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May 09, 2014 at 12:36 PM
This Disability Insurance Awareness Month, and it should be a great time just to write long, emotional — and completely true — articles about why agents and brokers should get more people to protect their incomes against the risk of disability.
Because, seriously: Protection against inability to work is urgently, desperately needed.
Most adults who have a hope of paying for commercial insurance have health insurance. Most know they should have life insurance. Many have only a vague idea that disability insurance exists, or what it does. Selling disability insurance is an obvious way to do well by doing good.
But, on the other hand: Rates are so low it’s actually challenging for insurers to write the product. I think what they’re really thinking is, “Understand this product. Value this product. Desire this product. But… apply for the product in a year or two. After rates have gone up.”
Some people at the Federal Reserve Board will say that the main reason that rates on the kinds of bonds an insurer typically buys are so low is that companies are uncertain about the future and reluctant to borrow money. The Fed folks will say that demand for cash is weak.
But I know, from first-hand experience, that the reason demand is low is because regulators, rating agencies and others terrified by what went on in 2008 have written rules that keep just about anyone who would really want to borrow money out of borrowing money.
How crazy are the credit rules?
Some of you reading this may be rating analysts, insurance company portfolio managers, or investment advisors. You can post angry comments here if I missed a credit card payment. You could come to my office and yell at me if I missed a payment. My family has been doing business with roughly the same bankers since about 1915. I’ve made all of my credit payments ever, and got only one of them in late (I did not know a $70 credit card bill I owed around 2004 existed), and I hardly ever carry a balance, but the credit card company cut me back to a $500 credit limit.
