May is Disability Insurance Awareness Month (DIAM), which presents a great opportunity to speak with your clients about their disability income insurance needs. None of us plan on becoming disabled, but the reality is that nearly one in four Americans will become disabled before they retire.
Most disabilities are not caused by accidents but by back injuries, cancer, heart disease and other illnesses. And that’s precisely why individual disability insurance is an integral part of a comprehensive financial safety net, especially for people who are in their peak earning years and who might not be able to afford the financial impact of a serious disability.
Here are some common misconceptions your clients may have about disability insurance and some important information to set the record straight:
I’m too young to worry about disability income insurance.
Most people understand the need for life insurance. Yet, the truth is, a long-term disability can be just as financially devastating to a household as a death.
After all, income is the foundation to the lifestyle you’ve created. If that income abruptly stopped, how would you maintain your household, cover expenses or continue to plan for your future? Could your savings alone sustain your family for a period of months, or even years?
I have group coverage through my employer, I don’t need individual coverage.
Group long-term disability (LTD) coverage is a terrific start to protecting income; however, unless supplemented, it likely will not be enough in the event you become disabled. An individual disability insurance policy is a terrific supplement to your workplace coverage and can help ensure that you’re adequately protected. Some other reasons to consider supplementing group coverage include:
Benefit caps put in place for the entire group often leave high-earning employees with the least amount of income protection.
Coverage is generally basic and cannot be personalized to your individual needs because it is not individually-owned.
You cannot take it with you when you change employers.
Group coverage can be changed or cancelled at any time by your employer or by the insurance provider. When premiums are employer-paid, net benefits are reduced due to taxation, minimizing income replacement.
Group plans generally do not cover bonus compensation or retirement plan contributions.
I’ll get disability insurance in a few years. I’m in perfect health right now.