Why Is Disability Insurance So Important?


LSM Insurance reached on to Jaclyn Nemethy – Regional Sales Director at IA Excellence to get her insights. Jaclyn is known for her thorough knowledge and providing her advisors with exceptional support and training on all the living benefits solutions IA Excellence can offer. She sits on the Advocis Toronto Chapter Board as a Director. She recently attained her CHS designation and is now working towards her CLU designation.

Do you feel as if Canada’s disability insurance market is underserved?

There are 17,802,200 working-age Canadians in Canada*. Currently, about 6 in 10 Canadian receive some type of salary continuance in the event that they are absent from work due to either a physical or mental health issue.**  That leaves over 7,000,000 Canadians that have no short term or long term disability benefit through some type of group plan.  Where is the opportunity?  According to the latest LIMRA study, it was found that there are only 810,000*** Disability Income Replacement policies enforce!  There is a huge opportunity to speak with your clients about disability insurance!

*Source: Statistics Canada, CANSIM, table 282-0008. Last modified: 2014-01-10.

**Source: Disability Management: Opportunities for Employer Action. Conference Board of Canada Report October 2013

*** Source: LIMRA Canadian Individual Disability Income Insurance Survey & Canadian Individual Critical Illness Insurance Survey, Q2 2014.

What are the odds of becoming disabled in comparison to dying?

What would you say to someone who says, “I have disability coverage through my work?”

Group Disability

· Pays a percentage of your gross salary – between 60% to 85%.

· There is always a maximum dollar amount.

· Definition of disability changes after 2 years of claim to “Any Reasonable Occupation”.  You may be forced back to work at a different job than you were doing before the onset of the disability.

· These plans are usually coordinated to make sure that all the benefits you receive are not greater than your normal income.

· Group plans generally terminate when you leave an employer.

At the end of the day, a group disability policy offers a base of disability coverage that should be reviewed by an insurance specialist to make sure that the insured has enough protection in order to cover their major liabilities and expenses. Group plans are not always sufficient coverage for your client’s DI needs.

Why is it harder for blue collar workers to obtain disability insurance than any other professionals?

It doesn’t have to be harder!  Depending on the insurance company you work with, getting disability insurance for the blue collar market does not have to be more difficult.  You should work with disability providers that offer guaranteed renewable products and regular occupation definition within their contracts.  These products are more suitable and easier to qualify for in a blue collar market space. Working with a carrier that offers coverage to everyone regardless of their occupation is key. IA Excellence is one of those companies that has occupation classes ranging from 4A all the way to a C class. There is no occupation that we won’t insure!

Why are so many insurance brokers hesitant to sell disability insurance?

Insurance brokers are very hesitant in selling disability insurance! 

It comes down to 4 main factors:

1.      Price/Budget – Brokers and clients think that disability coverage costs hundreds of dollars per month and therefore decide that it doesn’t fit within their budget.  IA Excellence offers DI to the middle market with our average policy costing only $700 annually.

2.      Underwriting – Disability coverage is more difficult to medically qualify for than life insurance.  This discourages many clients applying for coverage.  With IA Excellence, we have simplified DI options for your harder to insure clients.  Majority of clients will qualify for something within these plans.  No one should be left without coverage!

3.      Claims – Many brokers and clients worry that their provider will not pay the benefit when the client needs it.  At the end of the day, working with a company that has a proven track record of paying claims is most important.  IA Excellence averages over 90% of DI claims being paid year over year.  This is well above the industry average of under 80%.

4.      Knowledge and Understanding – Many brokers feel that disability is a very complex product that they just do not know enough about!  There are a lot of carriers out there that offer a variety of products; How does a broker identify the right product for the client they are working with?  IA Excellence has a team of living benefits specialists across Canada that can assistance brokers to identify the right product for their clients and help them feel confident when presenting the solution! 

What is unique about IA Excellence when it comes to disability insurance?

We make disability a focus.  It is an underserved marketplace that we want to assist our brokers in becoming experts in.

We offer a range of products from underwritten DI to almost guaranteed issue DI.  We also service the hard to insure market for Life and CI.  No one should be left without coverage.

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