Brokers who ask their clients the right questions before they take an individual disability income application are more likely to have satisfied clients, because it allows you to set realistic expectations.
When the client knows what to expect, it makes the underwriting process smoother for you, the underwriter, and the client. The medical and financial underwriting for disability income is more stringent than life insurance because the likelihood of being too sick or injured to work for a period of time during the working years is more likely than dying.
Tip #1: Make sure your clients are aware that the DI underwriting process can be more comprehensive than life insurance underwriting and why?
Tip #2: Discuss financial documentation in advance, especially with business owners. Questions to ask:
- How long have you been in business? If it’s less than a year, ask if they were a salaried employee in a similar industry before becoming a business owner. If so, may be able to insure 75-80 percent of previous salary.
- Do you take a salary or distributions? Disability income is based on net income (salary and distributions on your tax returns), not the gross proceeds of the business.
- Does your employment contract state you will earn bonus income? If so, how many years have you consistently earned a bonus? Most carriers want to 2-3 years of consistency with bonus income before they consider the entire bonus.
The disability income specialists at Source Brokerage, Inc. can prescreen your client’s financial history to help you determine the maximum monthly benefit they qualify for based on their income documentation.
Tip #3: Income documentation for business owners and applicants earning in excess of $150K should also include the first two pages of their 1040, in addition to their W-2 or paystub.
Tip #4: The #1 disability claim is due to muscle/skeletal issues, especially with the back. Ask your clients if they have seen a medical professional for any muscle/skeletal issues? If so, get the details from them…how long ago, who treated the condition, has it been resolved, etc…In some cases, the underwriter will place a temporary exclusion on the policy. If the condition is more severe or chronic, the underwriter may place a permanent exclusion on the policy or decline to offer coverage.
Ask your clients about their past medical history? Other common exclusions or limitations include mental/nervous conditions and complications of pregnancy.
The disability income specialists at Source Brokerage, Inc. have developed good relationships with our carriers’ underwriters. We can send an inquiry to the underwriter, so you can be more informed about medical conditions, the time that might be involved in the process, and what the outcome might be.
When you ask the right questions in the field, you can prepare your clients for what they might expect, so there is no disappointment or surprises.