No One Plans on Being Disabled

It is not uncommon for many of us to trick ourselves into believing that we don’t need individual disability income insurance or can put off such a purchase until we are a bit older and financially secure.

Sometimes we tell ourselves that there is no need for disability insurance in our particular case. Sure, it is possible that certain individuals can survive on their current net worth, but for the vast majority of people they simply cannot maintain their current lifestyle with current assets. Other times we tell ourselves that a spouse can instantly step in and fill the financial void.

Some individuals are in no hurry to purchase disability insurance. What many forget is that it takes more than money to buy individual disability insurance, it also takes good health. We are all one accident or illness away from being disqualified for coverage. No one plans on being disabled.

A common objection to purchasing disability insurance is the lack of funds. It should be said that insurance brokers are not here to cause an individual a financial hardship but to solve a financial problem. No one wins when a client must cancel a policy because they can no longer afford the coverage. The premium of a disability policy is based in part on the policy design, and there are many designs to fit many budgets. Knowledgeable disability insurance brokers will design a policy that reflects 2%-3% of an individual’s income. If the client believes the policy is still too expensive the broker can offer plans with less benefits but are more affordable. Purchasing a policy that at least covers the mortgage and utilities is a good starting point.

Sometimes, though rarely, individuals have no confidence that the disability policy will pay when a claim occurs. The reality is that it is unheard of for an insurer to not pay a valid claim. Insurance companies are well aware of the provisions in their contracts. There are state and federal laws that dictate what is and what is not allowed in these contracts. To avoid most misunderstandings though a broker will be wise to offer policies with the broadest and most appropriate disability definitions the client can afford (the broader the definitions of disability the more costly the policy may be.)

It is very important that the broker discuss with the client the policy provisions such as the elimination period, the benefit period, and the definitions of what is considered a disability. Once a client understands the provisions of the contract the more likely the objections fall to the wayside.

Lastly, once an individual understands the risks of being uninsured and the costs involved when insured versus not, most come to the conclusion that an individual disability insurance policy is a wise investment in their future.