Talk to Your Customers About Disability

Clearly, owning a home and car depends on income. Medical problems contributed to half of all home foreclosure filings in 2006, according to a 2008 report. Yet few personal lines professionals think about protecting incomes—to safeguard homes, cars, lifestyles and even the success of their own businesses.

According to the Social Security Administration, 70 percent of employees are not covered by any private disability insurance protection, even though more than 83 percent of the workers in the CDA survey said that a "disability could happen to anyone at any time." This presents a prime opportunity to help clients understand the risk and consequence of a disability-related income loss, and to help protect them from the devastating financial consequences that could result.  

 Read related: "The future of the health insurance agent."

With some form of disability currently affecting more than 10 percent of Americans between the ages of 18 and 64, according to the U.S. Census Bureau, you should start the conversation about income protection with your clients as soon as possible.  Here's how: 

Position income as the source of all financial security and the first asset to protect.

Ask your clients what's the one resource they rely on for everything that's valuable to them—their homes, cars, even their retirement accounts. Then ask them to how they would pay their everyday expenses if they suddenly lost all or part of their income. Do the math to help them understand the value of their income:

Current annual income x Estimated years to retirement = a very large amount!

This simple exercise illustrates that income is their most valuable asset. 

Make the disability risk more personal

Bring the need for preventing disability and protecting income to a more personal and emotional level by asking clients: Do you know anyone who has or had cancer, a heart attack or a stroke? How about chronic back pain?

• Did you know that common conditions of the bones, joints and muscles—like bad backs or arthritis—are the leading cause of disability?
• Did you know cancer is the second leading cause of disability claims?

You may also want to ask the client to tell a story about someone they knew who became disabled, or relate a personal story of your own. This is an extremely effective way to emphasize the importance of income protection. The CDA 2010 study found that workers who personally knew someone who had missed work due to illness or injury perceived their own risk of disability to be far higher. Also remember most disabilities are caused by rather common problems such as muscle and back pain and chronic disease.

Clear up misconceptions

More than 70 percent of the workers in the CDA study believed a disability would most likely result from an accident. The reality is that only 9 percent of long-term disabilities actually are due to injuries. Most are caused by illness or disease, so avoiding risky behaviors does not eliminate the risk of disability.

Also stress that roughly 95 percent of disabilities are not work-related—and therefore not covered by workers' compensation.

 Help clients assess the potential impact of a disability on their financial lives.

In the CDA study, workers believed a disability would interrupt their income for a year or even longer. So you might want to ask clients:

• How would they pay their regular bills, as well as any additional costs resulting from the disability, if their paycheck suddenly stopped because of disability?
• How long could they live on their savings (or any other alternative income sources) if they couldn't go to work for a period of time?
• How would a depletion of savings impact their future plans?

Make sure the answers they give reflect reality. For example, although 40 percent of the CDA respondents said they would rely on employer-funded sick leave or vacation pay, typically these sources run out in a matter of weeks.

Helping your clients protect their most important resource has many benefits:

• It makes it possible for them to continue to be premium-paying clients—even if a disability prevents them from earning an income—which protects your business as well.
• It can differentiate your business because many other personal lines advisors are not addressing this important need.
• It can help grow your business by adding another product and income source.
• It gives you and your clients peace of mind that they will continue to enjoy their homes, cars and lifestyles.

Educate your clients about the risk and consequence of disability. Use the Personal Disability Quotient (PDQ) developed by the Council for Disability Awareness to demonstrate the risk. Use the CDA Financial Security Plan to evaluate their degree of preparation.

Since income is the foundation for your clients' financial security, income should be the first personal possession you help them protect. Incorporate disability income planning as part of your risk evaluation process, along with other personal lines of insurance, to reinforce your credibility as a trusted advisor who has your clients' long-term financial well-being at heart.