or more lives, it's
typically employer paid,although there's some
opportunity to do this even on avoluntary basis on a guaranteed
(10:00):
issue platform.
But that's the key is we'rejust enhancing the group for the
most highly compensatedindividuals where again earlier
I talked about, where maybe thebonuses aren't covered, maybe
the K-1 distributions have notbeen covered, maybe the K-1
distributions have not beencovered.
We're coming in and layering inthese individual policies.
(10:22):
Kind of think of it as sold asa group, that they're really
still individual policies, butyou're gaining the guaranteed
issue and typically mostcarriers are discounting the
product either 15, somewherebetween 15 and 30 percent,
depending on the size of thegroup and how the carrier goes
about their discount structure.
Speaker 1 (10:42):
So you're getting savings, you're getting
guaranteed issue benefits again,starting at about five or more
lives, and those discounts aresignificant because it's not an
inexpensive product to purchase.
Speaker 3 (10:55):
It's not, and you know where I talked about the
group being about four tenths ofone percent on average.
The individual tends to beabout one and a half percent
somewhere in there.
But again, a little bitdifferent.
The individual product portable, the individual product premium
is guaranteed at least age 65and age 67.
You know, we can't come backand re-rate anything if we've
(11:16):
had, if we made a mistake.
So there's a reason that thatpremium is a little bit higher
and sometimes the individualproduct is even a little bit
more liberal in its language.
So yes, a little bit moreexpensive, but there's value in
that difference in premium.
Speaker 1 (11:34):
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And now back to ourconversation.
For a long time, for someproducers, the big boogeyman of
disability income, especially onthe individual side, was
underwriting and you'd hearpeople wail and moan about how
(13:25):
difficult it was to get a casethrough underwriting and how it
took forever and how they wereforever chasing little bits of
information.
Has that changed?
Has it gotten better?
What can an advisor look forwith a properly completed
application?
Speaker 3 (13:39):
Thanks for asking that because it's gotten a lot
better.
You know, when the industrysort of crashed and burned back
in the 90s and like we werestill struggling in the early
2000s, there were some healthissues, especially the mental,
nervous or anxiety anddepression related claims that
were weighing on the industry.
I will tell you that over timethat has sort of been put in the
(14:03):
rearview mirror a little bitand I think this is my own
feeling about this.
I think people are dealing withmental health much better than
they ever have been andtherefore we don't have quite as
many claims from that.
It's hard to put your finger onthat, but you know that was
something that if you had youknow, been on any kind of
(14:24):
antidepressant medicine for awhile.
There you were getting a decline.
Today, no care really declinesyou unless you're on a heavy
antidepressant medicine.
And there's all kinds of othermedical things, issues that have
improved as well high bloodpressure, cholesterol, things
that created waivers andmodifications on policies and
(14:45):
ratings.
We don't do that anymore.
You know we basically.
You know big pharma.
Say what you will at timesabout big pharma, but big pharma
has helped a lot of people aswell.
We've seen it in some of thethat risk history.
So we're not quite as concernedas about some of those issues
that we may have been in thepast.
Obviously, it makes it a littlebit easier for us to issue
(15:09):
these policies at our best rates, with very modest, if any,
modifications.
Speaker 1 (15:14):
Let's talk about what is decidedly an upside of these
products, and that is therevenue stream for the advisor.
It can be an extremelylucrative product line to add to
what you're offering yourclients, can't it?
Speaker 3 (15:25):
And you know whether it's group disability or
individual disability.
You know, I think most of yourfolks know that group disability
you're probably somewherebetween 10 and 15 percent
revenue on the group, dependingon kind of, you know, bonus
structures and those kinds ofthings with different carriers.
With individual, you'reanywhere from 40, to excuse me
(15:46):
well, 50 to 75% on medicallyunderwritten business and then
when you get into thatguaranteed issue you're
sometimes in that 40 to maybe asmuch as 70% first year come and
maybe 5 to 10% renewals percentfirst year come and maybe five
to ten percent renewals.
Um, and and we talked aboutearlier that the businesses
stink right these, theseproducts.
(16:06):
You know once the people havethem they tend not to get rid of
them.
I've had my disability policyfor almost 40 years, actually
two of them for almost 40 years.
You know, once they're in there, because those premiums aren't
changing, people keep them.
So it's a great way to buildrecurring revenue right because
of that renewal infrastructurethat both the group and the
(16:28):
individual have.
But on the individual side, alittle bit more heavy commission
on the front end, the timereally to convince them,
convince people to buy it.
