To design an income protection plan for a prospect, you must:

• Identify how much the disability income benefit should be and for how long it should be paid;
• Determine what other benefits the prospect is eligible to receive;
• Determine the period of time for which the prospect can afford to be disabled without receiving any benefits (elimination period); and
• Match the prospect's needs and wants and ability to pay.

Let's look at each of these steps in more detail.

Benefit Amount & Duration

Since personally purchased disability income insurance is received income tax-free, the objective is not to replace total gross income, but rather some percentage of net income, after business expenses, but before personal income tax. (See the Disability Income Marketing Guide.)

You must also determine the length of time benefits should be paid. This will depend on the prospect's:

• needs and wants;


• other disability benefits (if available); and


• ability to pay.

Depending on occupational class, the benefit duration can last as short as one year or as long as until age 67. The longer the duration, the higher the premium. Ideally, a prospect should have long-term disability income protection. Two situations, however, may occur:

• The prospect may not be able to afford a non-cancelable scheduled premium. The guaranteed renewable policy may also offer an attractive alternative. However, the YRT policy may ease the cash flow strain.
• The prospect may have group long-term disability income benefits from his or her employment, but benefits don't usually begin until after six months of disability. Coordinating benefit amounts and waiting periods may remove any overlap and again reduce cash flow strain.

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Ohio National is not affiliated with, nor does it endorse or sponsor, any particular prospecting, marketing or selling system.

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