Beware of the Disability Income E&O Lawsuit

Fifteen years ago, the DI rules were intuitive. Physicals and blood work were the status quo and those with quadruple bypasses or diabetes could run marathons easier than they could qualify for disability income insurance.

Flash forward to 2010

Heart patients, diabetics, alcoholics, drug addicts and antidepressant users now receive disability income insurance coverage every day. And, they're doing it honestly - with no physical examinations and no blood work. Moreover, they're getting quality disability income coverage with short elimination periods; Own Occupation definitions; survivor benefits; hospital indemnity benefits; home health care benefits and all the other bells and whistles they might like.

The old rules no longer apply - in fact they're downright counterintuitive.

Brokers' books are full of clients who previously would have been declined, but today, with the right partner, would be accepted. Why worry about these people? For one, it's the right thing to do and for two, it earns extra commission. But the most compelling reason of all may be this: Errors and Omissions. Insurance brokers who don't offer their clients the coverage they need can be sued if a client suffers disability and is not adequately protected. This is a bit like a doctor's requirement to keep her license current - brokers are obligated to be informed of available coverage and to protect their clients with the best options available.

With that duty to be informed in mind, here are the facts:

One-third of all people between the ages of 30 and 64 will become disabled sometime in their lives. (Source: Health Insurance Association of America)
At age 32, the chance of being disabled for 90 days in 6.5 times greater than the chance of death. (Source: National Association of Insurance Commissioners)
75 percent of disabilities are caused by an illness rather than an accident. (Source: Commissioner's Disability Table)

Most Americans readily understand the need for life insurance.

Now, with these facts and statistics, disability producers can easily illustrate that disability income insurance is more important than life insurance for the lion's share of working Americans. Many mistakenly believe that they are adequately protected by Social Security or Long-Term Disability plans. However, the income from these plans is often taxable and can be subject to long waiting periods. In fact, many plans leave income gaps as wide as 72 percent of gross income. Most people won't relish the thought of living on 28 percent of their gross pay!

Now is the time to take another look at disability income insurance!

Forget that the market for medically impaired disability income insurance is huge. Forget that the commissions are generous. Forget that this is an amazingly easy sale when one presents factual data about the risks involved. And remember this one simple truth: Insurance professionals have a duty to protect their clients. Now that you know what's available, don't you owe your previously declined clients a phone call?

Daniel C. Steenerson, CLU, ChFC, RHU, is the President of Disability Insurance Services, headquartered in San Diego, Calif. For more information about disability insurance and to obtain free sales tools and articles, visit http://www.diservices.com.