If you have clients between the ages of 30 and 55, then income protection is essential to their financial plan. The odds of a disability during your working years are as high as 1 in 4. When clients become too hurt or sick to work, one of their first calls will be to their financial advisor to ask what tool is in place to take care of them and their family. The answer should not be to liquidate assets, tap into qualified plans, or take your chances applying for Social Security.
Instead, a disability policy should be in place to provide a stream of income to help clients continue to uphold their financial obligations and pay for living expenses such as mortgage, food, and utilities. Typically you are able to cover 50% – 60% of your income with higher earners covered at a smaller percentage, but remember that this is usually paid on a tax free basis.
If you have business owner clients, there are several additional threats to consider that can be hedged with disability insurance products. Overhead expense policies reimburse business owners for fixed business expenses to help keep their companies doors open and the business operating in the event he/she is unable to run the day to day operations due to an accident or illness.
A disability buy-out policy funds a buy sell agreement to buy out a disabled business owner to help keep the business value intact and ensure its succession.
Lastly, key person replacement policies provide benefits to the employer to help offset the cost of losing a key employee.
It is your responsibility as a financial advisor to educate your clients about the consequences of becoming too hurt or sick to work, but you do not need to be an expert in disability insurance. Partner with us to help you design comprehensive disability insurance solutions for your clients.
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