You’ve probably heard the buzzword “hyperlocal marketing” trending as of late (perhaps even right here on Marketing Corner). While the concept is nothing new, the use of hyperlocal marketing is growing rapidly.
Our last Marketing Corner post looked at how Nextdoor.com is expanding its neighborhood-based social networking hub into a hyperlocal marketing tool for businesses and service providers. But one social platform is merely the tip of a much bigger hyperlocal iceberg.
In a nutshell, hyperlocal marketing involves targeting prospects within a specific geographic area. Geotargeting your ads and sponsored social media posts are popular forms of hyperlocal marketing in action. However, those are most effective when you reach a consumer who is willing to engage with the post/ad and answer your call to action. In spaces oversaturated with ads, such as Facebook, this can be a challenge.
Be There When They Want You
People are busy. They have places to go and things to do. Yes, they’re probably scrolling through Facebook or Twitter along the way. But that sort of multitasking leaves little room for them to engage with the ads that pop up in their newsfeed. While it’s important they at least see your content scroll by, it’s even more important that they can easily find it when they’re ready.
According to Google, “near me,” or location-based searches have increased by as much as 150% over the last two years. These might include “financial planners near me” or “advisors in [city or zip code].” As you might have noticed when conducting your own searches, Google now lists local results over organic when returning the results of a search (and just below the list of paid results). The higher a site ranks on these search results, the more traffic said site will receive.
So, how can you boost your site’s ranking? Because Google’s algorithm is in a constant state of change, there is no clear-cut answer to that question. However, there are several ways to optimize your page for better local results.
Best Practices for Local SEO
Claim Your Business Page – Claiming and optimizing your Google My Business page is a crucial part of boosting your SEO ranking. Setting up your page is free and fairly simple but does require you to complete a verification process (usually by receiving a postcard with a confirmation code to your physical address). Once you are verified, add as much relevant information as possible to your page—address, business hours, website URL, phone number, business description, etc. Make sure your information is accurate, consistent, and honest. Google has cracked down on businesses that give false or misleading information, and any violations of their guidelines could negatively impact your listing (or result in your page being suspended).
Images can help drive search engine traffic, so you’ll want to include a handful of quality photos of your business. Use a good shot of the front exterior of your office as your cover photo. You should also include your logo, professional headshots of you and your team, and a few interior photos as well.
Keywords & Content – Your address should be included in the sitewide footer section on your website, as well as on your “Contact” page. If you post original content to your site (which you should be doing), localizing some of that content can also help boost local SEO rankings.
Incorporating localized meta descriptions, tags, and keywords into your pages and photos can also help your site’s local rankings. Just be aware that Google frowns upon “keyword stuffing,” so make sure to keep things relevant. You will also want to include a clearly and concisely written snippet of anchor text (the blurb that appears underneath your link on a search result), such as “[Insert business name], a certified financial planner in [insert city], specializing in retirement planning.”
Be Mobile Friendly – This almost goes without saying. Mobile searches account for roughly 60% of all online inquiries and that trend is expected to grow in the years to come. Additionally, Google and other search engines favor sites that are optimized for mobile over those that are not. Simply put, if your site is not mobile friendly, you’re going to lose business.
Local Review Directories – While the reviews and feedback posted to your Google business page will appear first and foremost in search results, there are several alternative review sites that you should look into. Granted, many of these are geared more toward retailers and service industry businesses (bars, restaurants, etc.), but there are a handful that hold value for those working in the financial industry, such as Yelp and Foursquare. Customer feedback, be it from these or any site, can be leveraged to help your overall search ranking. Just remember to be responsive and transparent when a client shares their feedback.
Overall, local SEO is more of an art than a science. This is especially true when it comes to maximizing your online presence to prospects in your area. Having read through the tips listed above, now might be a good time to conduct a few localized online searches of your own. Whose business ranks higher? Yours, or the competition?
You’ve probably never given much thought into incorporating Nextdoor into your marketing strategy. If you haven’t, don’t feel bad. Not very many have. In fact, for many marketers and businesses, Nextdoor is barely a blip on the radar. All that might change in the not-so-distant future if the company has its way. For the last seven years, the community-based social networking platform has built itself up as an online neighborhood message board of sorts, giving people a place to post about garage sales, lost pets, crime, and other local happenings.
