There is still time left in May — Disability Insurance Awareness Month — an opportune time to have "the talk" about the value of income protection with your customers, who might not realize how often disabilities occur and the financial disruptions they can cause.
And there's no reason to dread this conversation. When connecting with current and potential customers, try the following conversation starters. And the Council for Disability Awareness offers some great supporting statistics to back up your points.
Do you play the lottery? Our industry has plenty of eye-popping statistics, but all too often customers aren't persuaded to take action. Your clients can look at the odds of becoming disabled, but they still don't think it will happen to them.
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Make the connection by pointing out that the probability of winning the lottery is slim to none, but people still buy tickets and think they can defy the odds.
Surprising stat: Approximately 60 percent of wage earners believe they have a 2 percent or less chance of being disabled for three months or more during their working career, according to the Council for Disability Awareness. In reality, more than 1 in 4 of today's 20-year-olds will become disabled before they retire.
Can you recognize someone who is disabled and unable to work? When clients use the word "disability," they might picture outward signs, including wheelchairs or casts. In fact, the majority of claims are filed by people with disabilities with no visible cues, such as depressive mental disorders or debilitating medical conditions. Remind your customers that no matter the reason, if they're disabled, they cannot work and won't have an income stream.
Surprising stat: In 2012, the three most common causes of new disability claims were musculoskeletal/connective disuse disorders, cancer and injuries, according to the Council for Disability Awareness.
How long could you live without your paycheck? Often, I ask clients how long they could make it if their paycheck went away tomorrow. How could they pay for their mortgage or rent, car insurance or groceries? Many people respond to the question in terms of days, not months.
Surprising stat: More than 60 percent of surveyed wage earners personally know someone who has been disabled and unable to work for three months or longer.
What is your most valuable asset? Many customers say their most valuable asset is their retirement plan or house. However, they might not consider their No. 1 asset to be the ability to earn an income. For instance, a 35-year-old with a salary of $80,000 per year will earn $2.4 million by retirement — and that's without accounting for future raises and promotions. Why wouldn't your customers want to protect their future flow of earnings?
Surprising stat: About 100 million American workers lack private disability income insurance, and almost 70 percent of employees in the private sector have no private long-term disability insurance, according to a U.S. Social Security Administration fact sheet.
If you have health insurance, shouldn't you have paycheck insurance? Clients are concerned about having health insurance, as they should be. If they have a serious health situation, their health insurance ensures their doctor, hospital and pharmacy receive payment. But who ensures your client gets paid? That's the purpose of disability insurance.
Surprising stat: Approximately 90 percent of disabilities are caused by illnesses rather than accidents, according to the Council for Disability Awareness.
Why income protection matters
Once you've had "the talk" with your clients, don't be surprised if you find yourself fielding questions such as, "How can I make sure I have adequate coverage to protect my income?" The solution is individual disability income insurance.
Explain to your customers that although group long-term disability insurance offers a valuable foundation of protection, it often is not sufficient for those earning more than $100,000 per year. Mid- and high-wage earners might not realize that the maximum monthly benefit of their employer's policy does not fully cover their salaries.
The LTD plan also might not cover bonus or incentive pay, which can drastically increase the salary of mid- to high-wage earners and result in an even lower rate of income replacement. For example, a common monthly benefit offered by group plans is $5,000. This means those earning more than $100,000 per year would need additional coverage just so their base pay would be protected at 60 percent, the typical level among group LTD policies. Group LTD benefits are generally taxable, creating an even greater gap in income protection.
In contrast, IDI benefits are not taxable when customers pay the premium, and they fill in the gaps left by group LTD. This gives you an opportunity to show your clients how they can fully protect their incomes and ability to earn income in the future — a problem many earners do not realize.
During DIAM — or any other time of the year — make it a point to bring the importance of income protection to the forefront of your conversations with clients. Providing education and sharing solutions can help bring your clients peace of mind and make a difference in their lives.
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