Barry Lundquist

The disability insurance and employee benefits industries are facing unprecedented change, influenced by the implementation of the Affordable Care Act (ACA), rising health care costs, evolving technology, and ongoing uncertainty about the economy. In the recently released 2014 Long Term Disability Claims Review, the Council for Disability Awareness (CDA) reported that the number of employers offering long term disability insurance plans increased in 2013, albeit slightly, for the second year in a row. But the number of employees covered by disability insurance actually declined, which is an apparent disconnect.

Each year since 2005, CDA has gathered detailed claims data from participating disability insurance companies for purposes of analysis and education. The companies that contribute data insure more than 30 million wage earners and represent roughly 75 percent of the insured group and individual disability markets. The 2014 review summarizes quantitative and qualitative long term disability insurance claims data from 2009 to 2013 and identifies emerging and continuing trends. The report also includes an analysis of worker disability data from the Social Security Disability Insurance (SSDI) program. The full report, as well as a library of charts and graphs, can be downloaded at www.disabilitycanhappen.org/research.

Other findings reported in the 2014 Claims Review include:

 • As the workforce ages, the average age of new long term disability claimants is also increasing, but about 41 percent of approved long term disability claims in 2013 were for employees in their forties or younger.

 • Women have more disability claims than men, but the claims for men increased relative to women’s claims in 2013.

 • Even though the number of new and ongoing long term disability claims decreased in 2013, payments to claimants increased to $9.8 billion.

 • Musculoskeletal disorders continue to be the leading cause of disability claims; cancer is the number two cause of new claims. Cancer claims also increased in 2013.

 • More workers were receiving Social Security Disability Insurance (SSDI) payments in 2013 than in the prior year, but new SSDI applications and awards decreased in 2013.

 • The average SSDI benefit amount at the end of 2013 was $1,146; $1,271 for men and $1,011 for women.

One important use of the Claims Review is to help everyone involved—brokers, employers and employees—understand the actual, real-life causes of disability claims. The Disability Divide Research Reports, which have been published by CDA over the past several years, identify one key misconception that impacts the pervasive attitude among most employees that “disability won’t happen to me.” Most wage earners equate “disability” with “catastrophic accidents.” For example: Every year the claim study demonstrates that only about 10 percent of new disability claims are caused by accidents, yet employees and brokers both rank serious accidents as the most likely cause of disability. Further evidence of this “catastrophic perception” is apparent from answers to a follow-up question: Nearly one-third of the respondents said someone with a disability would never return to work, and more than two-thirds said that the person would miss at least one year of work.

Because of this misconception, many wage earners are not considering or concerned about some of the very common disorders that are most likely to cause someone to miss work for an extended period of time—such as back pain, cancer, heart disease, mental disorders or pregnancies. Even though we know that roughly one in four (25 percent) employees entering the work force today will experience a long term disability at some point in their working careers, nearly two-thirds of Disability Divide respondents predict their odds of experiencing a disability to be either one or two in 100—just one or two percent!

The actual claim results and other information from the Claims Review can arm brokers to help employers and employees overcome their incorrect beliefs and to inform the best risk decisions.

Employee benefit brokers in the past couple of years have been pushed to the brink in their efforts to understand the ACA, help clients process the law and sort through options, and then help them comply. Because more focus on medical insurance has resulted in less focus on disability and other benefits, the ACA’s implementation may already be having an adverse effect on how and whether working Americans’ incomes are protected from a disabling illness or injury.

Given the focus on medical plans over the past couple of years, many brokers and employers opted to postpone action on other benefits—disability benefit plans in particular. Some indications point to disability plan sales on the rise once again. What’s driving this? Pent up demand and more attention being paid in the post-ACA implementation world for one thing. An improving economy is also helping, since some industries are finding themselves competing for employees once again, and benefits continue to serve as a means to attract and retain employees. But worries persist over future health care costs, and many businesses remain concerned about the sustainability of the economic recovery.

World events and Washington gridlock contribute to an overall lack of confidence among many business leaders. These combined ingredients mean many of the new disability benefits being sold today are voluntary plans, which has its benefits: Brokers have a positive idea to discuss with their clients, employees get a new benefit, and employers are not committing to higher fixed costs by signing on.

