Making the most of Disability Insurance Awareness Month

It is May, and time for Disability Insurance Awareness Month (DIAM), the marketing campaign used by many agents and advisors to raise awareness about the importance of income protection for their clients and prospects and encourage them to consider disability insurance as part of their financial planning.

Many industry studies have highlighted the dire need for income protection among American consumers. For example, the 2024 Insurance Barometer Study, conducted by LIMRA and Life Happens, showed that 46% of U.S. adults said they need DI insurance. Yet fewer than 1 in 5 said they have it, and LIMRA estimates that true individual ownership may be far less. This does not include coverage they may have obtained through work.

Why many lack DI insurance protection

Lack of knowledge about DI insurance could play a big role in explaining why so many consumers do not have this vital protection. According to LIMRA, just 16% of adults said that they are very/extremely knowledgeable about disability insurance. This signals a significant need for education about disability coverage, not only on the individual level, but within the workplace as well.

Also, fewer than half of employees believe they understand disability insurance somewhat or extremely well. LIMRA said that what this ultimately shows is that the industry can do more to better educate and communicate the need for disability coverage, the value it provides, and the risks of not having coverage.

Additional reasons for low ownership levels

Disability insurance might appear unnecessary when you are young and healthy, added Jessica Majeski, wealth management advisor with Northwestern Mutual, in explaining why so many consumers do not have DI insurance. However, she pointed out, there’s a nearly one-in-four chance that 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.

“The harsh reality is that if folks get sick or face an injury and their paycheck stops, recurring bills like their rent or mortgage, car payment, and more, will keep coming in,” Majeski said. “Disability insurance can help provide an income stream, allowing them to maintain payment of these essential bills. Financial security is a combination of both building and protecting wealth. While people take steps to grow their wealth, they often neglect to protect the income they already rely on -- the very income that enables them to build wealth over time,” she said.

Overcoming the challenges in selling DI insurance

As agents and advisors attempt to sell DI insurance to their clients and prospects, they often come across prospects with common misconceptions about disability insurance, which often prevent some of them from obtaining the product. For example, Majeski said, it is often seen as a “nice-to-have” versus a “must-have” product. Therefore, unfortunately, many workers (including those who are younger and healthier) aren’t considering that a serious illness or injury could prevent them from working, since it’s just not top of mind.

“When I’m talking with a client,” Majeski said,” I often relay that your earning potential is one of your greatest assets; so, why not safeguard it in the same way you would protect your home or car?”

Showing folks the benefits of a comprehensive financial plan – one that incorporates insurance, investments and annuities – and how they are protected when unexpected challenges happen, can help overcome obstacles, she explained. “Clients rely on us as their financial advisors to guide them on the path to achieve financial security,” she added.

Taking part in DI Awareness Month

As agents and advisors participate in Disability Insurance Awareness Month, it’s Important for them to continuously help clients understand how disability insurance could fit into their financial plan, said Majeski. “I also liken back to our philosophy at Northwestern Mutual, how everything we do is designed to help our clients become more financially secure.”

In addition to education around disability insurance and the impact it has on a holistic financial plan, advisors should keep looking for ways to simplify the process for their clients to obtain disability insurance, Majeski said. “It’s important we’re offering clients a simple and fast way to obtain this coverage,” she added.

 

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