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Convincing Your Clients of the Importance of Protecting their Paychecks
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Tuesday, April 1, 2014

Once we get past the age of perceived invincibility, it’s fairly easy to see the benefits of health insurance. For anyone purchasing a home with a bank-financed mortgage, homeowners insurance is simply a requirement of obtaining the loan. Even life insurance seems like commonsense to many of our clients after the first precious bundle is brought home from the hospital. But for some reason, buying disability insurance doesn’t come quite as naturally, despite its clear benefits.

It’s important to have a convincing and understandable message when talking to your clients about disability insurance, particularly because purchasing it simply isn’t as widely accepted as a cultural norm as other types of insurance. Essentially, you have more of an uphill battle with this one.

Emphasize the larger financial picture.

Even if your clients are retirement savvy and have college funds set up for their toddlers, it’s possible that they haven’t considered that without income, there are no other financial plans. A comprehensive disability plan will protect the one component of their financial plan that makes the rest of it possible.

Some employers offer group disability insurance, but make sure your client understands the limitations of the group plan and how their long-term finances would be affected if they were to lose their income for an extended period of time. Would there be enough to live on? Would they be able to continue to fund retirement accounts and college savings plans? Does the plan have a graduated formula that allows for income growth as your client ascends the company ladder?

Discuss the risks but stay focused on the benefits.

In many ways discussing disability insurance can be similar to discussing life insurance with your clients. No one wants to think about their own death—and neither do they want to consider the possibility that they could be disabled to the point of not being able to work. This alone may stop some of your clients from purchasing disability insurance.

Help them see the risks but focus primarily on the benefits. When adequately insured, their family would be able to maintain their current lifestyle, alleviating an incredible—and wholly unnecessary—burden. Point out that the group insurance offered through their employer may not be adequate for maintaining their current lifestyle, may require them to take positions outside their field if they become disabled and could be short-term disability insurance rather than the more protective long-term.

Make sure they understand how much coverage they need.
When discussing the amount of coverage your clients will need, remember that 65% of gross income is considered the bare minimum for adequate coverage. If tragedy strikes and disability insurance is needed to maintain financial solvency, surely your clients will appreciate that the majority of their paychecks have been protected.

Remind them of the potential loss of their lifetime earned income, which could be significant if they are young and just starting their careers. Even in mid-career, income loss could easily be in the multi-millions. Not only would a lengthy or permanent loss of income affect their day-to-day lives but also their retirement.

While it may be uncomfortable for your clients to imagine, it’s important for them to understand that becoming disabled in a way that they are unable to work in their current field is actually more likely than premature death. It is our job to help our clients understand that comprehensive disability coverage is just as important as owning a good life insurance policy.



 
 
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