This “Craigslist with a newsfeed” feel hasn’t made Nextdoor the most popular digital destination, but a number of small, niche businesses (home repair, lawn services, daycare, etc.) have discovered the value in advertising through Nextdoor. In April, the company introduced the ability for businesses to sponsor posts, making now a good time for agents and advisors to give Nextdoor a look as well.
Nextdoor is often described as “hyperlocal social media,” because its users only see what others in their own or surrounding neighborhoods post. For them, the increased privacy and relevancy, along with the lack of unsolicited, “spammy” posts, makes the platform a more neighborly alternative to global social networks. For you, Nextdoor offers unsaturated access to a localized list of potential new clients.
Your Friendly Neighborhood Financial Planner
The obvious first step in your Nextdoor marketing campaign is to create or claim your business page. This will differ from a personal Nextdoor profile in that the business page won’t have any specific neighborhood affiliation. The owner of a business page also can’t access neighborhood directories or the conversations that take place on the site. These limitations are in place to, according to Nextdoor, make sure “…members’ experience remains positive and is not overwhelmed by posts from businesses and service providers.”
Your page will also lack the bells and whistles of a Facebook business page, and displays little more than your contact info, profile picture, location on a map, and
what Nextdoor members are saying about your business. This last feature is where the value of Nextdoor can be found – word of mouth marketing.
According to Nielsen, two of the most trusted forms of advertising are online
consumer opinion and recommendations from friends and family. Nextdoor brings both together under its “Recommendations” section. Like Facebook or Google reviews, Nextdoor recommendations allow customers to offer feedback about their experience with a business. With more than 17 million recommendations posted, this can be a powerful brand awareness tool. Be sure you review the site’s Community Guidelines to avoid any violations or conflict of interest.
Hyperlocal Social Marketing
As we mentioned above, Nextdoor is in the process of incorporating Sponsored Posts into the newsfeeds of its members. However, in the interest of keeping the content relevant, they’re taking a calculated approach in doing so. Thus far, Nextdoor has only partnered with select businesses, including home and auto insurance providers, to give Sponsored Posts a test run. While they have yet to open the floodgates, the company says the option will be more widely available in the near future. When this happens, participating businesses will have the ability to build a geographically-customized audience based on zip code, neighborhood, or individual home address. This targeting method could come in handy when trying to fine-tune your message to homeowners, and/or people who live in a specific community.
Whether Nextdoor will be an effective way to market your individual business depends largely on how active your community is on the site. If you aren’t already a part of the more than 150,000 Nextdoor neighborhoods across the U.S., this might be a good time to sign up and start exploring.
**This post is part of Legacy Financial Partners’ ongoing Marketing Corner, a space that offers advisors short sales ideas, yellow-pad concepts, and alerts to aid advisors in lead conversion, marketing, and client relationship building.
We are deep into summer. Don’t forget to request our Summer Survival Kit, which provides great tips for advisors on how to deal with the slump in business that naturally happens each summer.
“Your Facebook ad has been disapproved”
Those six words have been throwing a wrench in the works for more and more business owners as of late. If you haven’t encountered them yet, the chances will be even greater you will in the coming weeks. In response to the ongoing data, privacy, and “fake news” scandals, the world’s most popular social media platform is making some changes, many of which could have a direct impact on your marketing strategy.
In the interest of transparency, Facebook is tightening the belt on ads (and advertisers) pertaining to elections and political issues. The new rules include new verification requirements for advertisers and “paid for by” disclosures on their ads. While the move is intended to slow the spread of “fake news,” there appear to be a few kinks left to be worked out of the screening process. In the weeks since Facebook has started roll out these changes, we’ve seen numerous reports of ads/sponsored posts being incorrectly flagged as “political” and disapproved until the advertiser submits personal information, such as their Social Security number and photo ID, needed for the authorization process.
