There’s never been a better time to ensure that clients have disability insurance, especially since people are living and working longer, says Aaron Keogh, president and financial advisor of Greendoor Financial.
“We need to plan for a potentially longer retirement, any period during which one is unable to work due to disability can greatly diminish the ability to have a successful retirement plan,” he says. Keogh adds that advisors should be knowledgeable about all aspects of the product, including the need, the differences and what each insurance company offers, as well as the pricing, underwriting and the claims process.
“Become familiar with the current demographic trends and the need for DI; how claims are higher in some industries over others and why the pricing varies so much from profession to profession, by age and sex,” says Keogh. He adds that it’s important for an advisor to understand the client’s history and health as its plays a role in underwriting, so one can be aware of possible exclusion or rating.
According to the OmbudService for Life and Health Insurance’s (OLHI) 2016 annual report, disability insurance is the most complained of product category, making up 40 per cent of complaints received.
Holly Nicholson, executive director, ombudsman and general counsel for OLHI, says most of the disability insurance complaints involve denied benefits that relate to whether the medical evidence is sufficient to determine if the claimant can do his job or an equivalent job.
“Disability claims are complex as you need to understand their job and the demands of it and the medical evidence has to demonstrate that they are unable to do their job. You can imagine it’s a high standard to meet,” says Nicholson.
If a claim needs to be made, Keogh says the advisor should be proactive and advise the client what he needs to obtain from his doctor, etc. “If a claim is rejected, it’s important for an advisor to assist their client in understanding why the claim was rejected,” he says.
Keogh adds that consumer protection – especially with respect to disability insurance – is very important and having services like the OLHI available is helpful.
“If there is a legitimate claim that doesn’t pay out, then it’s important to have another option,” he says.
Nicholson encourages advisors to contact OLHI if they’re having a problem regarding a rejected claim.
“Our people are experts, they are independents so you will be getting an unbiased view of your circumstances and situation,” she says. Nicholson also recommends that advisors take time to explain the coverage since many consumers believe they are covered for more than what they actually are.
“Sometimes consumers may not understand the coverage they have, or what that coverage means,” she says.
Advice for advisors
Keogh says it’s important for advisors to annually review the client’s coverage with him or her since life situations frequently change, such as new jobs, changes to income, etc.
He adds that if an advisor is new or inexperienced with disability insurance, he or she should reach out and find an experienced advisor who can share their wisdom.
“Most are very open to help and pass on the expertise that they’ve acquired in how to deal with prospects and clients. Talk to insurance company wholesalers or specialists. They can assist you in doing quotes and positioning the products,” he suggests.
Keogh underlines that the biggest mistake that an advisor can make is to not offer disability insurance to their clients because of the belief that it’s too complicated or difficult to sell. “One of the most important things to do as an advisor is to make sure that you are offering your clients income earning protection.”