The hardest part of the disability insurance conversation isn’t the products. Or prices. It’s getting started. Face it: If you’ve put off having the talk with your clients, it’s because you’re not sure how to break the ice.
It doesn’t have to be hard. I personally use three simple questions to start things off. The questions are designed to help the client think in real-life terms.
You don’t have to talk about funding. Or insurance plans, for that matter. All you need to do is make them see the importance of planning so you can head down that path – together.
Most clients will say no. People are typically unable to fathom the idea that they will ever not be able to work. Truth is, about 1 in 4 of today’s 20-year-olds will suffer a disabling event sometime in their lives.1
Some will answer that they have savings. Some will reference their employer’s group plan. Most will mention Social Security. While these are all great resources to utilize, they aren’t always a great fall-back plan.
While group disability is a great benefit to have, it isn’t guaranteed. Also, those benefits are taxable and only replace a portion of your income. Are your clients able to sustain their way of living on 60 percent of their income, and lose part of that to taxes?
Social Security … It’s difficult to qualify. That’s a huge understatement. The wait time is long. And the approval rate is only around 34-35 percent, after multiple applications and possibly hiring an attorney. If you do finally gain approval, the benefit on average is $1,300 per month.2 Most individuals will find it very difficult to sustain their quality of life on this benefit alone.
A common thought, especially for younger individuals, is that they would be able to rely on family members for support: emotional, physical and most importantly, financial. This should prompt a follow-up question: Can you name three family members who are willing and able to pay your bills for more than a couple months?
- An average individual disability insurance claim lasts 31.6 months3
- An average group long-term disability claim lasts 34.6 months4
In the next few weeks, I’m going to dive into the disability insurance conversation. If you’d like to keep the conversation going now, however, check out our free resources at di.ashbrokerage.com. Or, schedule a time to talk to me directly.
1 Source: Social Security Administration, “The Facts about Social Security’s Disability Program,” January 2018: https://www.ssa.gov/disabilityfacts/materials/pdf/factsheet.pdf
2Source: Council for Disability Awareness, “The basics of the Social Security Disability Income Program.” October 2018: http://blog.disabilitycanhappen.org/the-basics-of-the-social-security-disability-income-program/
3Gen Re, “U.S. Individual DI Risk Management Survey 2011,” based on claims closed in 2010
4Gen Re, “U.S. Group Disability Rate & Risk Management Survey 2012,” based on claims closed in 2011
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