Ok, Enough Already...

Disability Income is not expensive - even compared to Life Insurance.

If you happen to be one of the many advisors that I speak with who think that Disability Income is expensive, I would like to take this opportunity to provide you with some information that I hope will alter your opinion, and encourage you to make more of a consistent effort to speak with your clients about the value of protecting their entire income by speaking about both Disability Income and Life Insurance.

Let me start by explaining some of the reasons for the misunderstanding in the marketplace.

Disability Income is generally promoted in terms of monthly income protection.

For the purposes of this article, I will use as an example: $2,500 per month, Male, Age 30, Occupation class of a Consultant, anda 4 month elimination period with benefits to age 70.

With these assumptions, the traditional way of presenting it would say:

1. The injury portion of this benefit costs $23.75 per month for $2,500 of monthly benefit.
2. Add the illness, and it comes to $64.83 per month for $2,500 of monthly benefit.

It's no wonder it is considered expensive if that is the way it gets presented.

How about if we present it a little differently...

Instead of $2,500 per month, why not illustrate the total potential benefit of the coverage. $2,500 per month from age 30 to age 70 which happens to be $1,200,000. I recognize that the nature and duration of every claim is different but what's wrong with illustrating the total value of the protection in the event your client may need it. I cannot tell you how many claims I see that are now well beyond 60 months of payments with no recovery in sight.

So instead, present it as:

1. $23.75 per month for up to $1,200,000 of potential injury protection between now and age 70, and
2. $64.83 per month for up to $1,200,000 of potential injury or illness protection between now and age 70.

And for comparative reasons with our life insurance providers, let me ask you to look up the closest thing that you can find to a 40 year term life insurance product on a 30 year old male non-smoker for $1,200,000. And if you can't find anything for 40 years, then factor in the increases in the monthly costs at each term renewal until you get coverage to age 70.

I can assure you that it will not be anywhere near $64.83 per month. And the risks are quite different as well in that the risk of disability vs. premature death is significantly greater at all ages - 4 times more in your 30s,3 times more in your 40s, and 2 times more in your 50s..

You should be able to do the same thing with many other forms of insurance such as $1,200,000 of commercial, home, or even car insurance - if you happen to drive a supercar...

Not likely something you are going to find for $64.83 per month.

So is Disability Income expensive?

I guess it all depends on your perspective.