As a health insurance agent, you play an integral role in helping individuals secure a variety of health insurance and ancillary benefits. But one type of coverage that’s often overlooked by agents is disability income insurance. According to Mutual of Omaha, “51 million working adults in the U.S. don’t have disability income coverage,” while only 40 percent of households have sufficient liquid savings to cover three months of expenses. An even more shocking statistic is that “one in four workers can expect to be out of work for at least a year” due to a disabling condition before retirement age. Clearly, the need is real.
What is Disability Income Insurance?
Disability income insurance offers financial protection when an individual is unable to work due to an injury or illness. Unlike medical insurance, which pays for direct healthcare costs, disability income insurance provides a monthly income stream, helping to cover everyday expenses, mortgage payments, monthly bills, and other financial commitments.
Most agents have heard of short-term disability and long-term disability insurance, two popular employee benefits that many group brokers recommend to their clients. But what you may not know is that disability income insurance is also available on an individual basis.
The Critical Need for Disability Income Insurance
As already mentioned, the chance of being out of work due to a disability is much higher than a lot of people realize. Whether the disability is due to a physical injury or a serious illness, the repercussions on an individual's ability to earn a living can be severe, particularly for families relying solely on that income.
Many of your clients may not be aware of their need for some sort of protection against a short- or long-term illness or injury; others may be concerned but may not know their options. So, educating clients about their exposure and their options is the first step for brokers who want to start addressing this coverage gap.
Many individuals mistakenly believe that government benefits will adequately cover them in case of disability. Unfortunately, this isn’t always the case. First, government benefits may be insufficient to maintain their pre-disability lifestyle since the monthly payment amounts are relatively low. Second, most people are initially denied for Social Security Disability payments, at least initially. As Atticus reports, the initial application approval rate varies by state, with a low approval rate of 30 percent (Washington, D.C.) and a high of 65% (Alaska).
This misunderstanding provides an opportunity for health insurance agents to bridge the gap, educating clients on the essential role of disability income insurance in personal risk management.
Key Considerations for Disability Income Insurance
When helping clients choose a disability income insurance policy, several factors should be considered. These include the waiting period before benefits begin, the duration of benefits, whether the policy covers partial disability, and if the benefits adjust over time for inflation. Premiums will depend on these factors as well as the client's occupation, age, health status, and lifestyle. Your expertise can help tailor a policy that fits each client's unique needs and circumstances.
Disability income insurance offers more than just compensation for lost wages—it provides a sense of security, financial stability, and the ability to focus on recovery rather than financial stress. And the market is very unsaturated, creating an opportunity for agents who choose to add disability income insurance to their portfolio of insurance products and solutions.