Advisors Are Leaving a Shocking Gap: Howard Sharfman

Howard Sharfman hopes you warn clients about the need for disability insurance.

Sharfman, senior managing director of NFP Insurance Solutions, a large insurance distributor, says advisors should picture a business owner with commercial equipment that generates $2 million in revenue per year.

“Don’t you think they would make sure that machine is insured properly?” Sharfman asks.

Sharfman says clients should protect their capacity to earn $2 million per year as carefully as they would insure the high-revenue machine.

Sharfman has a bachelor’s degree from Babson College. He started out in insurance as an agent at MetLife, and he has worked for NFP and predecessor companies since 1995. He last talked to ThinkAdvisor about the implications of Secure 2.0 for long-term care planners.

He answered questions via email about how he sees the individual disability insurance market now. The answers have been edited.

THINKADVISOR: What is NFP doing in the disability insurance market?

HOWARD SHARFMAN: NFP has extremely strong ties with the entire disability insurance marketplace and would be considered by the carriers as a critical broker. We have a significant presence in the group, individual, executive and high-limit DI markets.

In the individual, executive and high-limit DI markets, we typically work with executive and specialist occupations, in addition to working with athletes, sports teams and entertainers.

NFP works with all critical providers, including Principal, The Standard, MassMutual, Guardian, Unum, Ameritas, Mutual of Omaha and Lloyds Underwriters.

How does the high-limit disability market work?

The “standard” markets for DI will typically issue up to $20,000 to $25,000 in monthly benefit, on top of existing group coverage, which typically provides from $10,000 to $25,000 of coverage, depending on the company size and executives’ income.

For executives still capped by the first layer of group coverage and the second layer of individual coverage, there is additional high-limit coverage available.

High-limit coverage can offer $50,000 to $200,000 per month in additional coverage, and larger monthly benefits additions may be available for individuals with contracted income over $10 million annually, such as athletes and entertainers.

Generally, high-limit policies have benefits periods of five to 10 years.

This is sometimes also supplemented with a lump sum amount, from $1 million to $5 million, if the disability persists to the end of the benefit period.

How does competition look in the individual DI market?

There are fewer providers than there were 10 to 15 years ago. But it’s a competitive market that must be shopped to make sure the client obtains the best coverage at the right price.

In the white-collar classification and the various medical specialties, there are a subset of different carriers that specialize in the market.

Where do the applicants come from?

Most disability insurance sales are “advisor-driven,” whether the transactions start with an accountant, financial planner or general insurance agent doing a risk analysis.