But there is a potential downside to this trend. At the core, voluntary programs involve employee choice and employee cost. Because of this, some employees will not choose to be covered. In fact, today’s typical voluntary disability take-up rate is in the 40 percent range. That means 60 percent of otherwise eligible employees could go without coverage. This may very well explain why disability insurers reported more employers offering plans, but fewer employees with disability coverage in 2013. These 2013 numbers are not yet conclusive, but whether a trend emerges in the next year or two bears careful watching. In light of this, brokers will play a critical role in making sure employee incomes are protected.

Voluntary products represent an enormous opportunity for brokers, but with this opportunity comes an important responsibility. CDA’s research demonstrates that employees and employers alike recognize that the ability to earn an income is a wage earner’s most valuable financial resource. Yet only about a third of America’s civilian work force has any form of private disability insurance. As more brokers sell voluntary plans, and more employers sponsor them, the responsibility for benefit decisions shifts to employees. In essence, the disability risk is being shifted to the employee. From whom will they receive the advice, information and resources to make informed risk management decisions?

There are significant ancillary benefits to educating employees about their disability risk and the importance of income protection. Many studies have demonstrated that when employees understand their benefits, they appreciate them more. They also have higher job satisfaction, remain with their employers longer, and are more productive. When an employee becomes disabled, having insurance not only means a monthly benefit with which to pay the bills, it also means resources to help get that employee back to work—a very important outcome for the employee and the employer. For society as a whole, everyone benefits when incomes are protected from the impact of a disabling illness or injury.

The effort to reform America’s health care system has drastically changed the benefits landscape. In particular, the broker’s role is evolving to that of a trusted advisor and consultant. What could be more important than helping employees protect what is most valuable to them?

About The Council for Disability Awareness

The Council for Disability Awareness (CDA) is a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury. The CDA engages in research, communications and educational activities that provide information and helpful resources to wage earners, employers, financial advisors, consultants and others who are concerned about the personal and financial impact a disability can have on wage earners and their families. Visit them at www.disabilitycanhappen.org. 

Carol Harnett is the new president of the Council for Disability Awareness. Harnett is an employee benefits consultant specializing in health care and absence, as well as a speaker, writer and trend spotter in the fields of general employee benefits, health and productivity management, and value-based health. She is the benefits columnist for Human Resource Executive and the co-host of the CoHealth Checkup radio show.

Harnett was a vice president and the national disability and life practice leader at The Hartford, and director of resource and rehabilitation services at Prudential Financial.

Kenneth A. Bloch,  The Bloch Agency

Eugene Cohen, Eugene Cohen Insurance Agency, Inc.

George G. Davidson, Secura Consultants

Cindy V. Gentry, Life Happens and BBA Life Brokerage Agency

Barry Lundquist, Council for Disability Awareness

Thomas R. Petersen, Petersen International Underwriters

Thomas Petsche, Sr., International DI Society and Brokerage Solutions

Raymond J. Phillips, Jr., The Brokers Source, Ltd.

Q: What advice do you have for brokers on how to take advantage of Disability Insurance Awareness Month?

Eugene Cohen: The best kept insurance  secret is disability income protection. I ask myself, “Why?” It is such an important part of financial planning. Most advertisements for financial planning are geared toward income for retirement years, not taking into consideration that many individuals may be forced to retire before age 65 due to disabilities.

Brokers should take advantage of Disability Insurance Awareness Month (DIAM)by calling their policyholders and telling them that the month of May is DIAM, and follow that up by asking their clients questions such as:

 • “What is the longest vacation you have ever taken?” Most will respond, “Two or three weeks.” You ask why that is the longest and the response will usually be, “I have to work. Who can afford to take a longer vacation?”

 • “If you were to have an illness or accident and you were out of work two or three years, would you have an income problem?” If the answer is yes, you respond, “We have to talk.”

 • “Do you have a plan if, due to an illness or an accident, your income should stop?”

 • “Would you agree that your greatest asset is the ability to earn an income?”

It is my belief that if brokers asked their clients these questions, the clients would see the need for disability income protection.

George Davidson: While many organizations and carriers support the Disability Insurance Awareness Month initiative, it does not matter if financial professionals don’t embrace the concept, utilize the tools, and launch a campaign to reach their clients and prospects.

However, the first order of business should be a review of your own disability planning! As I was recently reminded, you sell what you own. Many financial professionals are woefully underinsured themselves, and you can’t preach the message if you don’t heed your own advice.