I think that's the biggestissue that you know people you
know advisors have is hey, I'vegot to.
Maybe you know I'm super busywith my group solutions and my
(16:50):
employee benefit platforms thatI'm putting in place.
Well, you know I've got to stopand now have maybe a little bit
more of an intentionalconversation, but the industry
is going to reward you for thatmonetarily.
Speaker 1 (17:01):
There's enough reward so that if you have a small
office, you could have somebodywho specializes in DI and you
open the case and then you turnthem over to somebody, or you
bring them with you and you doit together.
Speaker 3 (17:11):
You know I think that's a great point.
You know I work with a lot offirms that have one individual,
like you say, is just become anexpert in that area and you know
we're going to share therevenue between the advisors on
that.
I'll tell you, the other thingthat's happened is to hear the
term maybe broker's broker, butyou have folks that are now
(17:33):
working with employee benefitfirms.
They're not employed by thefirm but they have a
relationship with the firm sothat when the employee benefit
advisor has identified a needfor a business owner or a set of
executives that need thisconversation, they partner with
that another broker who maybeagain specializes in this
(17:53):
individual market.
They just split the business.
So again, really, you knowthere's good opportunities for
somebody to have theconversation.
Whether you want to build yourown expertise or whether you
want to I use your term lay offthe risk a little bit to another
advisor and ask them to helpyou out.
Speaker 1 (18:13):
There's a lot to learn and there's a lot involved
in these contracts.
Involved in these contracts.
If you're a baby advisor or ifyou're just thinking, hey, I'm a
seasoned advisor, I'm lookingfor new conversations to want to
have with my clients, etc.
How do you learn about thisstuff?
I mean, I remember how we usedto do it in the old days and you
know we had the tablets thatMoses brought down the mountain
(18:35):
with the chiseling in them.
But today, how do you do that?
Speaker 3 (18:39):
Well, there's a variety of ways.
You know there's a couple ofresources that you know I throw
out there just as good resources.
You know the Council forDisability Insurance Advisors is
a independent third partyresource that has a lot of good
marketing material associated.
I think that's one of the best.
(19:00):
Um.
Um, you know resources outthere on our independent
platform.
Um, I know NAFA does LifeHappens.
Now, you know there's stuff onLife Happens that you can work
through.
I think that's a good resourceas well.
Um, you know NAVIP has you knowin in our um.
You know quarterly meetings andthings that you know your local
NAVIP chapters have you knowquarterly meetings and things
that you know your local maybepchapters have.
(19:22):
You know, I would go and and umjust pay attention to those
times when you have disabilityinsurance as a topic um.
The other thing you can do isjust align yourself with a good
bga, good broker general agencywho specializes in this, and
there's um several of theseacross the country the plus
group um, and then a lot, of, alot of the big bgas now national
(19:45):
bgas um have their own folksthat are specializing in
disability insurance.
So just ask, you know, hey, youknow, do I?
Speaker 2 (19:53):
you know how do I what?
Speaker 3 (19:54):
resources do you have that I can kind of lean on um.
And then obviously there'salways, you know, guys like me,
the carrier reps that are alwaysthere, that want to, you know,
partner with you as well.
So you know, any of thoseresources are great places to
start the one individual sidethere.
The one thing that I'll alsosay is you know, read a specimen
(20:17):
contract and it's an old schoolthing but ask your wholesaler
to provide you with a specimencontract.
It takes about, I would say,maybe 25 minutes to read through
a contract.
You'll be amazed, just byreading through the contract,
how much more confident you'llbe at what this product is, what
(20:37):
this solution is going to dofor your client.
You know how does it reallywork.
And I say the same thing on thegroup side as well.
You know, take a group contract, you know, same exact thing, a
little bit old school, just kindof reading through that
sometimes, I think, just givesadvisors a lot of confidence as
well.
Speaker 1 (20:57):
I think that's certainly a great place to start
and it's a great place to endour conversation for today.
Don Chimay, regional Directorof Executive Benefits at
Principal Financial Group.
Don, thank you so much forsharing your expertise with our
audience.
Thanks, dave, it's been mypleasure.
I want to give a quick shoutout to our sponsor and our
(21:19):
producer, hatcher Media.
Hey, if you need podcastproduction or professional
graphic design, josh Hatcher isthe expert to contact.
For more information, visit himat HatcherMedianet.
That's H-A-T-C-H-E-R Media dotnet.
Speaker 2 (21:35):
This Shift Shapers podcast is copyrighted content
and may not be reproduced inwhole or in part without the
express written permission ofShipChaper Solutions LLC.
Copyright 2024.
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