By Daniel C. Steenerson, CLU, ChFC, RHU,president, Disability Insurance Services

Most business owners today feel the pinch of a lagging economy,customers not paying on time and the ever-rising cost of healthcare. Without income protection, it can be financially devastatingwhen a business owner or a key employee is unable to work for ayear.

Yet surveys show that most business owners aren't even awarethat they can buy insurance to cover these exposures with productslike business overhead expense policies, individual disabilityinsurance (IDI), key person disability insurance, and disabilityoverhead expense plans.

If you're on the lookout for great opportunities to fast-trackyour earnings, look no further than income protection products forbusiness owners.

Read related: “KnowledgeIs Power for P&C Agencies Looking to Take On Life, Health andEmployee-Benefits Business.”

Here are four reasons why income protection is an easycross-sell for P&C agents:

• Business owners desperately need income protectionproducts. A 2010 business owner market study conducted byPrincipal Financial Group, “ABalancing Act – Priorities vs. Plans,” indicated that businessowners rank business protection as their highest priority andincome protection as their third highest priority. However, onlyone in four business owners—24 percent—has an individual disabilityinsurance (IDI) policy, fewer than one in 10 (9 percent) ofbusiness owners have key person disability insurance, and fewerthan one in 20 (4 percent) have a disability overhead expense planin place.
• First-year and residual commissions arelucrative. First-year commissions for a business overheadexpense policy start at 50 percent. Agents continue earningresidual income of 5 percent to 15 percent, year after year eachtime the policy is renewed for the first 10 years, and a servicefee paid for as long the policy is in force. Unlikeproperty-casualty products, which are price-driven and shoppedoften, income protection products stay on the books, often for adecade or more, providing a great source of passive income.
• You already know and serve the market. Forgetabout cold calling, prospecting and relationship building. Youalready provide business owners with protection against propertydamage, liability and workers' compensation claims, so they alreadytrust you to provide business income protection products. Incomeprotection might be the easiest sale you've ever made.

• It's the right thing to do. If your contractorfailed to mention that a major load-bearing wall in your house wasnot properly supported and your house collapsed as a result, you'dbe rightfully angry. You might even sue for damages. The same istrue for business owners. Think of a business owner's income as aload-bearing business wall. As a risk architect for businessowners, it's your job to mention potential deficiencies that couldrealistically cause financial collapse. If you don't mention theneed for income protection and disability and bankruptcy ensue,don't be surprised when you encounter an angry, litigiousclient.

Here are the four income protection/disability insurance (DI)products that business owners need:

1. Business overhead expense. This coverage paysfor overhead expenses such as payroll, mortgage or rent, insurancepremiums, office supplies, utilities, and more if an insuredbusiness owner or employee is disabled. The benefit period isusually short: 12 to 24 months. This product is a smart bet for anyindependently owned business.
2. Disability buy-sell: These policies are idealfor businesses with partners or several owners. A buy-sell policyallows a company to remain operating if one of the owners becomesdisabled and unable to pull his or her weight. It provides cash forone business owner to purchase the disabled insured's share of thebusiness. It's a win-win-win: The disabled owner is paid for his orher share of the business, the healthy business owner hascontinuity, and the business remains fiscally stable. Some DIdistributors offer solutions for high limits with up to $100million in coverage per owner.
3. Key person DI: Key person coverage isessential for businesses that employ workers with unique andhard-to-replace skill sets. Examples could include a surgeon, ascientist, an engineer, a well-known chef or even a rock starproducer. Key person coverage pays a benefit to the business. Ifthe irreplaceable employee becomes disabled, the business can usedisability checks to offset resulting financial loss. Policies canbe purchased for multiple employees. The benefit period istypically 12 to 24 months. Key person DI policy limits areavailable up to $100,000 per month or a $20 million lump sum.
4. Bank loan DI: If you know a business owner whois expanding, adding a location or opening a new business, chancesare he or she will need bank loan DI. This type of policy is oftenrequired by business lenders as a condition of the loan. When apolicyholder becomes disabled, the bank loan DI policy makespayments on the loan so the policyholder does not default or fallinto debt. Benefits are configured to match the loan repayment, upto $100 million.

These products offer business owners real value and stability intoday's unpredictable business market. Strokes, heart attacks andcancer are just a few of the leading causes of disability affectingbusiness owners and their key employees. And recovery from theseconditions is much easier without the weight of financial demise onone's shoulders.

Likewise, while the property-casualty market hardens and theemployee benefits market fluctuates with health reform, incomeprotection products are stable, in-demand, and have great potentialto be a 2013 game changer for agents on the fast track.