Disability Insurance For The Women In The Sandwich

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Baby boomer women could be great disability insurance prospects for producers who can provide the right products and the right advice.

Traditionally, most first-time buyers of individual disability insurance have been executives and professionals between the ages of 35 and 50, and the core buyers have been between the ages of 40 and 45, according to Susan Baker, manager of disability sales and marketing at Berkshire Life Insurance Company of America, Pittsfield, Mass., a unit of Guardian Life Insurance Company of America, New York.

One-quarter of baby boomer women are now in that core disability insurance market.

“Older women may not have thought about [disability insurance] because many were taken care of, or thought they were taken care of,” Baker says. “Younger women may not have come up against their mortality yet.”

But, in the boomer age group, “were seeing more and more of our high school and college classmates have serious problems,” Baker says.

Many boomer women also find that they are joining the sandwich generation. In addition to caring for children, women “are becoming the caregivers for their mothers and fathers,” says Cassie Wilson, an agent at Massachusetts Mutual Life Insurance Company, Springfield, Mass.

Women (and men) who care for relatives with disabilities get a first-hand education about the importance of disability insurance and long term care insurance, experts interviewed say.

Getting detailed statistics about womens purchases of disability insurance is difficult, but Dan Skwire, a consulting actuary in the Portland, Maine, office of Milliman USA, says women seem to be making up a growing share of the disability insurance market at the insurers that he tracks.

Baker estimates that about 30% of the boomers who buy new disability policies might be women.

Despite the growth in sales of disability insurance to women, “I think the female marketplace is underpenetrated,” says Daniel Steenerson, president of Disability Insurance Services Inc., San Diego.

Executives in the individual disability insurance industry often worry that because their product is tricky to underwrite, difficult to explain and somewhat expensive, it tends to get lost in the cracks. Aside, possibly, from the high-income medical professional category, no demographic category has a disability insurance penetration rate that is really as high as it ought to be, experts say.

When single people or family breadwinners suffer disabling conditions without having adequate insurance in place, “it can be absolutely devastating,” Baker says.

But the problem seems to be even more serious for boomer women than it is for boomer men.

“That might be because there are more men agents than women agents,” Wilson says.

“The insurance industry is still a male-dominated industry,” Baker agrees. “Not enough women are being approached to buy disability insurance.”

Once agents approach them, “women tend to be a little keener and in tune to the need” for coverage, Steenerson says.

Female professionals and executives vary as much as male customers, but the average female customer seems to be somewhat more interested in advice and a good contract, and somewhat less interested in price, Wilson says.

For producers, one challenge to selling disability insurance to women is the perception that women are worse underwriting risks than men.

The truth is more complicated, Skwire says.

“In general, at ages below about 50, women have a higher incidence of new disability claims than men,” Skwire says.

But younger women also recover somewhat more quickly than men, and risk profiles for women over age 50 are similar to or better than those for comparable men, Skwire says.

Insurance applications themselves might alarm boomer women and some agents who are not disability insurance specialists because they ask about relatively common conditions, such as uterine fibroids and pregnancy complications.

Fibroids, for example, are benign tumors. About one-third of all women in their 40s have them. Doctors occasionally recommend surgical treatment for fibroids that appear to be causing pain or other health problems.

Many hard-driving boomer professionals who had babies late in life may have suffered from temporary, pregnancy-related diabetes or high blood pressure during their pregnancies.

But the experts interviewed emphasize that insurers are simply asking for information they can use to make informed underwriting decisions and the fact that a condition shows up in medical records does not necessarily mean an applicant is a bad risk.

The experts also emphasize that making general, or specific, statements about how disability insurers view various conditions that affect boomer women is difficult.

“Its very hard to get into what ifs,” Baker says.

In some cases, Wilson says, agents can help boomer women with imperfect medical histories get informal reviews from the underwriters before submitting formal applications for coverage.

At MassMutual, “theyre going to try to find a way to provide some kind of offer,” Wilson says.

Even if underwriters decide they do have concerns about an applicant, MassMutual might simply exclude coverage for a particular condition or charge a somewhat higher rate, Wilson says.

Steenerson recommends that producers who work with self-employed boomer women consider group disability solutions.

In one state where Steenerson does business, insurers consider gender when they are pricing individual disability insurance but not when they are pricing disability insurance for groups of 3 or more lives. A 40-year-old boomer doctor might have to pay $3,800 per year for a policy that provides $5,000 a month in benefits.

The doctor could pay out of her own pocket for coverage for 2 nurses. The nurses policies would provide $600 per month in benefits for up to 2 years.

By adding coverage for the nurses, the doctor would get a 15% group discount on her coverage and, more important, she would get a “gender neutral” rate that would be 40% lower than the female rate, Steenerson says.

Because of the 15% group discount and the switch to a gender-neutral rate, the final bill for coverage for the doctor and the 2 nurses would be just $2,500 per year, he says.

“The average agent doesnt know about this,” Steenerson adds.


Reproduced from National Underwriter Edition, July 22, 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.