While the policy itself was written with politicians, lobbyists, and election campaigns in mind, content from a variety of businesses (including agents and advisors) has also been caught in the crossfire of Facebook’s increased scrutiny. When Facebook launched the new political ad rules in late May, the company released a list of 20 initial issues that would be used to determine whether an ad was political in nature. A few topics that appear on that list might help us understand why your post about a retirement planning seminar was disapproved:
- Social Security
Sure, it might seem silly to draw any sort of connection between the November elections and a post offering future retirees information on how a tax-deferred annuity can help those who are concerned over the future of their Social Security benefits. But, with a screening process that’s based on a combination of human judgment and a still-evolving algorithm, it’s happening. Has it happened to you? If so, don’t expect much help from Facebook, as the company is passing the issue off as growing pains and claims it will
straighten itself out over time. This leaves legit, non-political advertisers whose content has been flagged with little recourse other than to appeal the decision and/or complete the authentication process. Both of these require more time and energy than most of us would rather spend on clients and prospects.
But wait, there’s more…
The content of your Facebook ad isn’t the only thing under the gun these days. The ways in which you target your audience is also undergoing a major overhaul. The end of June will introduce the first step in Facebook’s move to eliminate “Partner Categories” from the available ad targeting audience. Partner categories consist of consumer data provided by third-party companies that advertisers use when fine-tuning their customized audience. This means that several behavioral and demographic parameters advertisers used to better reach those consumers who would benefit most from their products/services will no longer exist on Facebook’s advertising platform.
What does this mean for you?
For those working in the world of finance, targeting consumers based on their financial indicators is a key part of finding those prospects who are most likely to convert. Information such as personal income, net worth, homeownership, and several behaviors related to one’s financial well-being have long been used by advertisers when customizing an audience to the product/service. Beginning June 30, those parameters will no longer be able to be used for creating new or editing existing campaigns. On October 1, any ads using data gleaned from partner categories will no longer be delivered.
Does this spell the end of Facebook advertising? No, absolutely not. Despite the platform’s overhaul and accompanying frustrations, Facebook will still remain one of the most valuable ad platforms available. Even after the third-party data is gone, the remaining demographic, behavioral and interest categories will still allow you to finely-tune your customized target audience. You’ll just have to be a little more creative when doing so. Here are a few tips that can help you work around the changes to Facebook’s advertising platform:
- Geotarget Affluent Communities: You can no longer use Facebook to specifically target homeowners who make at least $75,000 a year. But, you can use what you know about your own area to geotarget your ads to reach those living in neighborhoods that would likely be populated by people who fall under that demographic. Geotargeting is a commonly used parameter that can be used to create a customized audience of Facebook users living in a specific area.
- Replace Behaviors with Similar/Relevant Interests: Just because Facebook is no longer going use consumer profile data from third-party companies, that doesn’t mean they’ve stopped learning everything they can about its users. The social media giant uses internet activity such as web browsing and Page “likes” to create comprehensive profiles of its users. If you ever expressed an interest in clog dancing, Facebook probably knows it and has you tagged as someone who might be receptive to an ad about clog shoes. The same goes for those who have searched for things like annuities, retirement, and life insurance. This approach might take some experimentation but can be an effective workaround in the absence of third-party data.
- DIY: Facebook’s new targeting policies apply to consumer info compiled by third-party data mining companies such as Acxiom and Experian. But the rules do not prohibit businesses from targeting people based on data they’ve collected themselves. Consider using surveys, forms, or landing pages to help build an audience of consumers who want to see your ad.
In all likelihood, we’re just seeing the tip of the iceberg when it comes to Facebook’s much-publicized overhaul. This means we should expect the “formula” for a successful ad campaign to change with the seasons. Keeping up with it all can take more time than most of you have to spare, but you also can’t afford to waste resources on ineffective advertising.
This is where we can help. If you’d like to learn more about how to keep ahead of the curve, call us today.
Summer has officially arrived! The weather is getting hotter, but for many, business is cooling off. It’s not uncommon for advisors to experience a slump from June to late-August. Clients and prospects are away on vacation or too busy with summer activities to worry about finances. With fewer appointments and less on your plate, how will you spend your summer?
Some use the downtime as a chance to recharge before things pick up again in the fall. Others simply wait it out and accept the summer slump for what it is—an often-unavoidable decline in business. However, as an entrepreneur, you probably aren’t the type to sit around and wait for business to come in. And why should you? You might not produce many results over the summer, but you can still be productive. A little extra effort and creativity is all it takes to beat the summer slump and make long-term improvements to your business. Here are two suggestions to consider.
