The Disability Insurance Litmus Test

LitmusAs an insurance professional, you make a living serving your clients’ best interests. You assumedly make it your primary duty to financially prepare your clients for the many varied obstacles life may bring. Harnessing your years of experience of recognizing and indemnifying risk, you more than likely prescribe medical insurance, life insurance and most importantly disability insurance.

Unless you specialize in the retiree market, most of your client base is made up of employed persons whom earn a steady paycheck. They depend upon that regular income to support their families and their lifestyles, no matter how extravagant or modest. The average American, and perhaps some of your prospective clientele, would be completely unprepared in the unfortunate case of disablement. Most Americans lack significant liquidity in their savings and accumulated assets, and disability insurance is the best available economic safeguard. Whether working full or part time, your clients deserve sufficient, sound financial protection of their incomes, no matter age, occupation, income level or health history. Every working American should have income protection in the form of comprehensive, long-term disability insurance.

But the true disability insurance litmus test is not whether you appropriate income protection for your clients, but to what level they are protected. According to the U.S. Bureau of Labor and countless departments of insurance, the recommended minimum level of income protection to maintain a semblance of previous lifestyle is 65% of one’s monthly income. If you were to poll every working person in this country, only an insignificant fraction of those would be properly insured at or above that 65% figure. 65% is the key.

Most traditional disability insurance, whether it group or individual coverage or a combination thereof, has set limits on protection and participation levels at the 50% to 60% mark. That figure drops even more when carriers underwrite high-income earners. We must also consider the adverse taxability issue of employer-sponsored LTD benefits. Income protection levels in the U.S. are not sufficient, and are a travesty to working professionals. We must prescribe more disability insurance. We are doing our clients a disservice if they aren’t covered at 65% of their income, and if they have taxable group insurance, they need coverage more in the range of 75%.

Petersen International specializes in providing excess and supplemental disability insurance on an individual or group basis. Our goal is to either participate with existing disability policies or provide base coverage in traditionally uninsurable situations to provide our producers’ clients with coverage of at least 65% of income.

We remind you to sensibly and appropriately advise your clients of the potential familial economic disasters associated with disablement, and we can assist you in acquiring them disability income insurance up to and above 65% of income. Contact Petersen International at (800)345-8816 to hear more about the magic of 65% and its significance to your clients’ futures.