Brokers who have seen firsthand what serious disabilities can do to clients wish colleagues would work harder at persuading affluent baby boomers to buy disability insurance.
Now that the excitement of the 1980s disability insurance boom is a distant memory, “theres no buzz about it,” says Irwin Cohen, president of Affiliated Financial Specialists Inc., South Elgin, Ill.
Agents might mention the importance of DI in passing, then hurry on to try to sell other, easier-to-explain products that generate more commission revenue, Cohen says.
But “high net worth” boomers counting on income from their prime earning years to pump up retirement nest eggs, pay off big mortgages and put children through college may need DI almost as much as middle-income boomers do.
No government agency or charity looks after the interests of rich boomers with inadequate disability insurance.
The percentage of affluent boomers who are wealthy enough to bump into disability coverage limits, let alone other barriers to buying coverage, is probably small.
UnumProvident Corp., Chattanooga, Tenn., one of the dominant carriers in the market, can write policies that will pay as much as $30,000 in monthly benefits, as long as the benefit payments will replace less than about 60% of the insureds current monthly income, says Guy Bertsch, the companys vice president of product development for disability and LTC products.
UnumProvident and its competitors usually limit the amount of income that disability benefits can replace to avoid the risk that rich benefits will give claimants who could go back to work an incentive to stay home.
Matthew Herz, chief operating officer of Herz Financial L.L.C., Farmington, Conn., and president of JustDI, a Farmington-based disability insurance brokerage, says he has helped quite a few clients set up special disability insurance arrangements because the clients have had problems buying conventional coverage.
Many carriers have monthly benefit limits of $10,000 to $20,000, and some carriers look hard at net worth when assessing applications for coverage, Herz says.
Finding carriers that will write coverage for applicants with more than $4 million in assets is especially difficult, and the more liquid the assets are, the harder placing the business is, Herz reports.
If applicants collect significant income from relatively “passive” activities, such as investing in real estate, “that counts against you,” he says.