Making the Connection With Disability Insurance
I have never sold insurance; however, in my 25 years in the insurance business I have worked with a lot of salespeople. During this time, I’ve made an elementary discovery: It is easier to sell an insurance product to someone that understands the need for it than to try and sell it to someone who does not.
There has been a lot of research conducted over the years and the only thing we know for certain is that we are all going to die at some point. The inevitability of this fact leads consumers to search out financial solutions that will benefit their loved ones at the time of their death. Some would say that a consumer's awareness of his or her mortality can make a life insurance sale relatively easy at times. However, the same cannot be said for Disability insurance. Most people don’t think about getting sick or hurt and being out of work for an extended period of time, or what that would mean financially to that individual as well as their family.
The month of May is Disability Insurance Awareness Month so I would like to share some information that hopefully elevates the conversation on disabilities and Disability insurance that might help people better understand why they need this product. Let’s start with some basic financial realities about working American adults today:
- Only 48% state that they have enough savings to cover three months of living expenses in the event they can no longer work or earn an income.1
- Almost half would not be able to pay an unexpected bill of $400 without having to borrow money or sell something.2
Getting sick or injured is always unexpected, and not being able to work would generate a financial hardship for some individuals immediately and most individuals eventually. Absent a paycheck, most if not all financial obligations would go unpaid. This includes everything from your mortgage or rent right down to your monthly cell phone bill.
Unfortunately, the idea of becoming disabled even for a short period is still unfathomable to most of us. When asked about becoming disabled, many people immediately think about someone else getting hurt at their place of employment. And yet, the reality is that 90% of all disabilities occur outside of the workplace and many last six months or more.3 In 2016 the top five reasons for long term disabilities (lasting six months or more) were:4
- Musculoskeletal Disorders (29%)
- Cancer (15%)
- Pregnancy (9.4%)
- Mental Health (9.1%)
- Fractures, Sprains & Strains (9%)
The good news is that awareness is increasing within the working population. In a 2015 study 61% of the respondents said that most people need some type of Disability insurance; however, only 26% of those people actually own Disability coverage.5 People are beginning to understand what losing a paycheck can mean, but they’re still not connecting the dots back to themselves. It is always going to happen to someone else.
Statistically, more than one-in-four 20-year-olds today can expect to be out of work for at least a year because of a disabling condition before they reach normal retirement age.6 Think about this: you insure your house, your car, even your life — why wouldn’t you prepare for a possible financial hardship if you are no longer able to earn a paycheck? Know what your Disability insurance policy covers – and make sure that if a disability does occur, your paycheck will be protected so that you can continue your lifestyle if the unthinkable does happen.
- "Federal Reserve, Report on Economic Well-Being of U.S. Households in 2016," page 26.
- LIMRA, "Facts from LIMRA," 2015.
- Integrated Benefits Institute, "Health and Productivity Benchmark," 2016.
- Life Happens & LIMRA, "Insurance Barometer Study," 2015.
- Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1997, Table A.