Plans put disability insurance in reach |
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Will insurers convince us that what happens to our knee bone is connected to our house note?
"My answer is, 'I hope so,'" Purushotham says. "I think people are missing the fact that even a disability that keeps you out of work can really have a huge impact on your finances. They may think, 'Oh my God, if I die, what will my spouse do?' But they haven't yet clicked with the idea of, 'What if I can't work?'"
2 risks, 1 'starter kit'
MetLife takes a different approach to underwriting term life and disability insurance. MetLife bundles its term life and disability insurance policies together. It's not a hybrid; the policies remain segregated (separate applications, underwriting and billing), but they are marketed together with special pricing that starts at $825 per year.
Joe Jordan, MetLife senior vice president for individual
business marketing, calls the bundle a "starter kit" for young people
who want to cover both risks in a cost-effective way. MetLife's
starter bundle pairs a $1 million, 10-year level term policy with
a 10-year, $2,000 a month term disability policy, at a savings of
about 46 percent off the cost of a permanent disability policy with
a benefit period through age 65.
Yearly premiums for the "starter kit" begin at $825 for a 30-year-old male, $1,200 for a 40-year-old male. Those rates will creep up annually during the 10-year term to roughly the next entry level. At the end of the term, you have options: renew at the next level (another medical exam is required), convert to a whole life product with guaranteed insurability or walk away altogether.
Jordan says that because the policies remain separate, consumers can easily "buy up" on the benefit amounts. But bear in mind that the disability benefit amount cannot exceed 60 percent of your monthly income.
MetLife's goal was to simplify a very complex product, both for sales agents and consumers. Jordan says if agents can sell these starter kits to young clients, they can upgrade them to more robust policies once they've had the opportunity to "kick the tires."
"It just makes it easier and more convenient to get insured," says Jordan. "The beauty of it is, later on, they have the ability to convert this without evidence of insurability."
Jordan says that so far, Americans have done little
more than cross their fingers and hope for good health and long
life. On average, we have just 2.5 times our income in reserves
for the unexpected, while, with the help of insurance, we can have
a much safer 10 times our income available. All it takes is acknowledging
the risk of disability and insuring for it.
"Denial is the big issue. People are in denial of the fact that they're going to die or get sick. It's not something they want to focus on, much less spend their money on. But if you go without either of these, you're exposed. Your house of cards could tumble -- fast."
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