The best DI sales ideas DI 1414 12-13 For Producer use only. Not for use with clients.

the best DI sales ideas

DI 1414 12-13 For Producer use only. Not for use with clients.

disclosures

• In approved states, Disability Income insurance (forms 4501NC, 4501NC CA, 4502GR, 4502GR CA, 4502GR RES CA, 4503BOE and 4503BOE CA) is issued by Ameritas Life Insurance Corp. located at 5900 O Street, Lincoln, NE 68510. In New York, Disability Income insurance (forms 5501-NC, 5502-GR and 5503-BOE) is issued by Ameritas Life Insurance Corp. of New York located at 1350 Broadway, Suite 2201, New York, NY 10018. Policy and riders may vary and may not be available in all states.

• This information is provided by Ameritas®, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including, but not limited to, Ameritas Life Insurance Corp., Ameritas Life Insurance Corp. of New York and Ameritas Investment Corp., member FINRA/SIPC. Ameritas Life Insurance Corp. is not licensed in New York. Each company is solely responsible for its own financial condition and contractual obligations. For more information about Ameritas®, visit ameritas.com.

Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2013 Ameritas Mutual Holding Company

DI 1414 12-13 For Producer use only. Not for use with clients.

For Producer use only. Not for use with clients.

something old, something new

• Most of these ideas have been around for years, but since most carriers don’t have a disability product, few producers get training

• While they may be old to you, they aren’t old to your prospects and clients

• “Find the blister,” then figure out how to take away the pain

DI 1414 12-13

For Producer use only. Not for use with clients.

first…some oldies

• Job A vs. Job B

• Fact finding for the DI need

• What is your greatest asset?

• How long was your last vacation?

• Salary Continuation Planning

• Payroll deduction

• Association marketing

DI 1414 12-13

For Producer use only. Not for use with clients.

job A vs. job B

• Which job would you prefer?

Job A: Pays $100,000 a year; however, if you become sick or hurt, it pays nothing;

Or

Job B: Pays $98,000 a year; however, if you become sick or hurt, it pays you $5,000/month - federal income tax free

DI 1414 12-13

For Producer use only. Not for use with clients.

fact finding for the DI need

DI 1414 12-13

For Producer use only. Not for use with clients.

demonstrate the need for DI

DI 1414 12-13

For Producer use only. Not for use with clients.

what is your greatest asset?

Current Age

$50,000/yr

$75,000/yr $100,000/yr $150,000/yr $200,000/yr $250,000/yr $300,000/yr

30 $1,850,000 $2,775,000 $3,700,000 $5,550,000 $7,400,000 $9,250,000 $11,100,000

35 $1,600,000 $2,400,000 $3,200,000 $4,800,000 $6,400,000 $8,000,000 $9,600,000

40 $1,350,000 $2,025,000 $2,700,000 $4,050,000 $5,400,000 $6,750,000 $8,100,000

45 $1,100,000 $1,650,000 $2,200,000 $3,300,000 $4,400,000 $5,500,000 $6,600,000

50 $850,000 $1,275,000 $1,700,000 $2,550,000 $3,400,000 $4,250,000 $5,100,000

55 $600,000 $900,000 $1,200,000 $1,800,000 $2,400,000 $3,000,000 $3,600,000

60 $350,000 $525,000 $700,000 $1,050,000 $1,400,000 $1,750,000 $2,100,000

Sales Idea – Make them go through the process of identifying what they have at risk…don’t do it for them!

DI 1414 12-13

how big is the small business market?

For Producer use only. Not for use with clients.

A recent study by the U.S. Small Business Administration’s (SBA) Office of Advocacy counted 26.8 million businesses in the United States;

• 99.9% have fewer than 500 employees

• 98.2% have fewer than 100 employees

• 89.3% have fewer then 20 employees

• 78.6% have fewer than 10 employees

• 60.8% have fewer than 5 employees.