Cindy Gentry: The easiest way is to let someone else do the heavy lifting for you. Life Happens (formerly LIFE Foundation), which is the nonprofit organization that coordinates the national DIAM campaign each year, has free turnkey tools for brokers and agents to use during DIAM—and beyond. There is really nothing that you have to do from scratch. You can find the DI tools and resources at www.lifehappens.org/industry. (The sidebar gives you some concrete examples.)

Success with the campaign, however, lies in consistency. Plan ahead, choose the resources that you’d like to use, distribute them and then be sure to communicate about DIAM and DI on a consistent basis. In my business, besides a monthly newsletter, we also send out two weekly emails with sales ideas, marketing resources and product information. This consistent drip of information is invaluable. If you want them to sell it, they have to hear about it and know more about it.

Barry Lundquist: A broker’s responsibility is to help people protect what is most important to them. We know from research conducted by the Council for Disability Awareness that consumers, brokers and employers all agree that the ability to earn an income is a wage earner’s most valuable financial resource; income is what pays the bills, pays for housing, food, clothing, transportation and other living essentials, as well as giving breadwinners an opportunity to save for retirement, a new home, a child’s education, or just for a rainy day. Disability Insurance Awareness Month  gives a broker a reason to contact prospects and clients and start a conversation about the importance of income to their financial security, about the risk of income loss related to illness or injury, and about solutions that can help them protect that most valuable resource. It’s also a great time to remind those clients who have already purchased disability insurance how important it is and to suggest a checkup to make sure that the income protection they have remains appropriate. For those brokers who do not talk to clients about protecting their income, DIAM is a great reminder to them of what being a trusted advisor is all about. After all, their responsibility is to help people protect what is most valuable to them, and for most working Americans, nothing is more valuable than their income.

Tom Petersen: Disability Insurance Awareness Month is just as the name implies—awareness. Disability insurance does not sell itself like many other forms of insurance. It has to be sold. It is also difficult for the average person to picture himself disabled much beyond a cold or flu. DIAM does an enormous job of marketing and spreading awareness at both the consumer and industry professional levels. Groups such as CDA, Life Happens, and IDIS have great tools to help make marketing DI easier. But don’t start in May! Start in April! May is when the blitz to the public happens, and it is best to have all the resources going at once!

A side note: When May ends, the need for disability insurance doesn’t! Hopefully, insurance professionals recognize that DI can be sold, should be sold, and should be part of our everyday sales activities.

Thomas Petsche: We need to start ASAP getting emails, mailers and brochures sent out to brokers and clients just to get DI on their radar.

Ray Phillips: Invest in the tools available from Life Happens. Invest the time to know what is on their website. Invest the money in those marketing pieces that might help spread the word about disability income insurance.

Use the benchmark reminder of Disability Insurance Awareness Month as a reason to start a conversation with clients about DI.

For clients who have purchased DI, use this as a time for brief review of the client’s situation to confirm that benefit amounts are accurate; review the definitions and features of the plan so the client knows what he has and can expect if a claim arises. Provide a brief overview of the actual claims process—how to file, what happens, etc.—in case a claim does arise.

Q: What tools, process or technique do you recommend that brokers make use of to engage clients in a DI discussion?

Cohen: I recommend asking clients questions to engage them in the mindset of disability income protection. Ask them how important their earned income is to them. Ask them how they would fund their retirement plan if they were to become disabled. Ask a small business owner how he would pay his business expenses if he had a disability.

Selling disability income protection is easy when the need is established.

Davidson: The important news is that you don’t have to “reinvent the wheel.” There are ample materials provided by Life Happens and the Council for Disability Awareness. Take a few minutes to find the tools that fit your practice style and put them to use.

Gentry: Increasingly, one of the most effective means of connecting with people on a very personal level—especially with Gen Xers and Millennials—is through social media. None of us really seems to have the time necessary to devote to these new channels of communication, but the truth is that we ignore them at our business peril. Again, free resources from Life Happens can make it much easier. They have pre-written “compliance neutral” content about DI, including images and “info-statistics” that you can literally copy and paste to share. You can also follow them on the Life Happens social media channels, such as Facebook and Twitter, and simply share the new content that they post several times a day.

Lundquist: From knowing and observing hundreds of brokers over the years, I have tried to discern what differentiates those who are highly successful from the others. I have observed four traits common to the best of the best:

 • They are dedicated, lifelong learners. They never stop learning; never stop striving to be more educated and professional.

 • They are passionate. For them, selling is not about commissions, it’s about doing the very best job to protect their clients and best meet their most important needs.