The summer months are filled with a variety of outdoor activities, events, and community gatherings. In fact, some of those prospects you’ve been trying to reach have probably already made plans to attend one. You should join them! Many community events offer sponsorship or vendor opportunities to local businesses. This can be a good opportunity to boost brand awareness and put your business card into the hands of several potential clients.
Reflect & Refocus
This would be a good time to take a close look at the first half of your year. How are your results matching up with the goals you set for yourself? What are you doing right? What could you be doing better? Even the most successful advisors can benefit from a little self-evaluation. Careful scrutiny of your strengths, weaknesses, wins, losses, and everything in between is a necessary step toward taking your business to the next level.
There are countless other ideas that are worth considering if you want to maintain some momentum during the slow season. Want to hear more? Our 2018 Summer Survival Kit is full of tips that can help create new opportunities while the competition is sitting at the beach.
Fill out the form to claim your complimentary kit today.
The latest report from the U.S. Social Security Administration’s Board of Trustees brought some troubling news for future retirees. For the first time in 36 years, the SSA will have to tap into its trust fund in order to pay for the program this year.
The June 5 announcement puts a spotlight on the worsening long-term financial status of the combined asset reserves for both the Old-Age and Survivors Insurance and the Disability Insurance trust funds. The report projects that the OASI trust fund will be depleted by 2034, one year earlier than previous estimates suggested, with only 79% of benefits payable. The lifespan of the DI trust fund was actually extended from 2028 to 2032, with 96% of benefits payable. When combined, these wells are expected to run dry by 2034 (on par with last year’s projection), meaning recipients could lose roughly 20% of their benefits.
Before going any further, the changed projected depletion date for the DI trust fund is worth mentioning. While the four additional years projected for the DI trust fund did not budge the overall combined depletion date, it was perhaps the closest thing to “good news” contained in the report. The reason given for the change in DI reserve depletion date is, according to the report, “largely due to continuing favorable experience for DI applications and benefit awards. Disability applications have been declining steadily since 2010, and the total number of disabled-worker beneficiaries in current payment status has been falling since 2014.”
While this is only one of multiple factors behind the change, it does suggest that more people (and employers) might be recognizing the value of personally-owned disability insurance as an alternative to SSDI. Assuming it is, perhaps the possibility of reduced retirement benefits could be a much-needed wake-up call for those who have stated they would have to rely on Social Security as their primary source of retirement income. In case you missed the recent Marketing Corner post covering Social Security awareness (or the lack thereof), that would be more than 40% of survey respondents aged 50 – 64.
So, overall, should we start freaking out over the looming Social Security crisis?
Yes, but no.
Shortly after the report was released, headlines and social media posts containing terms like “insolvency” and “bankruptcy” started spreading like wildfire, which played into fears that a generation of American workers would be left without any benefits whatsoever at retirement. While claims of impending insolvency are not entirely inaccurate and should be taken seriously, a little context is needed in response to the alarms being sounded.
According to the report, the Board of Trustees “consider the trust funds to be solvent at any point in time if the funds can pay scheduled benefits in full on a timely basis.” The words “trust funds” and “in full on a timely manner” should add a little clarity to the overall situation and alleviate concerns that the entire program is dead in the water. The trust fund exists to cover the gap between the payroll taxes used to pay for the program and the actual amount needed for the year. Because the trust funds do not have “borrowing authority,” when the money is gone, it’s gone for good and the gap will go uncovered. However, payroll taxes will still keep the program alive, albeit in a crippled state. Benefits will still be paid, but not “in full on a timely manner.”
This is where we find our cause for concern.
As mentioned above, a depleted trust fund means a significant reduction in benefits for everyone. The current average amount of a monthly Social Security benefit check is roughly $1,500. Not really enough for a “financially-secure retirement,” is it? For many, it’s barely enough to get by. We can only imagine the hardships that a reduction in benefits will bring.
There is, of course, still time for lawmakers to make the changes necessary to avoid the coming crisis. Options that have been presented in the past run the gamut from a gradual increase in payroll taxes to further raising the retirement age and lowering the cost-of-living adjustments. That said, waiting on a viable solution from Capitol Hill might not be a risk everyone is willing to take. Those facing retirement in 15 or more years will have to find additional income to supplement their Social Security benefits. And doing so means they have to start planning now.
