Small-business owners are a critical part of the national economy, and their organizations are a fantastic source of jobs for workers. Unfortunately, many of these entrepreneurs lack the insurance coverage they desperately need to protect their organizations from unexpected events.
A new survey conducted by LIMRA reveals that disability insurance ownership among small business owners has been unchanged for the past six years, and a large percentage of small business owners still lack coverage. This represents a massive opportunity for financial professionals who can engage these owners and speak with them frankly about the risks incurred by a lack of coverage.
To fully leverage this information, financial professionals need to understand why small-business owners have been reticent to purchase disability coverage. A frank discussion of these issues and improved consumer education can provide a route to deeper client connections and increased sales.
A serious opportunity
Financial professionals need to understand the enormous potential within the disability insurance market. Currently, more than half of small-business owners lack disability coverage, and that number becomes even larger when you examine individuals who work from home in isolation. A full 63 percent of these owners forego coverage, and the gap in policy ownership is a big opportunity for financial professionals.
For small-business owners, a long-term disability is more than a minor setback. If an owner is unable to work for a few months, it could have lasting ramifications for their business and income. The financial protection offered by disability coverage should be incredibly appealing to small business owners, who are generally risk-averse, according to a study from The Hartford Financial Services Group.
Unfortunately for financial professionals, small-business owners have generally eschewed the protection offered by disability insurance. By specifically targeting the reasons small-business owners don’t purchase disability insurance, financial professionals can engage an untapped section of the market.
What keeps small-business owners away
While there isn’t a single factor that pushes small-business owners away from disability insurance coverage, a general lack of education could be a major issue. Small-business owners simply may not realize the value provided by disability coverage, or carry misconceptions regarding the costs of these policies. Insurance News Net reported on a conference call that accompanied a new study on small-business disability insurance sales, and noted many people overestimate the cost of disability policies.
Not only do these individuals overestimate the cost, but it’s likely they underestimate the possibility of a serious disability occurring. In a new survey conducted by The American College, researchers discovered that more than half of the participants had not researched disability insurance at all. A remarkably high number of people who worked with financial professionals indicated they had not discussed the financial risks and other issues presented by disability.
The need for education
Financial professionals must be proactive about discussing disability insurance with clients, particularly those who are small-business owners. In many cases, people do not realize what types of injuries or issues disability insurance covers. Arthritis is the most common cause of disability, but nearly 100 percent of respondents in the American College survey were unable to identify it as a disability issue.
This knowledge gap puts consumers’ financial well being at risk and is a stumbling block to further disability policy sales for financial professionals. Education surrounding these issues begins with a conversation between financial professional and client. In many cases, the insurance producer will be presenting information that the client has never heard before. Disability issues make a compelling case for coverage, but it is impossible for clients to realize what they need without a professional’s guidance.
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