May is Disability Insurance Awareness Month (DIAM), the marketing campaign designed to spread the word about disability income (DI)insurance. Now, more than ever, it is time to talk to your clients about the importance of this valuable product and help them get the coverage they so desperately need.
It is critical to talk to your clients about the importance of DI insurance because many Americans are still underestimating their chances of becoming disabled before they retire.
For example, LIMRA research finds that almost 6 in 19 workers who opt out of purchasing DI insurance claim they do not need the coverage or that it is not worth the cost. But 75 percent of employees say they would have trouble paying for basic living expenses after several months if they were to become disabled and unable to work.
Of those employees who opted out of short-term disability coverage because they “don’t need it”, 25 percent also say they would have immediate trouble paying their living expenses should they become disabled, while 65 percent would have trouble within several months. Similarly, for those who say they “don’t need” long-term disability, 27 percent would struggle immediately, and 69 percent would have difficulty after several months.
Employees have a lot of financial priorities vying for their attention. LIMRA research finds that employees rank benefits lower than other investments, in spite of the financial security that insurance products can provide.
When asked, less than half of employees agree that DI insurance is “right for someone like me,” and only 34 percent of workers agree with the statement “most people like me own disability insurance.” The lack of agreement with these statements shows that employees consider it “normal” not to have coverage, and there is little social pressure to own these products.
Even outside a work environment, the perceived need for DI insurance doesn’t align with actual ownership of the product. The 2018 Barometer Study, for example, found that 64 percent of consumers believe that most people need DI insurance, but only 20 percent actually owned it themselves. The data also show that consumers are just as anxious about DI insurance as they are about medical insurance; yet, DI insurance ownership remains well below that of medical insurance ownership.
Carriers and advisors can work with employers to educate workers about the risk of becoming disabled and the costs associated with loss of income, LIMRA notes.
To help employees who think they cannot afford to purchase DI insurance, advisors should provide classes on budgeting and creating savings goals. This could help employees feel more confident in their financial outlook and may give them the confidence they need to make the DI insurance purchase.