Boomers And Disability Insurance: An Uphill Education
The Life and Health Insurance Foundation for Education is working hard to educate baby boomers about the need for disability insurance.
The nonprofit group can equip agents and brokers with disability insurance presentation kits and with videos that feature people who have benefited from disability insurance.
“I think we give [producers] some good options,” says Jon Dressner, a vice president at LIFE.
But Dressner, producers and others in the disability insurance market say the reality is that producers and individual insurers have a formidable responsibility to make sure that more boomers hear about the importance of disability insurance while the boomers still are healthy enough to buy coverage.
“The industry needs to remind workers that their incomes are their most valuable assets,” says Brian Ashe, a LIFE board member and president of Brian Ashe & Associates Ltd., Lisle, Ill. “Your ability to make a house payment depends on income.”
But today, Ashe says, “our industry is way, way behind” when it comes to disability insurance education.
“Disability insurance is a very undernourished market, agrees Robert MacDonald, president of CTW Consulting L.L.C., Minneapolis, and chairman of Allianz Life Insurance Company of America, Minneapolis.
Figures from the federal government show that only about half of U.S. workers get long term disability insurance from their employers, and Stephen Miller, a vice president at Disability Management Services Inc., Springfield, Mass., reported at the meeting of the Society of Actuaries, Schaumburg, Ill., that only about 2.5% of workers have individual disability insurance, according to a conference transcript.
The American Council of Life Insurers, Washington, released survey figures in 2000 that suggest 82% of U.S. workers lack adequate disability coverage.
Everyone involved with disability insurance worries about the fact that boomers are much less likely to have disability insurance than life insurance, even though boomers are more likely to suffer disabling illnesses or injuries than they are to die.
“Anybody whos got a job needs disability insurance,” Dressner says.
Some of the gap is due to boomers optimism.
Boomers “do not see themselves getting sick or injured,” MacDonald says.
But producers are quick to point out that some of the gap may be due to the insurers reluctance to attract bad risks with overly aggressive marketing campaigns.
Employers play a role, because few employers with weak disability insurance benefits want to draw attention to the value of the disability benefits that competitors offer, says Irwin Cohen, president of Affiliated Financial Specialists, South Elgin, Ill.
Meanwhile, most insurers, and most producers, tend to shy away from heavy involvement in disability insurance marketing because they get a very small percentage of their income from selling disability insurance.
“Theres little to no marketing to consumers,” says Matthew Herz, chief operating officer at Herz Financial L.L.C., Farmington, Conn. “Any increase there would be great.”
Sadly, in many cases, “people arent getting the education anywhere,” Cohen says.
Too often, boomers are so confused about disability insurance that “they think they have coverage,” Cohen says. “But they dont.”
LIFE tries to fill the void with its educational materials, but that organization also has a responsibility to promote the value of life insurance and other forms of insurance, and it is suffering from the same cold winds that have chilled many life insurers financial statements in recent years.
“Were grateful for what weve received,” Ashe says. But he adds that the tough economy makes this a difficult time to get support for big, new public education campaigns.
As a result, producers say, boomers who are shopping for disability insurance tend to fall into 2 categories. The first consists of healthy boomers who have seen colleagues, friends or loved ones cope with disabilities. The second group consists of boomers who have discovered they are sick.
By that time, “its too late,” Cohen says. “Now theyre uninsurable.”
Because of the lack of general product awareness, “the onus is really on the agents” to educate boomer clients who come to see them about other products or general financial advice, Dressner says.
Producers say agents can make some headway by taking the time to inform boomer clients who still are insurable about the fact that disability is something that can happen to them, too.
When MacDonald works on spreading awareness, he finds the boomers are more interested in “the facts” than their older brothers and sisters were.
Boomers “seem to respond better to the numbers,” MacDonald says. “Previously, there was much more emotion involved. Anecdotes would have worked better.”
Boomers are “more statistically driven,” says Jeff Derdiger, a financial advisor with Spectrum Strategies L.L.C., Dallas.
But Derdiger adds that the boomers in his market want more than a barrage of numbers illustrating the risk they will become disabled. His boomer clients seem to be more interested in hearing concrete discussions analyzing what would happen to their own personal finances if they became disabled, Derdiger says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.