Supplemental Disability Income Insurance Continues To Expand Its Reach
By Patrick D. Morris
Supplemental disability income insurance is unequivocally here to stay.
No matter the economy, this insurance should be thought of as the foundation to a financial plan–since arguably, ones ability to earn an income is one of a persons most important assets.
Traditionally owned by high-income professionals with sizeable earnings at stake, supplemental DI offerings have expanded their reach within the last decade and are enticing both executive and middle-income earners who wish to protect more of the income they earn.
To see why it is gaining strength in the market, lets first review supplemental DIs role in the larger economy.
When faced with a poor economy and rising health care costs, employers may be forced to cut back on funding for benefits such as group long term disability plans. At such times, employers often opt to offer supplemental DI as a voluntary benefit, with premiums paid by the employees who elect the benefit.
This strategy allows employers to continue subsidizing perceived basic, routine benefits like medical and dental insurance. However, those who continue working during a choppy economy tend to have heightened appreciation for their earned income. As a result, they are predisposed to recognize the need for protecting more of their earnings than before, should an unforeseen accident or illness strike.
How the premium is funded becomes a secondary issue. For them, supplemental DI during a challenging economy can be key to financial stability.
So, then, how can the advisor position supplemental DI as part of the employers and workers overall financial strategy? It is the industrys job to help identify the need for this coverage with each individual.
To start, its worth spending some time considering this question: If an individual is without an income, how can he or she pay for any expenses? All income earners should be asked to consider this and also the merits of supplemental DI insurance in such a situation.
Point out that, depending on individual income, this coverage can raise the level of income protection by nearly one-third over that of the group disability coverage.