LifeMarketers Presents

1. LifeMarketers Presents The ABC’s of Disability

2. The Sales Process • Understand the Client’s Occupation • Develop the Need • Highlight Policy Benefits • Help the premium fit financially

3. Understand the Client’s Occupation • What does your client actually do during the day • What are his or her “substantial and material duties”

4. How is Your Client Paid? • Base Income (W-2) • Bonus (W-2)/Commissions (1099) • Profits (Schedule K-1 or Form 1120) • Residual Income

5. Fact Gathering • Age/DOB • Group LTD Plan • waiting period/benefit period • % income covered • maximum monthly benefit • definition of earnings • Savings • Expenses

6. Describe to me what you would like to see happen if you could not work for a period of time

7. Why Disability Income Protection • Your clients need the protection • Effect on the family • Effect on the client • Effect on society • Mortgage foreclosures - 48% due to disabilities according to the U.S. Housing Authority (1984) • Potential effect on small business/employment

8. Are You Protecting the Right Asset?

9. Chances of a Disability

10. Chances of a Disability

11. Typical Policy Benefits • Noncancelable and Guaranteed Renewable • Fixed monthly benefit • How does the base policy pay? • 20% loss of earnings • cannot perform the substantial and material duties of your job and not working in another occupation • under the care of a physician • Regular Occupation rider removes the loss of earnings requirement.

12. Understanding the Basics • Benefit Period - how long benefits will be paid • Elimination Period - how long the insured waits before benefits begin • Benefit Amount - the monthly benefit payable under a total disability • Occupation Class - risk class affecting benefits and premium

13. Common Definition of Residual Disability • Requires a loss of income and usually a loss of time or duties • Percent of income lost equals percent of income paid • Ex.: a 60% loss of income with a $5,000 monthly benefit will result in a $3,000 monthly benefit • Partial Disability - 50% of benefit payable for 6 or 12 months

14. Catastrophic Benefits • Presumptive Disability • Presumptive disability with loss of speech, hearing, sight or the loss of use of any two limbs • Benefits are paid for life and no elimination period is applied.

15. Common Optional Riders • Cost of Living Benefits • Future Insurability Benefits • Automatic Increase Benefits • Premium Refund • Residual • Return to work • Extended disability benefit rider Subject to variation and state availability.

16. Cost of Living Benefits • Increase the monthly benefit on each anniversary date of the disability • Compounded interest • Has an overall cap of two times the monthly benefit • The younger the client the greater the need.

17. Future Insurability BenefitsBenefit Update Rider • Allows benefits to be increased without re-qualifying medically. No limit to amount of increase except for maximum issue amount. • Option dates will be every 3 years or by special trigger. Expires at age 55 • Triggers that open an early option are loss of group sponsored LTD, reduction of LTD, or change of employment(When purchased on top of Group LTD it acts as a portability rider to the group).

18. Occupation Classes • We are insuring duties not job titles • What is your client’s day like • If any manual duties what are they and what % of time do they represent • Do they have ownership • How many employees • Affects costs and benefit

19. Tax Consequences • Premiums paid with pre-tax dollars - taxable • Premiums paid with after tax dollars - income tax-free • More than 2% owners of Partnerships, S-Corps, LLC cannot deduct premiums

20. Example • $100,000 income qualifies for $4,800 income tax-free or $5,950 taxable benefits • Assuming 28% marginal tax bracket $4,800 income tax-free benefit is comparable to $6,666 monthly gross income

21. Medical Underwriting • Common Concerns • Musculoskeletal • Mental/Nervous/Drug/Alcohol • Stress and anxiety counseling • Diabetes • Blood pressure and cholesterol • Attending physician statements • Blood and Urinalysis

22. Financial Underwriting • What is your client’s net income after business expenses • Complete the income history including bonus and pension contributions • Include signed tax returns with all schedules for business owners • Unearned income

23. Common Objections • I have savings • My spouse can work • I can do my job from bed • I have protection at work • It costs too much

24. Savings…What’s It Really Worth? • 40 year old with $250,000 in the bank • Assume 20 years of disability with investments accruing at 8% • $1,900 per month will be paid out over 20 years • Can you live on $1,900?

25. My Spouse Can Work • What does your spouse earn now • Who will take care of you while you are sick? What’s that worth? • If you really don’t need the second income why not take a small percentage of it and ensure the second income continues in the event of disability

26. Group Long Term Disability • Myth - “It’s cheaper because it’s group” • Typically more conservative benefits • Pre-existing condition limitations • New cost containment provisions • Less adverse selection • Premiums and benefits can be modified • Plans can be canceled

27. Why Supplement Group LTDwith Individual Policies • Benefit may be too low • Benefits are typically taxable • Rates not guaranteed • Usually not portable • Usually conservative definitions • Bonus and Pension benefits may not be covered • Your client needs it • With Benefit update rider you now add portability

28. Cost • Try to keep premium at 2% or less of income • 90, 180 or 365 day wait • Five year or age 65 benefit period • COLA or not • SSI Integration

29. Thank You Presented by By LifeMarketers 800-897-5446