Illness and accidents are inevitable. Yet, only 39% of Americans, a little more than a third of the population, have some form of disability insurance. Your small business owner clients need to understand the necessity of disability insurance plans for themselves and their employees to protect them from the financial fallout inherent with a disabling illness or accident. With so few protected against the risk of losing their paycheck because of a disabling illness or accident, there is a untapped opportunity for brokers and financial planners to provide individual disability insurance to their small business owner and professional clients, such as doctors and lawyers. Your clients will appreciate the peace of mind that comes with knowing their paychecks are protected, regardless of any unexpected illnesses or accidents that may arise.
One of the most important products that people need to think about is long-term disability insurance. This was reinforced in a recent article posted by The Market Intelligence Center on NASDAQ.com:
This type of insurance is fairly basic to understand long term disability insurance picks up where your short-term coverage ends. Short term coverage will typically cover you for a period of about 3-6 months. If you are deemed to be long term disabled, most policies will typically replace up to 50-60% of your prior income, with certain limitations. While a 60% of your income may seem like a substantial reduction in income and insufficient to maintain most people’s current lifestyle, it is certainly better than no income. Long term disability benefits will typically not be paid beyond the age of 65.
Many workers have group long term disability plans through their employer, and this is certainly advantageous for most occupations. However, some occupations require a disability income policy that offers stronger protection, such as individual disability insurance for doctors. Doctors live by their skills and abilities and a disabling illness or injury can make it impossible for them to carry out the duties of their occupations, which can jeopardize their earning potential. A disabling injury or illness can lay waste all the years of education, training, and experience physicians worked so hard to build, leaving them unable to earn an income.
Nevertheless, even with the clear benefits of a DI policy, many people are still hesitant to purchase one. As their trusted advisors, your job is identify and overcome the obstacles that keep them from buying disability income protection. Whatever the obstacles may be, peace of mind is a strong motivator for everyone, without exception. Ask your clients how long they can afford to pay their bills without a paycheck? Savings can only be stretched so far. Ask the question: if you were too sick or injured to work, wouldn’t it be reassuring to know that you can continue to maintain your quality of life, without worrying that you were going to run out of savings?
The financial risks of disability are high. People are generally unaware of the true risk. The Council for Disability Awareness states: a typical 35 year-old male, with a height of 5’10” and weight of 170 pounds, and who leads a healthy lifestyle, has a 21% chance of becoming disabled for three months or longer before he retires, and a 38% chance that the disability could last five years or longer. Many people are willing to purchase other types of insurance protection—auto, home, and life—because of the perceived importance and the financial risk associated with the loss. Talking to your clients about protecting their income with a disability income protection plan, and helping them understand its importance in the hierarchy of insurance will increase the number of Americans who have disability insurance.
Partnering with Source Brokerage, Inc. disability income specialists will help you provide the best disability income insurance solutions for your clients’ individual situations.
(Source: A guide to understanding long-term disability insurance, NASDAQ, June 24, 2014)