“Protect Your Paycheck” is the theme for this year’s Disability Insurance Awareness Month, which is promoted throughout the month of May. The most valuable asset of nearly every American is the ability to earn a paycheck, and income is the source of all financial planning. Without an income, it would not be possible to fund a retirement, save for college, pay for a home or apartment, or even pay day-to-day bills.
Despite the fundamental importance that income plays in the financial security of America’s wage earners, fewer than half of all financial advisors — insurance agents and brokers, financial planners, CPAs, and investment advisors — discuss income protection with their prospects and clients. The result is that roughly two-thirds of America’s workforce — 100 million workers — have no private income protection insurance.
Which case would you rather handle?
Imagine this situation: A longtime client has unexpectedly suffered a disabling illness; she is hospitalized and the prognosis is unclear, but she is not expected to return to gainful employment anytime soon. Her family depends on her income.
In scenario one, the plans that you recommended to protect her income will kick in to allow bills to be paid and the family’s financial life to continue in a reasonably normal manner. Because of the solid advice you provided, she can focus on getting well — and has the resources to do so — rather than worrying about impending financial hardship.
In the second scenario, the plans that you recommended to her do not address paycheck protection, and her income ends after two weeks of sick pay. Your conversations with the client revolve around how long the family can hold out by tapping savings, retirement funds, and credit; whether the family home needs to be sold; whether her son needs to drop out of college; and other future plans that need to be altered or eliminated. The conversation becomes emotional and heated when the client expresses disbelief that your “trusted” advice did not include a solid plan for protecting her income.
The power of a reality check
Unfortunately, this situation is not a fantasy or not unusual; consider the following:
- On average, an American wage earner has about a three in 10 chance of losing their income from illness or injury for three months or longer during their working career.
- The average disability that extends beyond three months will last two-and-a-half years.
- There are more than 8 million workers receiving Social Security Disability Benefits today — benefits that require very serious impairments to qualify for.
- Most Americans have little awareness of the risk and no plan to deal with the devastating financial effects of disability. Many feel it won’t happen to them.
To calculate their own risk of disability, your clients can use the Council for Disability Awareness’ Personal Disability Quotient calculator.
Better yet, you can develop your own real-life stories from your own personal experience. Disabilities do occur, and in sufficient enough numbers that the risk to your clients cannot be ignored. No financial plan can be considered complete without addressing income protection.
Ask your prospects and clients one simple question: “If you became sick or injured and could no longer work, how would you pay your bills?” Use DIAM as a launching pad to talk with your clients and to work with your colleagues to turn 100 million uninsured paychecks into 100 million protected ones. You will be doing the right thing to make a difference in the lives of many American wage earners.
Barry Lundquist is the interim president of the Council for Disability Awareness. He can be reached at firstname.lastname@example.org or 207-774-2634.