When talking to your clients about the importance of income protection, you probably paint a picture of how coverage can contribute to their peace of mind. You might discuss how a policy can be tailored to a client's occupation and financial situation, and that it will help preserve their standard of living if they were to experience a severe illness or injury.

However, while you most likely talked with your clients about the application process, you may not have discussed how underwriting can affect the policy offer. Namely, that a policy could result in a modified offer.

What is a modified offer?

An individual disability income (IDI) application can result in a modified offer due to medical, occupational or financial circumstances uncovered during the underwriting process.

A modified offer doesn't mean that a client's application is rejected or that they are ineligible for coverage. Instead, it means that a client's policy is approved, but it may look slightly different than the original policy they applied for. This could be due to a client's known medical condition, or their financial situation didn't match up with the benefit payout they may have applied for, or their occupation may require a higher premium.

For example, a policy may exclude injuries or conditions involving the client's back if they have known back problems from a car accident. Or, if they changed jobs during the application process, the maximum benefit amount the client is eligible for may have changed.

Help clients see the positive

Some producers fear client reactions to modified offers. In reality, an IDI application resulting in a modified offer is a fairly common occurrence and can still make all the difference if they were to suffer a long-term health condition in the future.

While a modified offer may look different than what your client anticipated, it still provides valuable coverage that can help protect them if they incur a disabling condition. It's crucial to help your clients understand what the valuable income protection in their new policy can offer.

Explain the situation

First, it's helpful to normalize this situation. Modified offers happen — a lot. And it's not because a client is considered “bad” or that their situation isn't worth covering. It's important to help clients understand even if the carrier includes an exclusion, there are still many conditions covered.

Showcase the strength of the policy

Your client wants IDI coverage to ensure that their income is protected. Showcase the strengths of the policy and how it can cover them if they were to become sick or injured, with a medical condition not stemming from the exclusion, and be unable to work.

Rely on your team for help

While you may think you're on your own to deliver the news and figure out how to move forward with a client's policy, you aren't. Call on your General Agent for assistance. They have been through this situation numerous times, have good relationships with carriers' staff and can provide counsel on how to talk with your client.

Sell the value of coverage

A modified offer for an IDI policy is good coverage for your client. While the coverage may have exclusions due to medical, occupational or financial circumstances, the income protection it provides is important as your client grows in their career.

Sue Schweitzer, senior director of individual disability insurance underwriting at The Standard, leads IDI underwriting operations, including distribution system support and case management for fully underwritten businesses.

Instant Insights /

Modified IDI policy offers: what is a broker to do?

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