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.
Sound familiar? That’s what happens during a disability (although involuntarily); people can no longer work and need money to cover expenses.
3. A balanced health insurance plan.
Most people view health insurance as a must-have. They use it to pay hospital and doctor bills when they’re sick or hurt. What they usually don’t have is an insurance policy that pays them when they’re too sick or hurt to work. In the event of a disability, clients’ health insurance helps cover medical expenses, but that’s where it ends. It doesn’t provide funds to cover living expenses. Disability income (DI) insurance picks up where health insurance leaves off.
4. Compare DI to life insurance.
Touch base with clients who’ve bought life insurance from you. Begin the conversation by reminding them why they bought that coverage — to take care of loved ones. It’s the very same reason to purchase DI insurance. The only difference is, with a disability, your clients are around to see the heartache of not having coverage.
I encourage you to have these types of conversations with your clients. Their income is worth protecting. They just need your help to better understand that.