The rapidly developing interest in disability financial planning has revealed a huge concern in the senior marketplace. Insurance trade journals, economic magazines and newspapers all carry numerous articles discussing people who, unfortunately, fear they may outlive their money. The primary causes for this obsessive concern are due in large part to the recent recession coupled with the fact that people are living longer.
When earned income comes to an end voluntarily, there is usually a controlled retirement plan in place. However, when income is halted due to illness or injury, there is a potential for giant health care costs along with increased living expenses. All of this adds to the fear of what could happen—and it does.
These fears can largely be offset by an insured planning to work later into life and the knowledge that even if disabled, the income replacement capabilities of senior market disability insurance are available.
Some senior disability insurance plans pay beyond age 65, which of course has been the primary benefit period age for the past several decades. Moreover, there is a new and increased desire to have disability insurance that would stay in force to at least age 70—if not longer—with benefit periods and amounts that would adequately allow for the completion of a formal retirement plan.
There are other needs for senior disability products that stretch beyond the age barrier of 65. Business needs are still critical in one’s financial planning. An example would be a participant in a buy/sell agreement with no specific end age required; the need for funding is likely to continue to grow as opposed to decrease. Unfortunately, traditional buy/sell plans actually decrease in value as a person approaches age 65. Solutions to this problem can be found with carriers that have recognized the importance of the senior market. With your professional assistance, clients can be comforted in knowing their business obligation to buy out a senior aged partner can be backed by insurance.
Many people not only have the strength, but they also have the desire to keep working beyond normal retirement age. Self-employed individuals such as physicians, attorneys, writers, architects, store owners and partners in various enterprises feel they are wasting time and money by not being productive. It is not uncommon for our office to field calls from producers with clients in their late sixties and even in their seventies who are signing new office lease agreements or borrowing money from a bank to make some new capital improvements to their business. Not only does the business person recognize the importance of insuring these new obligations, but many landlords and lenders are insisting on insurance protection.
A business person or a professional person may wish to continue to keep his business open beyond normal retirement age. The overhead costs must be covered lest the remaining employees leave for fear they will not be paid. The owner loses the business, the employees lose their jobs and all are in financial jeopardy.
Business overhead expense, loan indemnification and key person disability plans play a vital role in the senior market by allowing productive people to remain productive and to actually be able to increase their productivity, knowing the financial concerns of a disability can be insured.
Senior market disability income insurance is a key to a large and responsive market: People are living longer and their good health encourages them to keep working for financial reasons. Pride becomes a motivating factor. Then we must also remember that senior citizens are constantly tempted to buy new cars, remodel their homes, do some long-postponed traveling, etc. These temptations could have a debilitating effect on the financial wellbeing of your clients, should their income suddenly become interrupted due to a disability.
There are real reasons for a person to respond to the concept of buying senior market disability insurance if given the chance. A review of existing clients is a good place to start.
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: firstname.lastname@example.org.