It’s May, which means it’s Disability Insurance Awareness Month. Now’s the time to think about what you’re doing to help clients protect their incomes.
I know talking about disability income insurance can be tough. Many clients are unfamiliar with the concept and why they need it. That’s where you come in. You can help make the concept click. Try one of these approaches to get started.
1. The income timeline.
On a piece of paper, draw a long horizontal line to serve as a timeline. Then say, “Let’s look at what happens on this timeline when you become too sick or hurt to work and are no longer earning an income.”
Moving from left to right, make tick marks on the timeline as you ask your clients if he or she could go without an income for a few days or a week. Most people are fine at this point. Then, start expanding the timeline and ask how things would look after a month, six months, a year or all the way to age 65. Are things still fine?
2. Sources of income.
Ask clients what other sources of money they could rely on if they can’t work. For most, the first source is savings. Let’s say the client has $10,000 in savings. If he spends $3,000 a month just for basic necessities, his savings would barely last three months. Unfortunately, most disabilities last several months or even years, so savings are just a temporary fix. They aren’t usually enough to cover the full scope of a disability.
A second source of alternate income is retirement savings. The main concern here is that raiding retirement savings has adverse long-term consequences. That money was earmarked for retirement for a reason: your clients were planning to no longer work at a certain age and would need the money to cover expenses.