Principal Announces Temporary DI Underwriting Guideline Changes In Response To COVID-19

Principal Financial has made temporary Individual Disability Income underwriting guideline changes in response to COVID-19.

Effective immediately, the Individual Disability Insurance (IDI) Underwriting Department at Principal® is changing underwriting guidelines for exams and labs.  These changes will be effective through May 31, 2020, and will be revisited regularly as the pandemic news unfolds.

Labs & Physical Measurements

No physical measurements and labs are needed for up to the amounts listed below.  For amounts beyond those listed below, Principal Underwriters will evaluate the medical records to determine if labs and physical measurements are needed.  We highly recommend the use of Human API and encourage your client to connect their records through that process.  Your underwriter can provide more information on Human API if you need it.

  • Disability Income:  $10,000/month
  • Business Overhead Expense:  $25,000 (increased from $10,000)
  • Disability Buy Out and Key Person:  $1,000,000 Aggregate Benefit (increased from $360,000)

These new guidelines are available to Individual and Multi-Life cases.

As you have questions, contact me.  We’re here and ready to help, in any way we can.

It’s Not Disability Insurance – It’s Income Protection

Over the past couple years we’ve slightly modified the language around Income Protection.

The word disability is somewhat alarming and often evokes thoughts of being incapacitated or laid out in a hospital bed – it’s the reason we don’t refer to Life Insurance as Death Insurance.

Put in a more positive light, DI Insurance is really Income Protection for clients who want affordable, simple protection that can help cover bills should they be unable to work due to illness or injury.

Here are a few conversation starters you can use to help engage your clients in a conversation about Income Protection:
  • How would you protect your income should you be unable to work due to illness or injury?
  • How much do you have in savings?
  • Do you have enough set aside to make ends meet for a several months if you’re off work?
  • Where will the money come from when your savings runs out?

Why should you use these conversation starters?  They’re effective in closing the sale – although many clients recognize the need for Disability Insurance, the number of folks who actually get a policy is much lower.

Rather than trying to convince clients that they may be unable to work due to illness or injury (“spitting in the wind” as your grandpappy may say), selling DI as Income Protection focuses clients on how they would financially manage a disruption in pay – especially when the majority of Americans don’t have sufficient savings.

Lay out exactly how Income Protection fits in with their overall financial protection plan and how simple it is to get affordable coverage in just days – no medical exams or occupation classes are great selling points. Once they understand just how easy the process is, chances are they’ll be sold.

What’s Next?

Simply let your clients know you are in the income protection business – they likely already want income protection but just don’t know where to get it.  Plus, they’ll want to purchase a policy from someone they know and trust – You!

Also, many clients are probably unaware they can even purchase an individual Income Protection Plan – as odds are they’re under the impression they can only get an employer sponsored plan.

We have numerous options available, and can help you get the word out.  Contact your Income Protection Specialist today for more information.

Affordable Protection With DI Retirement Security

It can take a lifetime to save enough for retirement – and just a few minutes to deplete it should an emergency strike.

Do your clients have a plan in place should they sustain an illness or injury that affects their ability to work?  What would they do if their income stream suddenly came to a screeching halt?

Help protect your clients’ retirement dreams with DI Retirement Security – crafted specifically to replenish lost retirement savings when an individual is too sick or hurt to generate a salary.

DI Retirement Security is an innovative program that helps clients ensure their ability to continue saving for retirement in the event of any type of long-term or total disability.  The plan will pay up to 15% of a client’s income for retirement – even if that client has reached the maximum benefit of their current individual DI plans.

Below are some sample rates – a small price to pay to secure retirement plans:

AGE MALE RATES FEMALE RATES MULTI-LIFE RATES
30 $21.08 $32.88 $17.78
35 $23.80 $35.48 $19.87
40 $30.95 $43.25 $25.51
45 $37.60 $49.78 $30.67

  *Rates from Principal Life assuming CA resident, $1,000/month benefit, 5A-M
occupation class, Mental Nervous and Substance Abuse Limitation rider, 180 day
waiting period and benefits to age 65
**Multi-life rates are for 3+ lives that share a common employer-unisex rates with the 20% Multi-Life Discount

Contact your Disability Income Sales Rep for assistance with illustrations, case design, and product questions.

Not All Disabilities Are Treated Equally

If a severe disability struck, the kind where it’s impossible to perform life’s most basic activities without assistance, would your clients have enough income to get by?

Traditional income protection would provide approximately 60% of your client’s pre-disability earnings. However, your client’s expenses are likely to dramatically increase should a catastrophic disability occur.

By adding the Catastrophic Disability Benefit (CDB) rider to their individual Disability Income (DI) Insurance policy, clients could receive up to 100% of their pre-disability income to help cover expenses in those types of situations.

The rider offers a minimum monthly benefit of $500, up to a maximum benefit of $8,000 (depending on the client’s income).  AND it is in addition to the base monthly benefit.

Together, the rider and base policy benefit replace a higher percentage of a client’s income to help them account for the extra expenses that often accompany a catastrophic event.

What’s Covered?

CDB benefits could be paid if your client is ADL disabled, cognitively impaired or presumptively disabled.

Capture 4

Contact your DI Sales Rep to learn more about income protection, and the advantages of the Catastrophic Disability Benefit rider.

Income Protection – The Time Is Now

When is the best time to buy an income protection plan?  The answer is – right now.  It should be done before any health challenges arise that preclude prospects from getting this valuable coverage, or the premium becomes too expensive due to older ages.

Start the conversation with young couples, ages 25 to 45 – they are the top prospects for income protection.

They’re purchasing homes and starting families – it’s an ideal time to build a foundation of financial protection.

Individuals in this age group still have a lifetime of earning potential.  Income is their most important asset, as their lifestyle and long-term financial plans depend on it.  A 33-year-old taking in 60k annually will earn approx. 3.5 million by age 67 with a 3% annual increase.  Many would agree that’s an asset worth protecting.

Remind clients how long it took to build their current savings and retirement funds – assets that can be swiftly impacted and depleted due to an illness or injury that prevents them from returning to work in a timely fashion.

While single, full-time wage earners, new home owners, and families just starting out are top prospects – don’t forget about your current life insurance holders, and auto policy owners with higher limits.

Talking Points:
  • Explain what’s at risk – a lifetime of earning potentially lost due to an illness or injury. (www.whatsmyeiq.org)
  • Lay out how Disability Income Insurance can help cover expenses during recovery.
  • The time to purchase this coverage is now – the premium will never be lower.

We have client approved marketing tools available to help you prospect your current customers while reaching new ones.  Contact your Disability Expert to learn more about growing this corner of your business.