Last month’s column entitled “Personal Economics 101” suggested that the vast majority of American wage earners are not in a financial position to maintain their current lifestyles in the event that their source of income is interrupted. This wonderful industry that we are all part of has solutions to help eliminate two of the primary reasons for income interruption: life insurance, in the event that a wage earner dies prematurely, and disability insurance for the most likely of all income interrupters—becoming disabled and unable to work.
The statistics for a person becoming disabled can be interactively discovered using the “Personal Disability Quotient” calculator on the website of the Council for Disability Insurance Awareness (www.disabilitycanhappen.org). Suffice to say the chances are anywhere from two to seven times greater (depending on age) than a person dying prematurely. Yet our great life and health insurance industry continues to sell more life insurance than disability insurance by large volumes.
Most people know if they have disability insurance benefits available to them, but they may not necessarily know if those benefits are adequate for their needs. There are more than 137,240,000 American income earners—and most of these people are inadequately prepared financially for a disability.
This lack of preparedness is truly an opportunity for every professional insurance agent and is a simple and an affordable service for those professionals to provide. The least that can be achieved is a favorable interview and the chances are it will result in a sale of at least some supplemental disability insurance.
So, how should this vast market be approached? Following is a suggestion for starting the conversation.
“Mr. or Mrs. Client (or prospect), third party researchers have disclosed the fact that most American income earners are inadequately insured against the contingency of being involved in an accident or becoming sick and being unable to work and produce income.
“Income is essential to most people’s peace of mind and happiness, yet it is the most likely need to be overlooked or neglected. It is my duty, as an insurance professional, to help bring an awareness of this critical matter.
“Economists who have substantially studied the income needs of consumers feel strongly that 60 to 75 percent of personal income is needed; otherwise negative results will quickly develop. Insurance products and services make protecting your income possible and affordable. You will be able to tell very quickly if my information and service will be of interest to you. Will you see me next Tuesday or Wednesday morning?”
More help with continuing the conversation:
“Like most people, you probably wonder why you must buy so much insurance. Here is a quick review:
“Which of your insurance policies now in effect pay you directly in cash? Following is a list of insurance, based on the most common purchase priorities of consumers. How do you measure up to this priority list?
“Homeowners insurance pays the mortgage company, or the cost to rebuild your home, but it does not pay you. Most people own this insurance because the mortgage companies demand it.
“Automobile insurance pays the repair people or the car dealer to replace your car. You do not get to handle the funds.
“Medical insurance pays physicians, hospitals and pharmacies, but not you! It is nice that we care so much about making sure the doctors and health care workers get paid, but what about you?
“Life insurance pays your beneficiary. Most of us do care about what our loved ones will do to make ends meet in the event of a premature death, but you will never see the money.
“Long term care insurance pays a nursing home to care for you. If the insured is the income provider for a family, who pays for food, clothes and a home for the family members?
“Dental and vision insurance pays the providers directly, but only for their services, leaving nothing for you. There is no offset for the time it takes away from your job to be treated and there is no cash to you.
“Disability insurance pays you! Only you will have the control over the money and how it will be spent!
“Some people say that insurance is an unappealing product because…it has no moving parts; it has no chrome strips; you can’t eat it, ride it or sit on it; you don’t even hang it on the wall to show your friends. It is just a piece of paper that gets tossed into a dark and dusty drawer, never to be thought of until it is time for the next premium to be paid.
“Disability income insurance is the exception because, in a sense, it is edible, rideable and you can sit on it. As a matter of fact, its cash benefits will buy anything!
“Disability insurance is like a wall safe, filled with money. It is peace of mind from the knowledge that should you become disabled, you and your family will never be hungry, will not have to give up your home, will be comfortably clothed, educational endeavors will not be curtailed, and retirement plans will not go unfunded.
“Cash is king and disability insurance pays the policyowner in cash.”
There you have it—Personal Economics 101.1—now it’s time to sell some disability income insurance.
W. Harold Petersen, RHU, DFP
RHU, DFP, is founder and chairperson of Petersen International Underwriters. He is recognized as an expert in underwriting development and policy innovation for such products as high-limit disability insurance, residual disability benefits, cash-value DI, and the expanding field of disability financial planning. The life/disability industry has acknowledged his leadership as an author, educator, motivator and leader, and has bestowed upon him the Harold R. Gordon Memorial Award (NAHU), the Will G. Farrell Award (NAIFA Los Angeles), the Lifetime Achievement Award (IDIS) and the Distinguished Service Award (NAIFA CA). His extensive industry involvement includes NAIFA, LIMRA, NAHU and The American College, all on local, state and national levels as well as IDIS. Petersen can be reached at Petersen International Underwriters, 23929 Valencia Boulevard, Valencia, CA 91355. Telephone: 800-345-8816. Email: email@example.com.