 • They tell stories. They share stories from their personal and professional lives; stories from which, for many, their passion derives; stories about how important it is for people to protect themselves from the most catastrophic risks.

 • They ask great questions and then they shut up and listen. Clients don’t want to be sold, they want to be listened to, they want to be educated, and then they want to make their own decisions based on advice from someone they trust.

So I think the answers to this question are apparent from these four traits. There are no silver bullets. Clearly, being the best requires hard work. But those who dedicate themselves to learning, who are passionate, who have stories to share, and who have great questions to ask will be successful.

Some good questions to start a conversation about income protection include:

 1) If you were sick or injured and couldn’t work, how would you pay your bills?

Know what all the responses might be and have answers prepared. For example, if the person says, “We’d live on my spouse’s income,” what would your response be? What follow-up question would you ask? If the person said, “I have disability insurance,” that’s an opportunity to ask about their protection and to help them determine whether it is enough.

 2) What is your most valuable financial resource? What is it worth?

When they respond, they may talk about their home, their retirement nest egg, etc. Use the Earnable Income Quotient calculator, which is a great tool made available by the Council for Disability Awareness, to help them estimate the value of their income. It is typically a very large number, much larger than the value of their home or 401(k) balance.

 3) What are your odds of experiencing an illness or injury during your working career that will prevent you from earning a paycheck for three months or longer?

We know that most people dramatically underestimate their odds of becoming disabled. Use the CDA’s Personal Disability Quotient calculator to demonstrate that their risk is higher than they think. The good news? Solutions are available.

The key is to ask the question and then let the client talk

Petersen: There is no one way to engage someone. Some people are visual. Some are analytical and need statistical information. Some people empathize with stories, and others feel a need to protect their family or business. And finally, there is a group that buys because they are told they need it (usually by an attorney, friend, parent, business partner, etc.). As a professional salesperson (it doesn’t matter if you sell insurance, refrigerators or widgets), you need to be able to engage people on their level. Do you have a story to share? Do you have statistics? Do you have pictures? If not, get them! Life Happens, CDA and IDIS all have great tools to help.

One other source that is not to be overlooked is your local disability insurance brokerage outlet. These are the experts in many areas, all on DI. They have tools, they have knowledge, they can help with marketing, and they can help with sales calls in some cases. Most DI brokerage outlets represent several carriers so that they can provide you an assortment of products to solve insurance needs.

Petsche: I have my three questions:

 1. If your car were stolen or destroyed tomorrow, how quickly could you find another car to drive?

 2. If your house burned down, how soon could you find a place to live?

 3. If you became sick or hurt and your doctor told you that you could not work for the next six months, two years, or the rest of your life, do you have an income guaranteed to cover your regular monthly bills, no matter how long you cannot work? Your income potential in your working lifetime is several million dollars—that is, if you don’t become disabled.

Phillips: ASK! Ask clients if they have DI.

If they do have DI, ask if they know what they have (chances are they won’t). If they have group coverage at work, ask to review the policy to point out any shortfalls and perhaps provide input on insuring any benefit shortfall relative to their income. Ask if an individual policy they have will cover their current situation. Ask if you can do a DI policy audit to ensure proper coverage.

If clients do not have coverage, ask how it would impact their lifestyle if they were sick or injured and couldn’t work. Ask if you can provide an affordable solution to the exposure they have.

Q: Many DI specialists share the view that every month should be treated as if it were DIAM. What can be done to convince specialists in other insurance fields to impress upon their clients the need to protect their income?

Cohen: Specialists in disability income protection find selling the product quite easy. This is because they know and understand the policies. Specialists in other insurance fields need to be educated so they, too, become knowledgeable and comfortable addressing the concept of disability income protection with their clients. At our agency we spend as much time as needed going over the disability policy illustration with our brokers, preparing them for the appointment; we are not satisfied until we have done our job of making the broker secure in his knowledge and comfortable with the previously uncomfortable. Knowledge is power.

Davidson: Unfortunately many financial advisors wake up to the importance of this issue only after one of their clients suffers a disabling illness or injury. In our practice we spend every day attempting to save these individuals from becoming an example which motivates their financial advisor to do the right thing.