DI 1414 12-13

For Producer use only. Not for use with clients.

how long was your last vacation?

• In the small business market, the business owners handle the financial, buying and selling of supplies or inventory, public relations, advertising, hiring/firing, etc.

• When they say that they would continue to pay themselves if disabled ask them, “Can you imagine yourself taking a 30-day or longer vacation?”

• They will likely tell you they could never be out that long due to the business...Ask them, “Would a period of disability be any less harmful to the business?”

DI 1414 12-13

For Producer use only. Not for use with clients.

questions to ask the small business owner

• Who would you tap to keep the doors open while you are out?

• Would the cash flow continue in your absence? For how long?

• Is this person capable of or trained to solicit new accounts?

• Is your business and its worth important to your retirement?

• What would the business be worth after three months... six months...a year?

DI 1414 12-13

For Producer use only. Not for use with clients.

salary continuation planning

• Tax guidance which outlines requirements to have a valid salary continuation program

• Allows you to demonstrate to the business owner some planning techniques that can help the company and the key employees

• Can result in either individual or multi-life sales

DI 1414 12-13

For Producer use only. Not for use with clients.

what is a salary continuation plan?

• A tax-favored salary continuation plan means an employer agrees to continue paying an employee who becomes sick or hurt and is unable to work

• A plan that is in place prior to any period of disability. While it is not necessary that it be in writing, it must be known by the covered employees

• It can be self-insured or insured

• ERISA considerations

DI 1414 12-13

For Producer use only. Not for use with clients.

• A salary continuation plan defines:

• Who receives benefits;

• How much;

• For how long; and

• Under what conditions those benefits are payable during a period of disability.

what is a salary continuation plan?

DI 1414 12-13

For Producer use only. Not for use with clients.

government requirements for salary continuation plans

• The plan should be in writing, although other forms of notice may suffice;

• The plan must be in effect before a disability occurs;

• The plan must be communicated to participating employees;

• The plan must be set up solely for employees (not shareholders, unless also employees); and

• The benefits cannot be considered excessive.

DI 1414 12-13

For Producer use only. Not for use with clients.

why establish a salary continuation plan?

• The regulation under Section 105 of the Internal Revenue Code describes an accident or health plan as “…an arrangement for the payment of amounts to employees in the event of personal injuries or sickness.”

• Plans must be for the protection of employees of the firm...not shareholders

• Various tax court rulings highlight the need to have the plan, in place, and in writing, or known by the covered employees, prior to the disability

DI 1414 12-13

For Producer use only. Not for use with clients.

what are the advantages of a salary continuation plan?

• Clarifies that the continued salaries are tax-deductible payments to the disabled employee, which is good for the employer

• Requires payments to the disabled employee, which is good for the employee

• Provides stronger likelihood of payments by establishment of the plan

DI 1414 12-13

For Producer use only. Not for use with clients.

advantages of having and funding a plan

No Plan Self-Funded InsuredRevenue $100,000

Income Tax *- 34,000

Net Profit 66,000

Sick Pay - 30,000

Retained Earnings

$36,000

Revenue $100,000

Income Tax *- 34,000

Net Profit 66,000

Sick Pay - 30,000

Retained Earnings

$36,000

Revenue $100,000

Sick Pay - 30,000

Pre-Tax 70,000

Income Tax* - 23,800

Retained Earnings

$46,200

Revenue $100,000

Premium** - 1,000

Pre-Tax 99,000

Income Tax* - 33,660

Retained Earnings

$65,340 plus

DI Benefits

$30,000

**Assumes a 34% corporate tax rate.

**Approximate annual cost of insuring a 35-year old employee with $30,000 annual benefit to age 65.

DI 1414 12-13

For Producer use only. Not for use with clients.

payroll deduction

• Allows you access to an employer’s employees

• Work on getting the employer’s support

• Use of conference room, payroll stuffers, etc.

