​Income protection is a vital yet often overlooked aspect of financial planning. Many individuals insure their cars, homes, and even their identities, but neglect to protect their most valuable asset—their income. In fact, a 32-year-old earning $50,000 per year will earn $1.5 million by age 65—much more valuable than a house or a car, yet both these assets are commonly insured against loss.

Disability Income (DI) insurance can bridge the gap if an illness or injury prevents your client from working. To effectively sell disability insurance, financial and insurance professionals must convey the true impact of income loss due to an unexpected illness or injury. 

Here’s some facts and perspectives to help your clients understand the importance of paycheck protection.

The Reality of Disability

Statistics reveal that one in four 20-year-olds will experience a disability before retiring. The average duration for all DI claims, based on data from 2000 to 2023, is four years.​

Understanding the Disability Income Gap

Without DI, there’s often a significant gap between the income people are used to earning and the reduced amount they receive from government programs like Social Security Disability, worker’s compensation or am employer-provided group long term disability plan. Many clients assume that government programs will cover their needs, but in reality, these programs typically provide only a small fraction of their former income. Employer-provided group long term disability plans are often capped and taxable benefits, providing less than their current salary. DI helps fill that gap, ensuring financial stability in the face of a disability.

Comparing Costs: DI Insurance vs. Everyday Expenses

When evaluating expenses, it’s insightful to compare the annual cost of DI insurance to other common expenditures:​

• Large Coffee: $763 per year

• Smartphone Service: $1,800 per year

• Satellite Television: $1,500 per year

• Individual Disability Income Insurance: $960 per year​

These comparisons highlight that the cost of protecting your client’s income is relatively modest compared to other regular expenses.​

The Importance of Disability Income Insurance

Income is your client’s most valuable asset. Protecting it with DI insurance ensures that they can maintain financial stability in the event of a disability. Given that 92% of disabilities are due to illness and 8% to accidents or injuries, having coverage is a prudent step in safeguarding their financial future.​

Conclusion

In short, financial and insurance professionals promote disability insurance because it offers essential protection against one of life’s biggest financial risks—losing the ability to work. It helps safeguard income, ensures financial stability, and allows individuals to focus on their health and recovery without the added burden of financial strain. Given the high likelihood of disability and the affordability of the coverage, it’s a valuable tool in any comprehensive financial plan.

For more information on Disability Income Insurance, contact Steve Crowe at ext. 222 or request a quote.