Gentry: The great part about DIAM and using the Life Happens resources is that May becomes the launching pad for DI outreach—a great beginning. You can give your own campaign a big burst of energy while the national campaign is underway, and you can leverage the national attention that’s being put on DI. Then it goes back to consistency. Continue to use those DI resources throughout the year. Most of Life Happens resources—realLIFEstories flyers and videos, and social media posts—can be used any time of the year. Set up a calendar of when and how you are going to communicate about DI, and then stick to it.

Lundquist: As I noted earlier, a financial advisor’s responsibility is to help people protect what is most important. For nearly all wage earners, income is most important. If the broker is not familiar with disability insurance, that is not a valid excuse for not addressing income protection. There is plenty of help available to get educated, and plenty of opportunities to partner with experts to create the best solutions for a client. Some years back, LIMRA surveyed brokers who did not sell disability insurance and asked them why. The most common response was “the client didn’t ask for it.” That is simply not acceptable. The advisor’s job is to help the client understand his risks and to protect against them. Some people will talk about the broker’s liability because they didn’t talk about disability insurance to a client who subsequently became disabled. As a trusted professional, I cannot imagine having a conversation with a client who has suffered a disabling illness or injury, or perhaps having that conversation with one of that person’s loved ones, and having to explain to that person why there is no protection in place for that person’s lost income. For many, their lives will be completely ruined.

Petersen: While we in the disability insurance industry believe every insurance professional should always include DI, the reality is that they can’t (or won’t), for many reasons. This is one reason the need to network with others in our industry can be a useful tool. The specialists in other fields don’t need to know about disability insurance as much as they need to know (and use) the resources that can analyze, design and implement a DI plan. That may be a producer to split cases, or a brokerage outlet, or a carrier rep. If they want to do it alone, they should also know the online tools and resources we have already mentioned. A specialist in another field should understand that if their client becomes permanently disabled, he may lose them as a client! A CPA will not have a business client. However, a business owner disabled and with business overhead expense DI coverage will need a CPA! An investment advisor will find that a disabled person becomes a survivalist, and discretionary income for investing is much tougher to part with during a disability. A life insurance specialist should ask himself, “What if my client doesn’t die from a severe accident or heart attack?”

Petsche: Every plan/program that you can set up in the financial services area is dependent on your income to keep them going, and once that money machine—you—breaks down, all your plans just become liabilities. Should we protect the goose? Or the golden eggs the goose lays? Too many advisors and their clients want to insure the golden eggs.

Phillips: If a person becomes disabled, the other specialists need to recognize that there is a good chance it will affect the client’s ability to pay the premiums on the products or investments they have sold. The fact is, before IRAs, before life insurance, before 401(k)s, before long term care insurance, there should be disability income insurance. Not only does it protect a paycheck, not only does it protect the lifestyle a client has grown accustomed to, it also protects the very plans that have been implemented to secure the individual’s and family’s financial future.

Q: In your experience, what are the main difficulties/objections you encounter in trying to market DI either to agents or to consumers, and how do you overcome them?

Ken Bloch: The biggest consumer objection is “sticker shock.” If the producer explains disability insurance in understandable terms with the policy premium at 2 percent or less of gross income as a starting point, the consumer can then design a policy that will provide value and peace of mind. [KB]

Cohen: This is a typical conversation when talking to a new broker: “Do you offer disability income protection to your clients?” Most answer no. “Why?” we ask. The most common answers we get are: “I don’t want to be bothered.” “I am busy with my casualty business, health insurance, etc.” “It’s too complicated.”

The real objection is that the broker is uncomfortable with his lack of product knowledge. We help brokers overcome the real objection of why they do not offer disability income protection to their clients by letting them know that our agency marketers are here to help them understand the product and how to offer it.

In overcoming objections from the consumer there are only four basic objections. Everything else is not a real objection. The four basic objections are: 1) no need, 2) no hurry, 3) no confidence, and 4) no money.

I gave examples earlier of questions to ask to establish the need for disability income protection. Once the client understands that he needs the policy, you have overcome objection number 1. 

Objection number 2 is “no hurry.” When your client knows he needs disability income protection, he will act. You have overcome the “no hurry” objection.

Objection number 3 is “no confidence.” If you have the knowledge, your client will have confidence in you. It is your job to obtain the knowledge by reading the material that companies have developed for producers and by working with a knowledgeable brokerage agency that can give you all the time and support you need.

Objection number 4 is “no money.” This is the final objection and this is when you ask the client, “If the company were to deduct x amount of dollars from your checking account every month, would this create a financial problem?” If the client says no, you are done! If the client says yes, then you state, “I am not here to create a financial problem, I am here to solve one.” (This approach only works because of its sincerity.) Then we work together to reduce the benefit and premium to something the client can manage.

