For all of the joking around we do in this episode, we actually like disability insurance a lot. What we're a bit annoyed with is the fact that there are a great many agents, insurance marketers and insurance companies that love to talk about the underserved disability insurance market.
Now, they base that on the fact that so few people actually own an individual disability insurance policy.
But is the market really underserved?
Yes there are undoubtedly people out there that should have a DI policy and don't have one. That exists in every market and is not exclusive to the insurance world.
There are certainly some people who work in particular occupations who should definitely have it. Physicians as an example should most certainly have it but in our experience most of them do.
For most people that spend a majority of their time sitting behind a desk, it's a much tougher product to own and for an insurance salesperson to justify the expense.
The product becomes much more important when you are more specialized in what you do. To the average American worker, there is no specialized skill behind what he or she does, so he or she tends to devalue his or her wage earning opportunity
This doesn’t mean they are right. They probably should own the product, but it can be tough for people to justify the cost and to find the value in paying the premiums (which aren't insignificant).
Working with Disability Insurance is Tough
There's a big reason that not too many agents focus on writing disability insurance. It's really difficult to sell to prospective clients and then you learn that part is just the first step.
How do I put this delicately? Underwriting sucks. Yes it is arduous, extensive, and takes a while. Additionally, you will be asked even more detailed questions about any health issues you've had and you will be asked to open up your financials to the underwriting process–tax returns, income statements etc. Not a process that most people relish.
What's more challenging is that most people are way over confident about their health and they don’t appreciate DI until after they need it. Of course at that point, like any other type of insurance, it's not possible to purchase.
Despite all the downsides and difficulties, we think it's a product you should own.
A few things to consider:
– 1 out of 3 working men experience a disabling event for at least two years throughout their working carriers and 1 out of 2 women experience the same
– 50% of all personal bankruptcies are caused by some sort of disability
– 50% of all mortgage foreclosures are caused by disabilities