How to Have Disability Insurance Planning Conversation

What You Need to Know

Barely half of workers have disability insurance.
Some have no idea they need protection.
Few understand the limitations of employer-provided coverage.

May is Disability Insurance Awareness Month. Of course, most financial professionals don’t need to be reminded about the importance of disability insurance and the critical role it plays in financial planning and financial well-being. However, it’s often a topic clients like to avoid.

While clients might be hesitant to discuss anything involving the term disability, delaying the conversation — or allowing the conversation to be delayed — can cause more harm than good. Consider that, according to Guardian’ sMind, Body, and Wallet study, financial well-being plays an outsized role in influencing overall well-being. Therefore, one of the best steps clients can take to ensure their well-being is to have sufficient disability protection in place.

Of course, this can be easier said than done. Fortunately, there are a number of strategies financial professionals can use to start the conversation.

Re-framing the Discussion

For a client, talking about a “disability” can be scary. Income protection and cash flow, on the other hand, are often top-of-mind for clients and concepts they care deeply about.

In fact, the Insuring Your Income report found that 92% of American workers are concerned about being financially prepared if the primary wage worker in their household experiences a disability. Despite this concern, just 51% of workers own a disability insurance policy.

There is clearly a significant disconnect between this pressing financial concern and the corresponding solution — which presents an opening for financial professionals. In other words, the first step is to help clients understand how income protection, cash flow, and disability insurance are all connected.

Dispelling Disability Insurance Myths

With the foundational understanding that income and cash flow protection and disability insurance are the same, financial professionals can next turn the conversation to clearing up a number of myths and misconceptions about disability insurance.

In talking with clients, two common misconceptions often emerge — that disability insurance is only for catastrophic accidents and that it is only for individuals who are permanently and physically disabled. Unfortunately, these misconceptions are often the reason clients don’t purchase the very income and cash flow protection they’re worried about.

For financial professionals looking to clear up client confusion, the most straightforward and effective approach is one-in-the-same: walking clients through the numbers. For example, when it comes to the misconception that disability insurance is only for catastrophic accidents, many clients are surprised to learn that the leading short-term disability claim is related to maternity — accounting for roughly one-third of claims, per Guardian’s Insuring Your Income report. When it comes to the misunderstanding that disability insurance is only for those with a permanent physical disability, clients might be interested to learn that Guardian’s report found that mental health-related issues have been the fastest-growing source of disability claims in the past five years, up 40%.

When clients see these numbers, it often starts to click that a covered disability isn’t just a random or life-altering accident. Rather, one in five people, according to the Guardian’s report, have been out of work for an extended period of time over the past 10 years. As a result, disability insurance and the income and cash flow protection it provides are relevant and necessary to day-to-day living.

Leveraging Holistic Disability Offerings

With an appropriate understanding of how disability insurance can help with income and cash flow protection, the conversation can turn to access and available offerings.

In most cases, clients will seek coverage through their employer. In fact, among individuals with disability insurance, Guardian found that 91% obtained coverage through their employer.

While employer-sponsored coverage is critical and provides foundational protections, it’s important financial professionals explain how such coverage can be enhanced and work together with an individual policy. As part of this discussion, sharing background and education on where employer-sponsored coverage provides protection and where individual solutions can fill any gaps can be critical.