People can insure just about anything they want to. And they do. Their wedding rings, their cars, their homes, their businesses, their health, and more are all insured as a matter of prudence. People feel better when they are protecting their important assets. In all this flurry of consumer protection, however, many people neglect to insure or grossly under-insure their most important asset: their income. Let’s take a look across the disability income insurance landscape as it stands today and assess the opportunity.
Disability Income Insurance Policies by the numbers
Precise numbers on how many Americans protect their income are difficult to come by. This is due, in part, to some of the data being siloed in government disability programs. However, the Council for Disability Awareness estimates that out of nearly 140 million working Americans, roughly 90 million of those income-earners have some form of DI other than WC or SSDI. This leaves a staggering 50 million workers, and their incomes, vulnerable to disabilty.
Additionally, they report that of the 90 million workers with disability coverage that the breakdown shows:
- 69.1 million have partially or wholly employer-paid DI
- 7 million purchase through their employer and pay for it themselves
- 7.8 million access DI through a club, society organization, or alumni society
- 6 million purchase through their financial advisors
50 million workers, more than 1 out of every 3 working Americans have no protection against asset loss concerning their income. This is a large and vulnerable population especially considering 1 out of every 4 workers will require time away from work at some point due to disability. While these numbers speak to the importance of protecting more workers and closing that gap, there are opportunities to improve the coverage of those that already have a policy in place.
Find the gap: Revealing your client’s coverage
The percentage of salary lost due to gaps in disability coverage increases significantly with the salary size. Finding this gap is the first step towards protecting your client. The team at Mettle specializes in identifying under-performing coverage and developing best practice strategies to overcome shortfalls in disability compensation. We will perform a comprehensive review that identifies the gap and presents you with solutions to share with your client. It is likely that your client is unaware of the disparity between what they earn and what their current disability plan covers. This is where our expertise and educational resources can help you show your clients not only where the gap lies but also the most efficient way to close it.
The true value of income: gaps in disability income coverage
If a person totals their car, they can expect an actual cash value amount from their auto insurance policy. While this value is less than what they originally purchased the vehicle for it is still usually enough to purchase the same vehicle of the same age and condition. Obviously, this is not the case with DI coverage through an employer. The general standard hovers around 60% of income paid out after the waiting period for a disabling condition.
Additionally, people with greater income benefit less from standard group disability offered through their employer. In our next article, we break down the percent of income replaced through standard group DI. Top earners are under-insured by group DI alone. However, it is possible and favorable to add a portable GSI gap policy to increase the amount of salary covered and improve their income protection. For highly compensated employees, an additional GSI multi-life policy can bring the total coverage to 80% of their income protected.
Market opportunities: selling DI to your clients
Disability income insurance is a product that needs to be sold. Clients have to understand the ramifications of being without their income for an extended period of time. Their income is the foundation behind all of their investments, assets, and financial planning. The fact that there are so many people with incomes that are uninsured or under-insured tells us that people take their income for granted.
Educating our clients about the importance of protecting their income themselves comes down to exposing them to the statistics surrounding the need for DI.
Going through their current financial plan and sharing information about products that can help round out their coverage and keep their income intact will help them protect the engine behind all of their goals. By protecting their income they are protecting all of their other assets.
We are here for you
Mettle understands the importance of income protection for any financial plan. We can help find the best-fit disability products to protect your client’s greatest asset. Let us know how we can help you best serve them.