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Disability Income Insurance: Do Your Clients Know They Need It?

There are two conversations you probably never want to have with a client.

One of them is when they tell you they didn't know you could have sold them a life insurance policy that they bought from someone else.

The other is that you should have sold them a life insurance policy  –  but you didn't  –  and they ended up needing it. But it was too late.

This can be the case with disability income insurance.

Are You Missing An Opportunity?

Many life insurance producers overlook the importance of disability income insurance because they are, understandably, focusing on other aspects of their practice. Disability income insurance may appear to be a foreign concept, especially if the producer focuses on other lines of insurance like commercial or property-casualty insurance.

But, even producers who work in life insurance lines, health insurance, or investments still tend to ignore the risk of an income-earning client becoming disabled and forfeiting their much-needed income. If that happens, there's not going to be a paddle large enough to get your client up that creek!

Disability income insurance is especially important as people enter their career at a younger age, and all the way through their pre-retirement years, where income earning may be the strongest.

Simply stated, disability income insurance, or DI for short, is insurance that replaces part of the income that a person would lose if a disability were to prevent him from not being able to perform his functions at work. Incapacitation could be caused by either an injury or an illness that results in enough of an impairment to reduce or completely eliminate someone’s capacity to work.

Why Your Clients Aren’t Talking About It

Statistically speaking, one out of every four people in the U.S. workforce will suffer a disabling injury before they retire.

If the risks are so great, then why doesn't everyone buy disability income insurance? The answers are diverse.

1. They Don’t Know It Exists

Some people may rely on what their employer offers, if they offer anything at all, and don't realize there is a market for personal insurance to protect against the risk of disability.  

2. It’s Not Readily Available

An employer may or may not offer disability income coverage, but the self-employed don't have that option. Also, state-provided disability programs typically provide an inadequate amount of coverage for most well-to-do income earners.

3. Their Life Insurance Producer Doesn’t Offer It to Them

Many producers don't necessarily talk with their clients about whether they have disability income insurance and have adequately protected their income against such risks. 

That may be in large part because a producer may not focus or specialize in disability income insurance, and they'd feel vulnerable talking about a subject that they're not well-versed in.

4. The Focus Is on Long-Term Care Insurance

Nowadays, many producers are focused more on long-term care insurance as prospects and clients start to age and where the risks for needing care increase. Long-term care insurance has also seen far more product development than disability income insurance, including riders on life insurance products, hybrid products, and traditional long-term care insurance products.

Capitalizing On Disability Insurance Potential

What to do?

One option is to partner with another life insurance producer who might specialize in disability income insurance. This option typically means giving up some control of the client and working out some type of compensation split arrangement.

Another alternative is to work with a firm that specializes in disability income insurance and has the support staff to drive the case and provide sales and processing assistance to the producer.

Make sure your clients are aware of their need for disability insurance. 

LWT’s Solution Center offers the expertise you need to continue specializing in life insurance while getting support for other lines like disability income, long-term care insurance, and annuities.

Updated 5/21

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