Every day in our office is disability income protection awareness day. Every day we are teaching, training and talking disability income protection to our brokers and to each other. It is great to be a part of an industry that does so much good for people. [EC]

Davidson: A well-versed and motivated financial advisor encounters very few legitimate objections. We have worked closely with advisors whose placement ratio is almost 100 percent. This comes from understanding the needs of the client and the solutions that are available. Everyone wants what disability insurance does—our job is to help the client position it into their plan and budget. [GD]

Gentry: I see it less as an objection and more of an issue of something we don’t talk enough about. Health agents aren’t selling DI, P&C agents certainly aren’t selling it, and most life agents don’t sell it either. But the truth is, none of those other types of insurance meet the need that DI does. There is a huge gap between consumers who need DI and those who have adequate coverage.

I think the key is focusing the conversation on “protecting your paycheck.” People aren’t necessarily open to talking about disability insurance—they may not even know what it is. However, they will be open to knowing what can help them if an injury or illness keeps them out of work for an extended period of time. Life Happens did a survey that found that 50 percent of people would have financial troubles either immediately or within one month of not receiving a paycheck. That’s a crisis. We have the tools so that agents can help their clients solve this problem. Now we need to start using them. [CG]

Lundquist: Some common objections from brokers: It’s too complicated, it takes too long, and policies are too often modified from what was applied for. The first thing I’d say is: Just because something is hard doesn’t mean for a second that it is any less important. The more brokers learn about disability insurance, the more policies they sell and the easier it becomes. They can make sure the prospect knows what to expect if they themselves know what to expect.

Many very successful disability brokers that I know have made the observation: If I knew then what I know now I would have started selling disability insurance much sooner. Many companies today are offering multi-life programs on a guaranteed issue, simplified administration basis. Those multi-life programs can certainly make the process easier.

Another tip is to focus on younger wage earners. When someone is early in his career, his risk of disability over the many years he will work until his retirement is much higher than an older worker who has fewer years of work remaining. That younger worker’s earnings potential is significantly higher than the older worker for whom many of his earning years are behind him.

So the youngest prospect has the most to lose and the highest odds of losing it. Younger workers often have few financial resources to fall back on. And for younger workers, it is typically much easier and less expensive to purchase income protection.

Other benefits to brokers besides doing what is right for clients: There is less competition in the disability insurance marketplace and commissions are lucrative, especially renewals.

Some common objections from prospects: “It costs too much.” This may simply be a reflection of not appreciating their level of risk. Discuss the consequences of disability; ask how they would pay the bills. Ask if they know others who have had cancer, or a stroke, or experienced a bad accident. Use the Personal Disability Quotient calculator. Many wage earners assume that disability insurance is much more expensive than it is. Finally, don’t forget that having something is better than having nothing. Help them get something in place that can be built on in later years.

“I’m healthy.” It is certainly the case that a person can lower his risk of disability substantially by living a healthy lifestyle, keeping weight in line, eating right, exercising and so on. In fact, a person can cut his risk of disability in half. But even the youngest, healthiest person has a risk of disability that is too high to ignore.

“We can get by on our savings and (other sources).” Help them do some math. How much do they need each month to pay the bills? What sources of income would they tap into, how much would be available, and how long would the sources last? Finally, quantify the gap between needs and income sources. Help them learn how to best fill that gap.

Also keep in mind that the average long term disability, once the claimant satisfies his elimination period, exceeds 2.5 years. He needs to be prepared to withstand a disability that can last for several years, or one that may even end his working career.

Helping overcome objections is where stories and passion come most into play. Telling stories about others who have experienced disability and especially getting clients to talk about people they know who have experienced illnesses or injuries can certainly help. Many people don’t think they know anyone who was “disabled,” but when asked if they know someone who has had cancer, a stroke, or even chronic back pain, most everyone will say yes. Our Council for Disability Awareness research demonstrates that when an individual knows someone who has experienced a disability, they think their own risk of disability is higher.