• Demonstrate the power of the discounts and, if appropriate, unisex pricing

• What is involved?

DI 1414 12-13

For Producer use only. Not for use with clients.

payroll deduction

DI 1414 12-13

For Producer use only. Not for use with clients.

association marketing

• What does this provide to you?

• Ready market

• Marketing support to gain appointments

• Referral base

• Tangible advantage to the members and the association

• Ongoing relationship if you are smart and work it correctly

DI 1414 12-13

For Producer use only. Not for use with clients.

tools for association marketing

• Materials available to you:

• Association Marketing Agent Guide

• Pre-approach letter

• PowerPoint Presentation for use with executive director and board members

• Announcement Letter

• Press Release

• Ad slicks

• Postcards

DI 1414 12-13

For Producer use only. Not for use with clients.

some new concepts

• Combo Application

• GSI

• “Good, Better, Best”

DI 1414 12-13

For Producer use only. Not for use with clients.

combo life and DI sales

• Life + DI Limited Underwriting program

• Taking care of two needs with one application

• Advantages

• Applications are synced up to expedite the underwriting

• Smooth processing with one Underwriting and New Business contact from submission to issue

DI 1414 12-13

For Producer use only. Not for use with clients.

life + DI limited underwriting guidelines

• Life insurance

• Up to $300,000 death benefit

• EZ App must be used

• Simultaneous application required (except CA)

• Individual DI insurance

• Up to $5,000/month

• EZ App must be used

• No financial documentation required for non-owners (Business owners follow normal financial documentation guidelines)

DI 1414 12-13

For Producer use only. Not for use with clients.

Guaranteed Standard Issue (GSI)

• What are the advantages to you?

• Minimal underwriting

• Ease of gathering necessary group information

• What are the advantages to the employer and the employees?

• Discounted unisex rates

• Can supplement existing group LTD plans or provide disability coverage where no LTD plan exists

• Can be used as a perk to recruit, reward, or retain key employees

DI 1414 12-13

For Producer use only. Not for use with clients.

what is “reverse discrimination?”

•LTD Plan - 60% to $10,000

•Four employees:

• Non-executive - $50,000 salary

• Exec 1 - $100,000 salary/ $ 50,000 bonus

• Exec 2 - $200,000 salary/$100,000 bonus

• Exec 3 - $300,000 salary/$200,000 bonus

60%

Non-executive Executive 1 Executive 3Executive 2

40%

40%

24%

Highest income earners receive lowest percentage of benefit…reverse discrimination

DI 1414 12-13

For Producer use only. Not for use with clients.

example of GSI supplementing group LTDTotal Income w/

BonusNet Monthly

LTD Benefit*

% Net Income Replaced*

$130,000 $3,750 46%

$160,000 $4,500 45%

$230,000 $4,500 31%

$300,000 $4,500 24%

Total Income

w/Bonus

Net Mo.

LTD Benefit*

Individual DI Net Benefit

Combined Net Mo. Benefit

% Net Income

Replaced*

$130,000 $3,750 $3,000 $6,750 83%

$160,000 $4,500 $3,750 $8,250 83%

$230,000 $4,500 $7,425 $11,925 83%

$300,000 $4,500 $11,025 $15,525 83%

Employer-paid LTD only: 60% to $6,000 monthly maximum benefit (base earnings only).

Employer-paid LTD with supplemental Individual Disability Income Insurance

DI 1414 12-13

*Assumes 25% tax rate at all incomes.

For Producer use only. Not for use with clients.

good, better, best

DI 1414 12-13

For Producer use only. Not for use with clients.

send us your ideas!

DI 1414 12-13

questions?

DI 1414 12-13 For Producer use only. Not for use with clients.

key contacts

• Your agency or brokerage manager

• Your Ameritas® sales development team

• Your GSI regional director

• The DI product management team

For Producer use only. Not for use with clients.DI 1414 12-13