Last month’s post on Social Security awareness asked advisors what they are doing to educate consumers on the program’s retirement benefits. In the wake of the Board of Trustees report, that question bears repeating. What are you, as an advisor, doing to engage more consumers and stress the importance of an alternative/supplemental source of retirement income?
One of the biggest challenges agency owners face is recruitment. Without quality staff under your brand, how does your company grow? How do you target motivated people that will successfully join your vision and process?
Below we discuss five reasons why agency recruitment can be difficult and how we can help your firm.
Ideal Candidates Are Hard To Find
New agents may be molded to fit your agency’s approach and vision. Experienced agents will have a fluency with product lines and sales techniques. But each also carries disadvantages. New agents may require longer on-ramping, as they may lack knowledge base and drive. Older agents may be less willing to be coached.
Generally, when you want to bring someone under your banner, you want them to have proven experience in the industry, but not so much that they will be aging out of the field soon. This means the number of prospective agents who can become long-term assets for your company is smaller than you realize. There is still great opportunity; you just need to spend more time and effort marketing to the right candidates.
Fill out the form below to claim your Agency Accelerator Guide
The trap that many agencies fall into is taking too much risk on less-than-ideal candidates. You want to grow, you need staff right away. But investing the time and money going after your ideal candidates can pay off huge.
How We Help: Legacy Financial Partners can target and manage your ideal candidates. With a large nationwide database, we can put you in contact with candidates that meet your experience requirements.
Expectations Not Clearly Defined
We find many agencies lose new agents because expectations are not clearly defined between the two parties. Terms of employment are often casual, handshake deals, without outlines as to what determines success. Putting KPIs and metrics in a document such as an employment agreement can put you both on the same page. You should also clearly describe the support, coaching, and tools available to new agents.
How We Help: From our experience working with both agencies and individual advisors, we can help your dial-in expectations, goals, and metrics that are reasonable to both parties, with support offered to you as the owner and your new agents.
Your Value Proposition Is Fuzzy
As with your consumer prospects, you should be able to articulate your distinct advantage to agent prospects. Why should an individual agent want to join your firm over others? How are you getting this message out?
For most agents, it won’t be one single thing that entices them to join your firm, but a mix of things, such as:
- Prospecting and Coaching Support
- Your Firm’s Success/Branding
- Specialty Programs/Tools (exclusive, proven marketing programs)
How We Help: Legacy Financial Partners has worked with numerous agencies and agents identify their value proposition. Our support helps you develop/enhance your business. And through Legacy, you will have access to the marketing tools, programs, and support your agents desire.
Your Website and Marketing Materials Are Outdated (or non-existent)
A prospective agent is going to check your web presence and marketing materials at some point in the engagement process. You want to give them the impression that you are a modern, forward-thinking organization. An old website can turn away potential employees, the same way it can turn away prospective clients.
And what about your marketing materials? Do you even have agent-facing recruiting brochures or landing pages? These can be very helpful as you guide a candidate to join your company.
How We Help: Legacy Financial Partners is a digital marketing organization as much as we are a brokerage. We create progressive and eye-catching websites, landing pages, email templates, brochures, and more—all designed to leave your clients and agents with full confidence in your services.
Good Agent Recruitment Takes Time
For agency owners like you, time is one of your most precious resources. Not only are you likely servicing your firm’s top dog clients, you are also responsible for keeping the lights on, handling payroll and personnel issues, approving marketing (or creating marketing) and more. Being your own boss is a double-edged sword. You answer to no one, yet you are responsible for everything.
Throw agent recruitment into the mix and your time is that much less. Good recruiting takes time—in the sense that it can be weeks or even months before your onboard the right candidate and in the sense that it takes time away from your other duties.
How We Help: Legacy Financial Partners agent recruiting solutions save you time and allow you to engage with prospective candidates further in the funnel.
Want to learn more about our Agency Accelerator Business Platform?
Request our Agency Accelerator Business Platform guide.
When you think of the different marketing/advertising methods at your disposal, what comes immediately to mind? Digital and print ads? Commercial spots with your local TV and radio stations? Social media?
All of the above are effective ways of getting your brand out there to your target market, but they also exist in a very crowded space where each message is forced to compete for the attention of a consumer base who is already over-inundated with advertisements.