Perseverance counts. Keep asking, keep reminding. As any successful salesperson can attest, the sale is very often made after many attempts. [BL]

Petersen: The DI industry has done a great job of educating insurance professionals that disability insurance is cash flow. More life insurance is sold for asset protection than for a “need for cash.” When insurance professionals who speak about assets as things that are important to insure realize that disability insurance is asset protection, then they begin to include it in their day-to-day sales. The same perception applies to the end buyers, too. People don’t visualize losing income as easily as losing a house, keeping kids in school, wrecking a car, etc. A long term disability will result in the same liquidation of those assets if they are not protected by disability insurance. We must do a paradigm shift in thinking about what disability insurance truly is. It is asset protection! [TP]

Petsche: The biggest obstacle we have to overcome with both brokers and consumers is the perception that “disability will not happen to me.” The best way to overcome this objection is by telling emotional and motivating stories about our experiences dealing with what happens to individuals with and without disability insurance. Also, show the law of averages that relates to disability, because the odds are not in their favor. [TP]

Phillips: The biggest hurdles, in my experience, have been cost, recognition of exposure, and perception of the underwriting process.

Cost is the major objection to many insurance sales. I’ve found that if the advisor gets the client to focus on the amount of annual and total payouts the DI plan could provide in the event of a claim, it helps. For instance, for a 40-year-old business owner who is considering a $5,000 monthly benefit, stress that this is $60,000 per year; and that the total potential payout to age 65 is $1.5 million. In that context, the premium relative to the benefits provided is perceived as much less than if presented monthly.

Statistics abound that provide the realities of the exposure an income earner has to a disability. The Council on Disability Awareness has information available to help point out this exposure, as does the Life Happens site, www.lifehappens.org.

The facts are that the DI underwriting process can be involved and tedious. Accurately pre-screening the client as well as detailing the process and the reasons behind the scrutiny involved must be explained to the client. The amount of potential benefits requires a process that allows carriers to mitigate their own exposures.

But within that framework a number of carriers have come out with a simplified underwriting process that can be less invasive for clients up to a certain age and benefit amount. Exploring that process for the client’s particular situation can be an effective way to cut the time and consideration involved. [RP]

The Patient Protection and Affordable Care Act (ACA) continues to make headlines, cause concern and exhaust resources. At a recent employee benefits conference, there were 35 general sessions and workshops dedicated to the topic of health care and the ACA. Only one focused on disability, and that session’s objective was to explore how ACA would impact disability plans. Somewhat symbolically, the conference’s only disability-related workshop was scheduled for the very last session of the very last day-typically when many conference attendees have already headed for the airport.

There is no question  the ACA is already impacting how and whether working Americans’ incomes are protected from a disabling illness or injury. Without a deliberate effort by insurance carriers, distributors and employers, the end result could be even fewer protected incomes and more workers experiencing disabilities without a source of income to support themselves and their families. This also means fewer available resources to help return disabled workers to productive employment-a very important but often overlooked benefit of private disability insurance programs. Certainly, this would be an unintended and undesirable consequence for employees, employers and American society.

The 47 million Americans with no private health insurance were a major motivator of the push to win approval of ACA. At the same time, about two-thirds of the work force, roughly 100 million working Americans, have no private disability insurance. And after experiencing a disabling illness or injury, a wage earner is just as likely to suffer a severe financial setback from losing his income as from incurring big medical bills.

Income Needs to Be Protected

Income is almost every American worker’s most valuable financial resource-employees, advisors (agents, brokers, benefit consultants, financial planners) and human resource benefit professionals unanimously agreed in the Council for Disability Awareness’ Disability Divide Research series.

Using the Council’s Earnable Income Quotient (EIQ) (www.whatsmyeiq.org) calculator, the estimated lifetime earnings for a 35-year-old worker currently earning $46,000¹ per year exceeds $2 million. That is more than eight times the median price of U.S. homes sold in August 2013², and 27 times the average balance in a U.S. worker’s 401(k) account.³

Just about every working American needs his income to survive financially. Because wage earners almost always depend on a continuing income stream, protecting their incomes is a necessary step toward financial security.

The ACA does not address income protection issues and does not tackle the large number of working Americans who have no private disability insurance. The legislation does not help to reduce the critical need for protecting the incomes of working Americans from the effect of a disabling illness or injury. And because voluntary insurance programs have become more popular, American workers are taking on additional financial and decision-making responsibilities relating to their benefit programs. This means that the need for income protection will likely be greater in a post-ACA world.

The ACA is accelerating a trend toward more voluntary benefit plans, more employee choice and more employee responsibility. Non-health insurance benefit programs are being caught in the ACA’s turbulent backwash. More resources are being diverted to focus on health care issues, which means there is less of a focus on other types of benefits, in particular, disability insurance. According to CDA’s 2013 Long Term Disability Claim Review, the number of employees insured by group LTD plans increased just 1 percent in 2012-down about 6 percent since 2008.

