Disability Insurance Needs to Take The Modern Workforce Into Account

It’s well-known that people are living longer, but the effect that’s having on people’s time in the workforce is less clear. Longer lifespans are not necessarily leading to more time spent in retirement. Instead, many people are using their healthy years to continue working, so that they can build more wealth.

While working later in life can increase a person’s overall savings, it also introduces new risks that may not be covered by traditional insurance. After all, many disability insurance plans limit coverage to people under the age of 65. That may be a potential issue in a world where people work until they are over the age of 70. Some insurance companies are altering their products to accommodate this new reality. Unfortunately, many individuals either have outdated plans that don’t provide adequate coverage or lack disability insurance altogether. Financial professionals can conduct policy reviews with clients to adjust insurance portfolios in ways that reflect the modern workforce.

A shifting plan

disability insurance needsIn the past, 65 was considered the universal retirement age, but economic changes have challenged this ideal. The aftermath of the Great Recession has been slow to recover, keeping many people on the brink of retirement in the workforce. Analysis from Pew Research Center on data from the U.S. Bureau of Labor Statistics shows that about 18% of people, 65 years of age and older, are working full- or part-time. This is a trend that since tracking began in 2000, has grown steadily.

Concern about inadequate retirement savings motivates many of these people to pursue working later in life, but some people simply like their jobs according to Bloomberg. There is a growing percentage of people who enjoy their careers and plan to work as long as they are physically able. This appears to be correlated to the number of retirees with college or graduate degrees, as studies show that they tend to work longer. It also helps that employer efforts to retain older workers has increased. This “incentive to keep older workers happy” may play a factor in some older workers staying in the force longer.

Changing products

Insurance producers engaging in a policy review with clients who want to work later in life may find they have more options to offer these individuals. Disability that removes a person’s ability to work can be financially damaging at any point in life, and many policies fail to cover older workers. Make sure you know your client’s retirement plans so that they are adequately covered should they decided to work longer.

Editor’s Note: This post was originally published in September 2015 and has been reviewed and updated.

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