Disability insurance still a hard sell for brokers

Though adults know it would be disastrous to lose their income due to a disability, it seems only a minority of them actually insure against that risk. More than three-fourths of the 2,103 adults polled by Northwestern Mutual Life Insurance Co. said that they be “devastated” if they were disabled and unable to work. Thirty percent said they had coverage through their employer and only 10% have actually purchased individual disability coverage. “Right now people see the vulnerability of their income,” said Stephen Frankl, director of Northwestern Mutual’s disability insurance unit. “It’s incumbent on brokers and advisers to make sure clients have the opportunity to do something about it.” The lower rate of insurance indicates that the thought of becoming disabled does not carry as much dread as other catastrophic events, Mr. Frankel said. Demonstrating the near-universal awareness of the risk of a catastrophic fire, 88% of the respondents said they would be devastated by a fire and nearly three out of four carry some sort of insurance covering fire damage. The risk of a car accident wasn’t quite as worrisome, as only 49% of those polled felt that this would be disastrous. Still, 88% of the surveyed individuals have bought car insurance — not surprising since such coverage is mandatory in many states. Individuals are more likely to brush off disability concerns because they believe their odds of becoming disabled and unable to work are low, Mr. Frankl said. “Many people believe that disability won’t happen to them, or believe that employer- or government-sponsored disability plans will cover their needs,” he said. “But three in 10 of today’s 20-year-olds will become disabled before reaching age 67, and people need to ask themselves whether they are equipped to handle the emotional and financial consequences of that disability.”