By limiting your marketing strategy to the “go-to” traditional methods, not only are you pitting yourself against others who offer the same service, you’re thrown into a mix of restaurants, car dealerships, and other businesses all waving their arms wildly and shouting “Hey, look over here!”
In fact, studies suggest the average person is exposed to roughly 4,000 advertisements a day. That, my friends, is a whole lot of arm waving and shouting. If you want to stand out and rise above that kind of clamor, you might have to go guerrilla.
The concept of “Guerrilla Marketing” can be traced back to the early 1980s when author and advertising guru Jay Conrad Levinson first coined the term to describe any “unconventional marketing tools used in cases when financial or other resources are limited or non-existent.”
While books have been written detailing the finer points and evolution of guerrilla marketing since it was first introduced, the overall concept remains the same and can be pinned down to one word—unconventional. So, what does that look like?
For starters, guerrilla marketing does not necessarily mean “free advertising.” Despite the above description, the fact remains that, in order to make money, you have to spend money. However, a little creativity can go a long way when it comes to the money you invest into brand awareness.
At its core, guerrilla marketing is all about taking the consumer by surprise; presenting yourself/brand/message in a way that strikes a resonant chord with whoever encounters the “ad.” This is actually easier than it may sound if you don’t mind pounding a little pavement. As an independent agent/advisor or the owner of a small agency, your business is based on forging real-life relationships with your consumers. You can get that ball rolling by taking your marketing efforts directly to would-be-clients.
Before the days of Facebook, you couldn’t walk past a telephone pole, public bulletin board or storefront without seeing an array of fliers promoting concerts, speaking events, garage sales, etc. In fact, you probably still see them scattered about the community, which should tell you there is still something to this overlooked, but cost-effective promotional vehicle. Consider hanging a few fliers for your next seminar. Just make sure they’re in a well-trafficked area and posted with permission
Plant A Seed
Community gardens and pocket parks are popping up in neighborhoods all over the country. Chances are, you pass by one or more on a daily basis. Chances are even greater that you pass by one or more locations that would greatly benefit from a little beautification. Look into filling those voids with a flower garden and bench, complete with a “Brought you by [Your Brand Here]” plaque that lets everyone know that you have a vested interest in the community.
Make an Appearance
Think about all the various community events, gatherings, festivals, and parades that take place in your area. Are you getting involved in any of that action? You should! Keep in mind that “getting involved” means more than just paying to have your brand displayed on the event poster. Arm yourself with a bag of “swag” (aka cheap giveaway items that feature your logo and contact info) and send everyone home with your brand in their pocket. If you’re at an event with vendors, consider giving away reusable shopping or tote bags to people as they come in. Charging cables, phone holders and USB drives are also handy items that we never seem to have enough of. And don’t forget about the kids! Sure, a fidget spinner or squeeze ball with your logo might not seem like the best way to connect with people who are interested retirement planning and life insurance. However, that’s exactly who is going to pick it up once their child puts it down.
These are just a few of the hundreds (if not more) of non-traditional marketing opportunities that you could add to your toolkit. Maybe these will work for you. Maybe they won’t. Hopefully, this post has at least got you thinking outside of your own box a little. The point here is to highlight the fact that you are not confined by the formulas set by traditional marketing methods. If you’re still looking for new and innovative ways to engage your target market, get in touch to find out how we can help.
Consumers often cite cost and convenience (or the lack thereof) as reasons for not having life insurance. While any agent worth their salt should be able to counter excuses they hear from the uninsured, convincing people to part with their time and money can be challenging. Rather than talking yourself blue in the face trying to convince a hesitant consumer otherwise, a better approach might be to show that you’re saving them money and time.
How? You can employ Table Shaving to help save them money and Simplified Issue to save them time. We discuss both life insurance concepts below.
If everyone who wanted life insurance could qualify for the cheapest rates available, perhaps cost wouldn’t be as much of an issue. Unfortunately, consumers find that any number of health conditions (be it their own or related to their family history) and/or lifestyle factors can result in high monthly premiums.
For many, looking at the difference between what others might be paying and what they’re being forced to pay can be frustrating enough to walk away without a policy. This is why you should become familiar with the various table shave programs offered by insurance companies.
