Maria is a 43-year-old, married lawyer with two small children to support and a mortgage loan to pay off. Her financial advisor tells her she should have disability insurance. “Yes,” she says. “But theres one problem. My doctor recently told me I have diabetes.”
Twenty years ago, Maria might have had a hard time getting disability income protection at any price. Today, if she has her diabetes under control, many traditional carriers might decline her or severely rate her, but “the impaired risk carrier would make an offer,” says John Nichols, president of Disability Resource Group Inc., Chicago.
Nichols says the increased competition in the impaired risk disability insurance market has come just in time for the aging of the baby boomers.
Doctors “know how to make us live longer and maybe more comfortably,” Nichols says. “But the morbidity risk probably has increased.”
The number of applicants between the ages of 39 and 58 who need impaired risk disability insurance is increasing partly because the aging of the boomers means there are more consumers in that age range.
For instance, the percentage of U.S. adults between the ages of 45 and 64 who have diabetes increased to 8.57% in 2000, from 5.54% in 1980, says the Centers for Disease Control and Prevention.
Meanwhile, Nichols notes, many boomers are taking longer to have children. By the time they need disability insurance to protect their children, their bodies may show signs of wear and tear.
Disability insurers are taking note and finding ways to price and underwrite products aimed at boomers who are in less than perfect condition.