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Why There Is No Real Retirement Planning Without Disability Insurance

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What You Need to Know

  • Many consumers know just how to get the cash to cope with a disability: They say they will raid their retirement savings.
  • About 53% of workers say they need individual disability insurance.
  • For most clients, income protection will cost less than 3% of their income.

The fuel to a good retirement plan is income.

A client who is unable to work for an extended period of time due to a disabling illness or injury — and without proper disability insurance to replace their income — will not have a retirement, or at least not the kind that you spend your career helping people plan for.

Here’s why: One in four people said they’d turn to their retirement savings if they were disabled and unable to work, according to the new data from the 2022 Insurance Barometer Study, by Life Happens and LIMRA.

This is a serious financial misstep when you consider that one in four workers will be disabled at some time in their career, according to the Social Security Administration.

Here’s how disability insurance solves that.

Peter Zatir, a courtroom litigator with a thriving practice he owned with another lawyer, was stopped in his tracks by thyroid cancer.

It ended his career at 45, but not his ability to provide for his family of seven or to stay on track to retire.

He had individual “own occupation” disability insurance, as well as a buy-sell agreement with his partner, funded by disability insurance that ensured he got an equitable share of the business when he couldn’t work.

Where would he and his family be without disability insurance — and the right kind? Peter sums it up succinctly, “Without the protection of disability insurance, I can’t fathom where my family would be right now.”

Granted, it’s tough to have the disability insurance conversation — we know that as an industry.

But that doesn’t mean you shouldn’t be having the tough conversations.

Just 14% of those working say they have an individual disability insurance policy (down from 31% a decade ago), and more than half (53%) say they need it, according to the Insurance Barometer Study.

Clearly, there is a huge need and an untapped market for this.

You can play a part in closing this gap.

Here are some ways for all of us to start having this important conversation.

1. Keep it simple.

Ask a very straightforward question to each client in the course of their review: “If you weren’t able to work and earn your income for an extended period of time, due to an illness or injury, where would you get the money to maintain your family’s lifestyle, fund your retirement and grow your investment portfolio?” Then, it can be very instructive for a client to “do their own math.” Life Happens has a free Disability Insurance Needs Calculator.

Have your client use it and go through some easy steps to come up with their “number,” so that the next step in the conversation — getting coverage — is that much easier.

2. Tell clients a story — and it doesn’t have to be your own.

There is a reason storytelling is as old as time: It works.

People relate to other people.

They see themselves in other’s stories.

That’s what we do at Life Happens.

As a nonprofit, these stories are there for any consumer (and you!) to read, view, share.

Peter Zatir’s story is there.

Physician Valerie King’s journey is a convincing lesson for young medical professionals.

Travis Guthman didn’t lose his small business when he was extensively injured while texting and driving.

Even young people need to know that their future retirement (40 years in the future) could be in jeopardy; it could have been for 27-year-old Michael Sizemore.

3. Show that it can fit their budget.

While disability insurance can appear on paper as more expensive than other types of insurance coverage, you can put it in perspective by pointing out that your client will pay typically around just 1% to 3% of their salary to protect it.

And for some people, if they are disabled for a long period or permanently, that small investment in their future is invaluable.

4. Team up.

If talking through the ins and outs of disability insurance is not something you truly feel comfortable with, don’t let that stop you from offering this important product.

Bringing in an expert in disability insurance is great way to ensure your clients are well taken care of.

For example, John Nichols, past spokesperson for our Disability Insurance Awareness Month campaign and past NAIFA president, created a firm that specializes just on disability insurance — on a national level.

He’s an advocate not only because he believes in the product, but because he was a beneficiary, when he became paralyzed in his 20s.

While he has an inspiring story of recovery, he is passionate that everyone who works and earns an income learns about the importance of disability insurance.

And with the pandemic having reawakened many of the need for disability insurance, working with someone like John or another firm that has the requisite knowledge about DI can help you keep all your clients on track for a sound retirement.

As May wraps up, so does the Disability Insurance Awareness Month industry campaign, but that does not mean the need to have these discussions ends.

As a nonprofit, we will continue to support you and the industry in the work you do to get all your clients the insurance coverage they need to stay on track for a sound retirement.


Faisa Stafford (Life Happens)Faisa Stafford, LUTCF, is president and chief executive officer of Life Happens, a nonprofit that educates consumers about the importance of life insurance, disability insurance and related products. Life Happens Pro provides digital marketing and social-media resources for agents and advisors.

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(Image: Shutterstock)