A table shave program is way for applicants with certain health conditions to save money on life insurance premiums by meeting specific criteria and/or wellness targets. Not all carriers offer table shave programs, and those that do have their own set of specific limitations, exceptions, and criteria. They’re typically used more for permanent life insurance policies, but a select few carriers also allow table shaving on term coverage as well.
A table rating can be triggered by anything (medical or non-medical) that increases the likelihood that an applicant will die prematurely. Those triggers can vary from carrier to carrier, but a few general examples are:
High blood pressure, cancer, diabetes, combined height/weight (obesity), poor family health history, sleep apnea, asthma
Mental illness, hazardous occupation, adventurous lifestyle, criminal record
Underwriting is more formulaic than fluid, which means an applicant with any one of these (or other) impairments can be automatically rated up several tables. Table shaving offers a little more flexibility in the underwriting process for
eligible applicants. Again, specifics differ from carrier to carrier, but there are a number of favorable health and lifestyle characteristics that can offset those impairments and improve an applicant’s rating.
Let’s say an applicant is mildly to moderately overweight and works in a hazardous occupation.
The underwriter will most likely see these as unfavorable or risky lifestyle factors and give them a lower health class rating, resulting in a higher premiums rates. At the same time, the applicant also undergoes routine wellness checks, hits the gym a few times a week, and comes from a family with no known history of serious medical problems. These favorable lifestyle factors can earn the applicant wellness credits that improve their health rating. The improved rating could save them hundreds of dollars, if not more, each year on premium costs.
Due to all of the carrier-specific variations in table shave programs, you might need to do a little digging to find one that matches your client’s individual situation. But the potential discounts they offer could go a long way toward converting a potential client.
Like money, time is a valuable commodity these days. When a person wants something, they want it now. Not six to eight weeks from now. For the impatient consumer, a Simplified Issue policy is a quick and easy way to get coverage without the medical exam or waiting period.
Granted, this convenience does come at a cost. Because the carrier is providing coverage without a medical exam to provide a clear assessment of the policyholder’s mortality risk, a Simplified Issue policy is going to be more expensive than a traditional plan. Premiums are based on the amount of coverage and can range anywhere from a few dollars more to twice as much as a traditional term life policy. And coverage for most Simplified Issue policies typically maxes out at $250k.
Not everyone will qualify for a Simplified Issue policy. Again, this is because the carrier is essentially “going in blind” by waiving the medical exam. Instead of making a trip to the doctor’s office, the applicant will have to answer a series of detailed questions about themselves (lifestyle, behaviors, family history) and submit additional personal information, such as medical and driving records. The carrier uses this information to determine whether the applicant is “low-risk” enough to be approved.
Generally speaking, a Simplified Issue policy is geared toward consumers who are young, in fairly good health, and have not previously carried a life insurance policy. Another advantage to both the consumer and agent is the quick turnaround time for these policies. The application process is fairly simple and can often be conducted over the phone or during a short face-to-face meeting. It typically only takes a matter of days (or hours in some cases) before the application is approved or denied. Death benefits are available immediately after the policy goes into effect.
A few situations where a Simplified Issue might be ideal include:
- Starting a new job in a hazardous or high-risk occupation
- Traveling abroad or to a dangerous location
- Medical issue or procedure that makes a person temporarily ineligible for traditional term life insurance
- Someone who takes part in dangerous or high-risk hobbies
While a Simplified Issue policy is far from the most ideal product available, it can be a good solution for those clients who value time above all else.
May is National Disability Insurance Awareness Month. The campaign, launched in part by the Council for Disability Awareness, is used to educate wage earners on the importance of planning ahead should their income source be disrupted by an unexpected disability. Because many advisors and agents butter their bread with retirement planning and life insurance products, disability insurance is probably not a topic that comes up in too many client meetings.
But it should. If you’re asking why, the answer can be found within the annals of pop culture.
Dr. Steven Strange was at one time considered the top neurosurgeon in the world. That all changed one fateful night when he was involved in a fiery car crash. While Strange survived the crash, his hands—once skilled surgical instruments—were injured beyond repair. Despite months of treatment, his hands never fully healed. Dr. Strange would never perform surgery again. One tragic incident, one miscalculation on a windy, mountainside road was all it took to ruin a lucrative career.
