The Risk and Consequence of Disability: Awareness, Need, Planning, Responsibility and Opportunity

The Risk and Consequence of Disability:Awareness, Need, Planning, Responsibility and Opportunity

Barry Lundquist, CLU – President

“Raising Public Awareness About Disability”

www.disabilitycanhappen.org

Twin Cities DI DayOctober 22, 2009

Today’s Discussion

• Environment

• Disability Facts, Perceptions, Misconceptions

• CDA Refresher: Background, History, Overview

• CDA tools (What’s in it for you?)

• What’s New at CDA? (What’s in it for you?)

• Monica’s Story

• Call to Action: How can you help?

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Environment

www.disabilitycanhappen.org

The Disability Insurance Environment…

…is evolving…lots going on:

• Health care costs… Health care debate

• Shift to consumer driven benefits

- Decision making shifting

- Costs shifting

• Demographics

• Increasing incidence of disability

• Depleted savings and retirement accounts

- Workers embracing security

• Can government fulfill its promises?

- Let alone take on more?

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Disability: Facts, Perceptions, Misconceptions

• 54.4 million Americans reported some level of disability in 2005; roughly 1 of every 5

• Three out of 10 workers between 25 and 65 will experience a Disability of 3 months or longer

• One in 7 workers will be disabled for five years or morebefore retirement

• The average long-term disability absence lasts 2.5 years

• The chances of a 32 year old becoming disabled prior to retirement are 3.45 times greater than the chance of dying.

• Over 80% of physicians have disability insurance protection;what do they know that others don’t?

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Sources: U.S. Census Bureau, Commissioners Disability Table, 1998; Commissioners Individual Table A; Journal of the American Society of Chartered Life Underwriters; Social Security Administration Fact Sheet January 2007, UNUM

Disability: Facts, Perceptions, Misconceptions

From CDA’s 2007 Disability Awareness Study:

• 90% of workers grossly underestimate chances of becoming disabled & potential length of disability

• 85% express little/no concern about becoming disabled

• 64% unaware of disability impact on 401(k) contributions

• Women are more aware of the risks, but less prepared than men

6Source: CDA’s 2007 Disability Awareness Study

80% of workers who have planned financially for disability are confident about their ability to maintain their current lifestyle if a disability strikes.

Disability: Facts, Perceptions, Misconceptions

• 58% of adults say that they are covered by disability insurance; only around 35% actually are covered

• 71% of workers say it would be very or somewhat difficult tomeet their financial obligations if next paycheck were delayedfor one week

• 70% of the private sector workforce has no long-term disability insurance

• 66% of agents say because clients don’t ask = why they don’tsell disability insurance

7Sources: JHA, National Payroll Week 2008 Getting Paid In America Survey, Social Security Administration, LIMRA

Disability: Facts, Perceptions, Misconceptions

• 53%: ability to earn a living is most important contributor to financial security

• 86%: say workers should plan in their 20s and 30s for incomelimiting disability

• 82%: express concern about how they would pay bills if disabled

• 62%: don’t mention earnings as part of financial planning

• 54%: never discussed disability planning, how they would pay bills, etc.

• 57%: have not discussed how to manage loss of income and have no plan

8Source: CDA’s 2008 Worker Disability Planning and Preparedness Study

From CDA’s 2008 Worker Disability Planning and Preparedness Study:

“Cash is nice, but…”Employees value these benefits even more than cash.

Cash

Source: Sun Life Financial Voluntary Products Survey, 2009http://www.sunliferesearch.com/

Short-Term Disability

Life Insurance

12.9

Dental

22.0

401(k)

21.9

Long-Term Disability

Long-Term Care

Vision

14.5

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Disability: Facts, Perceptions, Misconceptions

Disability Facts, Perceptions, Misconceptions

www.disabilitycanhappen.org

Disability - a neglected risk… …overshadowed by health, longevity, pre-mature death risks

Lack of public awareness & dialogue about disability… …trends, financial impact, resources, healthy lifestyles

Slow response to a new era of personal responsibility… ...workers are increasingly in the risk business …trend toward consumer driven benefits…choice and cost …most not adequately informed or preparing

The need for a credible information resource… …help the public understand disability risks and consequences and and the value of prevention, planning and protection

CDA was established by Disability Insurance leaders concerned about lack of public awareness and understanding

--- CDA was chartered as a non-profit corporation in 2005 ---

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What is The Council for Disability Awareness?

1) the growing likelihood of disability occurring among the working population

2) the financial hardship that disability can cause wage earners and their families

3) the value of prevention, planning responsibly and being prepared in case a disability prevents one from earning a paycheck

A disability insurance industry “public service” dedicated

to raising public awareness about…

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• CDA is about:

• Educating, communicating and raising awareness

• Helping workers, employers, advisors, family members, media and any interested others understand the risk and impact of disability

• Helping workers avoid disability where possible

• Helping workers plan appropriately for the possibility of an income limiting disability

• CDA is not about:

• Selling

• Product

• Lobbying

A rising tide lifts all boats… ~ John F. KennedyA rising tide lifts all boats… ~ John F. Kennedy

What is The Council for Disability Awareness?

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What is CDA Trying To Achieve?

1. Informs wage earners about the realities and financial consequences of becoming disabled and the need to plan accordingly

2. Gets the media’s attention about growing risks of disability

3. Encourages more advisors & employers to educate employees about disability risk management and planning

4. Establishes CDA as “ the credible resource” for information about disability awareness and preparedness

5. Institutionalizes “disability financial planning” - equal status with estate, medical, investment and retirement security planning

Conduct a public awareness campaign that:

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ThanksThanks To Our To Our CDA Member Companies…

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CDA Refresher:Background, History, Overview

www.disabilitycanhappen.org

CDA Resources and Tools

CDA Develops and Distributes Tools for:

• Employees

• Employers

• Advisors

• Media members

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CDA is looking to carry out its mission of raising disability awarenessamong working Americans by communicating directly with workers,but also by leveraging channels such as advisors, employers,the media, and insurance companies.

