WINTER 2021 15
People respond to both ‘ flesh ’ and ‘ bones ’ — stories are the ‘ flesh ’ and data is the ‘ bones ,’ and advisors need to provide clients with both .
Sara Samuels
The Disability Disconnect
One important area where coverage may be falling short , according to the survey , is long-term disability insurance , and there may be a critical knowledge gap . The MDRT survey reported that 69 % of Americans underestimated the chances of a 20-year-old acquiring a long-term disability before retirement . Only 20 % know that the chances of that happening are one in four .
In an unexpected finding of the survey , Americans with financial advisors are not more informed on this topic than Americans without financial advisors . 75 % of survey respondents with advisors underestimated a 20-year-old ’ s disability chances of disability , compared to 69 % of respondents without advisors and 60 % of respondents who formerly had financial advisors . None of those differences were statistically significant .
This worries Samuels , who sees long-term disability insurance as the most important policy the average worker can have .
“ Consumers — especially those with financial advisors — should be more informed ,” she said . “ As advisors , we talk about opportunities to educate our clients , but statistics like this demonstrate we have a responsibility to educate too .”
Only 27 % of Americans who said they purchased new insurance policies since March 2020 say they were motivated by concerns about potential future disabilities or long-term care needs . But Samuels says that all working adults should have long-term disability insurance , especially since many workplaces don ’ t cover their employees ’ entire salaries with employerprovided policies .
“ Long-term disability insurance protects your greatest asset as a working adult — your ability to earn income ,” Samuels said .
Baker Ronn agrees . “ Since we don ’ t know the long-term impacts of COVID-19 , and likely won ’ t know for many years , disability income becomes even more important ,” she said . Baker Ronn shared that she purchased a disability policy for her daughter , who had a mild case of COVID-19 .
“ If there are any long-term effects , I ’ m happy that she has the coverage ,” Baker Ronn said .
The MDRT survey was conducted before the Biden administration announced that “ Long COVID ” symptoms may qualify as disabilities under the Americans with Disabilities Act .
Using Data with Clients
Many advisors like to use anecdotes and personal stories to motivate clients into protecting themselves and their families . But data can be a powerful motivating tool for clients on its own , especially if clients ’ own expectations are not aligned with the cold , hard math .
“ People respond to both ‘ flesh ’ and ‘ bones ,’” said Samuels . “ Stories are the ‘ flesh ’ and data is the ‘ bones ,’ and advisors need to provide clients with both .”
Data also helps educate advisors about their clients in ways that may not become apparent in conversation , and this can reveal new opportunities to educate clients in turn .
“ As we all know in the insurance industry , money doesn ’ t buy insurance . Good health does ,” said Baker Ronn . “ Seeing these statistics should instill a greater sense of urgency in all advisors to bring up these important topics with clients .”
Additional DI Facts
1 in 4 of today ’ s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age per the Social Security Administration . Most frequent reason consumers have for not buying disability insurance is lack of knowledge with only 1 in 5 Americans saying they are very knowledgeable about disability insurance . According to the Bureau of Labor Statistics , workers ’ compensation only covers time away from work if the disabling illness or injury was directly work-related . In 2019 , less than 1 % of American workers missed work because of an occupational illness or injury . In a recent LIMRA study , consumers were asked how much more important certain employee benefits are since the pandemic . 46 % said long-term disability benefits were more important and 43 % said the same about short-term disability benefits .