The income umbrella (AP photo/Charles Dharapak)

The Federal Reserve System could be described either as a homicidal friend of the disability insurance community or a loving enemy.

On the one hand: The Fed is terrible for the supply side of the life insurance industry. The Fed makes it hard for insurers to write any kind of product with a long time horizon, including long-term disability insurance.

The Fed is keeping interest rates very low, in part in an effort to juice the economy, and in part to encourage investors to invest in other types of more profitable investments.

The Fed, meanwhile, is letting insurance regulators, rating agencies and others shackle insurers to bonds issued by government agencies and by giant corporations that are too big to fail. My personal definition of a company that creates SIFI risk because it’s just plain too big to fail: Any company that is considered suitable for a life insurance company’s investment portfolio.

So, in effect, the Fed is helping insurance regulators and rating agencies to force life insurers to create systemic risk, whether the life insurers want to do that or not.

But, on the other hand, the Fed is great for insurance demand. Fed governors are always out on the stump talking about the need for people to think harder about retirement planning, retirement savings, and post-retirement health care costs.

Now the Federal Reserve Bank of New York has come out with a nifty interactive map that illustrates how much debt workers in Connecticut, New Jersey and New York are carrying.

In Connecticut, for example, lenders should be very grateful if workers have at least enough income protection to protect the ability to cover the $8,600 median non-housing debt balance. The median is $8,800 in New Jersey and $8,450 in New York state.

The ideal disability insurance buyers are workers ages 18 to 34 who somehow have survived the economic reaping and have incomes worth protecting. In Connecticut, about 60 percent of them have non-housing debt, and the median balance is $13,550.

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