While it is not a cure, disability insurance (DI) can be a bandage to help clients stop the financial bleeding if they have a disabling event. At the very least, the COVID-19 pandemic has highlighted the importance of income to everyday lives.
Discussing ways to protect income, whether the client is working currently or not, is extremely important. This can be especially true since a disability is likely an unexpected, life changing event.
On the heels of recognizing Disability Insurance Awareness Month in May, financial professionals are continuing conversations with clients impacted by COVID-19 — whether they are an essential worker, had a job loss or income reduction, or are getting back to work after a temporary layoff or business closure.
Many clients understand the ability to earn a living is their most valuable asset; however, they don’t make plans to maintain their lifestyles should that asset be taken away unexpectedly. Ideally, the DI discussion would come before that happens, but just because the client isn’t currently working doesn’t mean there aren’t any solutions available.
Unemployed with a DI Need
With companies closing or laying off employees due to the pandemic, some clients are finding out they are unable to apply for traditional DI offered through an employer, or even individual DI coverage through their insurance agent or financial professional.
Here are some questions to ask before creating an individual DI plan:
- Does the client currently being unemployed change the fact that a disability can happen at any time?
- Will the disability affect the client’s ability to get back to work once the employer opens the position again?
- Would the client’s income changing from a short-term situation due to the pandemic to a long-term situation due to a disability impact his or her lifestyle, and financial and retirement plans?
Naturally, some clients might ask the question, “Do I have to wait until I get back to work before I can protect my income?” Financial professionals can offer answers to help heal the wound left by income loss.
True individual DI requires the insured to be employed full time (at least 30 hours per week) prior to being eligible to apply for coverage. In addition, some carriers now require proposed insureds to work at least 30 days and acquire two paystubs before being eligible to apply.