The number of employers offering group LTD plans was flat in 2012, following three consecutive years of decline. Anecdotally, 2013 prospect activity and sales of new disability insurance benefit programs have fallen below expectations as employer and distributor attention has been riveted on health plans and making sure they can be in ACA compliance. Many of the new disability benefit programs being sold in 2013 are voluntary, partly because many employers don’t want to commit to any additional benefit costs with the uncertainty of where health care is headed. This means that employees still need to decide whether to opt in and pay the premium.

Five factors driving the “voluntarization” of benefit programs include:

 1. Many employees’ preference to get their benefits at the worksite.

 2. Employers’ desire to stabilize or reduce their benefit (mostly health care) budgets but maintain a robust benefits program.

 3. Carriers and distributors have increased their marketing focus on voluntary plans in response to employer demand.

 4. New and better technology is available to support the sale and administration of voluntary benefit programs, making mass customization possible (e.g., private exchanges).

 5. There is a dwindling number of insurance agents available to meet with individuals one-on-one to discuss protection needs.

Historically, most disability plans were chosen and paid for by the employer and all eligible employees were automatically enrolled. Even today, most employees covered by group long term disability insurance are in employer-paid plans. But that is slowly changing. As more employers adopt voluntary programs, it is noteworthy that typically only 40 to 50 percent of the employees sign up for that voluntary disability benefit-potentially leaving half or more employees unprotected.

Many employers that currently offer disability benefit programs have put them on autopilot in order to focus on ACA compliance. But, at least so far, employers don’t seem to be terminating disability plans, as some predicted would occur, but few are adding new plans.

Most Underestimate Their Risk of Disability

The Council for Disability Awareness’ Disability Divide Research series, conducted with employees, financial advisors and human resource benefit professionals, revealed that employees underestimate their odds of experiencing a disability that will prevent them from working for an extended period of time.

Although the Social Security Adminis­tration reports that about one in four 20-year-olds entering the work force today will experience a long term disability during their working career, most wage earners are in denial that it could ever happen to them.

At this intersection of the employees’ underestimation of their disability risk and the trend toward more income protection plans offered on a voluntary basis lies a critical educational challenge.

Many workers’ incomes are not protected today, and many others are protected only because their employers choose to provide and pay for long term disability insurance programs. Some have protection, but not enough, which can lead to a false sense of security.

Their advisors-agents, brokers, benefit consultants and human resource professionals-are responsible for helping keep a focus on income protection because disabilities will not stop happening just because everyone is worried about complying with the ACA. As relentlessly registered by CDA’s America’s Disability Counter (www.disabilitycounter.org), a working age American becomes disabled every seven seconds.

In unpublished data from CDA’s Disabil­ity Divide (advisor research), just 10 percent of the surveyed individual advisors thought their clients fully understood or knew the key points about the disability insurance plans offered by their employers.

In the employer version of the Disability Divide research report, fewer than half of the human resource benefits experts surveyed thought their employees fully understood or knew the key points about their companies’ disability insurance plans. And only 26 percent of those same human resources professionals thought their employees were adequately prepared to withstand the financial impact of a disability. Somewhat ironically, those same benefit experts also overwhelmingly identified themselves as the key source of their employees’ information about their disability risk and disability insurance benefits.

Education Is Key

As the responsibility for benefit decisions shifts to employees, information and resources are needed so that they can make informed, fiscally-sound choices. In particular, many employees have a limited understanding of disability and disability insurance, so educating employees about their disability risk and the consequences of disability is very important to help make income protection an essential and obvious risk management choice. Many studies demonstrate that when employees understand their benefits, they appreciate them more, they have higher job satisfaction, remain with their employers longer and are more productive.

As employers, advisors and American workers continue to navigate uncharted waters ahead, one thing is clear: Everyone will benefit from protecting incomes from the impact of a disabling illness or injury.

Footnotes:

 1. Department of Labor, Bureau of Labor Statistics, the average American worker’s pay in August of 2013.

 2. U.S. Department of Housing and Urban Development, September 25, 2013.

 3. Fidelity Investments, June 2013. www.fidelity.com/inside-fidelity/employer-services/fidelity-reports-record-gains-for-401-k-savers.