If you’ve seen the movie or read the comics, you’d know that Strange drained his life savings in pursuit of a remedy for his career-ending disability. Sure, he eventually stumbled upon an ancient mystic, gained superpowers beyond imagination, and has saved the universe a dozen or so times. But in the real world, the story of Dr. Strange would have ended with “drained his life savings.” Unless, of course, he had a good disability insurance plan
Assuming that none of your clients are superheroes, the following paragraphs (rooted in facts, rather than comic book fantasy) should illustrate the value of a private disability insurance plan.
According to the Council for Disability Awareness, at least 51 million working adults in the U.S. do not have disability coverage other than what is available through Social Security.
This is a staggering figure, especially when we consider that 48% of American adults would not have enough savings to cover three months of living expenses if something happened that prevented them from earning any income. Couple that with a recent report that found nearly half of all foreclosures on conventional mortgages are caused by a disability or other medical-related setback, and it’s easy to see why agents and advisors should encourage their clients to consider adding disability insurance to their existing plan.
However, it seems that many believe (or at least hope) that Social Security Disability Insurance (SSDI) will be enough to keep them afloat if they become disabled. Data from the Social Security Administration reveals a much more sobering truth. At the onset on 2018, the average monthly disability payout was $1,197. That’s barely enough to keep the beneficiary above the current poverty level.
This is why even the federal government discourages people from banking on SSDI should an injury or medical condition render them disabled. By their own admission, the Social Security Administration has tacked a very strict definition on the term “disability.” As stated on the agency’s website, a person is only considered disabled if:
• You cannot do work that you did before;
• They determine that you cannot adjust to other work because of your medical condition(s); and
• Your disability has lasted or is expected to last for at least one year or to result in death.
Furthermore, SSDI benefits are not available for those determined to be suffering from a partial or short-term disability.
Of those who meet those guidelines and applied for benefits, only about one-third were actually approved to receive payments. And those payments typically won’t start coming in until after the roughly six-month waiting period. Someone who is forced to live within those means for several years, if not permanently, can forget about setting up or holding onto any sort of retirement nest egg.
So, if you look at life insurance as a way to soften the financial blow that comes with a death (income loss, funeral expenses, medical/hospital bills), then you should look at disability insurance in a similar light. Essentially, a personally-owned disability insurance policy, when used strategically with additional sources of income, can provide the insured with a comparable amount of stability and security they enjoyed before becoming disabled. Or, in cases where he/she will be able to eventually return to the workforce, it can keep money coming in while they recover or learn a new skill. This can also be the key to avoiding asset liquidation or dipping too deeply into existing retirement or life insurance funds.
Several factors will determine the details of an individual personally-owned disability insurance policy. First, the policyholder’s current situation should be taken into account. How much income will they need in the event of a disability? What additional sources of disability income are available to them (employer-provided short/long-term disability benefits, SSDI, existing income sources such as investments, savings, CD, etc.)? How much can they currently afford to put toward monthly premiums?
Once those questions are answered, then you can start hashing out the finer points of the policy, such as how long they must be disabled before benefits kick in (e.g. 60, 90, 180, 365 days) and how long they will receive those benefits (one year? five years?). Most policies only pay until the insured turns 65.
An important component here is the definition of total disability. Because this would be a personally-owned policy, the definition is a little more relaxed than the one given by the SSA. It can range from “the inability to perform their current occupation to the inability to work in any reasonable occupation based on their education, training, and experience.”
Other factors that will affect the overall policy are whether the individual wants the policy to provide benefits for partial disabilities following a period of total disability and if they want any rehabilitation expenses covered. Premium waivers, renewability options, the impact of inflation, and cost-of-living riders should also be a part of the conversation.
To our knowledge, the astonishing tale of Dr. Strange is perhaps the only example of NOT holding a personally-owned disability insurance policy working out for a person whose main source of income was taken away due to a disability. But he’s not real. And in the 12 years that May has been used to raise awareness about the value of disability insurance, the numbers suggest consumers are still slow to get the message. So, it’s up to you—Super Advisor/Agent—to the real hero here.
Next week, we’ll explore how liability insurance could have protected a science lab from litigation after a high school student touring the facility was bitten by a radioactive spider. Just kidding…