Disability Insurers Will Sell To Boomers--For A Few More Years

Insurers, meanwhile, have been preoccupied with past disability insurance underwriting and contract-writing problems, along with the need to protect boomers against the cost of long term care.

“I really don’t see a lot of innovation [in disability insurance] products for people in their 50s and 60s,” Olsen says.

Disability insurance producers report, for example, that products that can protect the income of people in their 70s or 80s who are still working are rare, even though some famous insurance company executives are in their 70s and 80s.

Getting disability insurance coverage for a boomer may require several years of tax returns, a full medical exam, a rigorous telephone interview and months of shepherding the application through underwriting, Large says.

“I’ve lost too many clients to the process,” Large says. “The industry has to do a better job of simplifying the process of selling this product.”

On the other hand, high blood pressure and high cholesterol–two health problems that mar many boomers’ medical records–tend to be easily controlled with medication, Olsen says.

Another consideration is that the high-income boomers who can afford large amounts of individual disability insurance are often in excellent health.

Insurance advisors working with boomers who cannot qualify for disability insurance probably should start by making sure the boomers have adequate long term care insurance, Olsen says.

Olsen also recommends that boomer income protection advisors have a thorough knowledge of annuities.

A rated annuity–an annuity designed to pay a relatively high amount of benefits to annuitants with relatively short expectancies–might be a good option for a boomer with obvious health problems, and annuities with guaranteed minimum income benefits might be good alternatives for other boomers, Olsen says.

Boomers who need an alternative to disability insurance “should be making sure that, if they become disabled, they can turn their portfolio into an income stream,” Olsen says.