CDA is looking to carry out its mission of raising disability awarenessamong working Americans by communicating directly with workers,but also by leveraging channels such as advisors, employers,the media, and insurance companies.

Available at www.disabilitycanhappen.org:

• Disability Facts and Statistics

• 5 Questions Every Worker Should Ask

• Disability Awareness “Quick Quiz”

• Disability Planner

• Financial Security Plan

• Income Replacement Benefits Inventory

• Healthy Lifestyle Tips

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CDA Resources and Tools

CDA Resources and Tools (cont.)

Available at www.disabilitycanhappen.org:

• Disability Studies and Surveys

• Long Term Disability Claim Studies: 2005, 2006, 2007, 2008

• Worker Disability – A Growing Risk to Retirement Security

• 2008 Worker Disability Planning and Preparedness Study

• 2007 Disability Awareness Study

• Real Life Stories

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What’s new at CDA?

PDQ – Personal Disability Quotient (March 2009)

Advisor Tool Kit (July 2009)

2008 Disability Claim Study (September 2009)

CDA in the News (Ongoing)

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CDA Resources and Tools (cont.)

What’s New? The PDQ Estimator

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http://www.whatsmypdq.org

Designed to…

1. Engage 2. Educate 3. Empower

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http://www.whatsmypdq.org

Engage: Turn them on by leading in with a different question

http://www.whatsmypdq.org

Educate: Use the PDQ estimator to raise awareness of the risk

PDQ Results Page

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http://www.whatsmypdq.org

Educate: Use the EIQ estimator to show how much is at risk

EIQ Results Page

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http://www.whatsmypdq.org

Action Plans Page

Empower: Turn awareness into action by integrating other tools

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http://www.whatsmypdq.org

What’s New?PDQ Advisor Toolkit - Marketing Materials

Personalize the PDQFlyer; use the PDQ Graphics

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http://www.pdqtoolkit.org

PDQ Advisor Toolkit - Web Buttons

ADD PDQ to Your Web Site

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http://www.pdqtoolkit.org

PDQ Advisor Toolkit - Flyer

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http://www.pdqtoolkit.org

CDA Tools (What’s in it for you?)

www.disabilitycanhappen.org

CDA 2008 Disability Claim Study CDA Member Company 2008 Claim Results

2008 CDA Long Term Disability Claims Review 76% LTD & IDI market share

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154,000,000 covered workers: + 15%

7,430,000 total disabled workers: + 58% (plus 1.8 million spouses and children)

890,000 new disabled workers in 2008: + 46%

2,320,000 applications: + 98%

38.4% approval rate in 2008

Average current backlog: 17 months

Average age: 51

Average monthly benefit: $1064

• 37% increase in rate of disability – 50% increase for female workers

Source: SSA 2007/8 Annual Statistical Supplement.

Rate of worker disability… …continues to rise at an increasing rate…

SS Disability Trends: 1998 - 2008

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SSDI Claim Approval Rate Declining

0

10

20

30

40

50

60

1994 1996 1998 2000 2002 2004 2006 2008

% of SSDI Applications Approved

33Source: www.socialsecurity.gov

Percent of SSDI Claim Applications Approved 1994-2008

0

500

1,000

1,500

2,000

2,500

3,000

3,500

199419951996199719981999200020012002200320042005200620072008

Est. 2009

SSDI Claim Applications vs. Approvals1994-2008

SSDI Applications

SSDI Awards

0

500

1,000

1,500

2,000

2,500

3,000

3,500

199419951996199719981999200020012002200320042005200620072008

Est. 2009

SSDI Claim Applications vs. Approvals1994-2008

SSDI Applications

SSDI Awards

Number of SSDI Claim Applications Compared to Approvals – 1994-2009 (est.)

Source: www.socialsecurity.gov 34

What’s New at CDA?(What’s in it for you?)

www.disabilitycanhappen.org

What’s New? Advisor Tool Kit – New Additions

Advisor Homepage

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What’s New? CDA 2008 Disability Claim Study

CDA Member Company 2008 Claim Results:

156,000 new LTD/DI claims approved in 2008

574,000 existing LTD/DI claimants

$7.9 Billion in paid claims (7% increase)

2008 CDA Long Term Disability Claims Review 76% LTD & IDI market share

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Advisor Toolkit – Graphs and Charts Library

Graphs and Charts from the 2008 Claim Study have been added to the toolkit.

Visitors may download theGraphs and Charts and add them to presentations and marketing materials.More to follow!

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What’s New?Media Outreach: CDA in the News

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Monica’s Story

www.disabilitycanhappen.org

Monica’s Story

Monica had it all by the ageof 37 — a successful career in

the financial field, a wonderful son,and big dreams for the future.

She never dreamt that a disabilitywould change her life forever…

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Monica’s Story

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My Boy’s Haven

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A Canadian’s Dream Abode

Monica’s Story

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Our Prime Minister’s Manor

Monica’s Story

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California Dreamin’

Monica’s Story

46

The Million Dollar Bracelet

Monica’s Story

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Humpty Dumpty Falls

Monica’s Story

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Think Safety First

Monica’s Story

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Life Happens

Monica’s Story

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The Penthouse Suite

Monica’s Story

51

The Outhouse

Monica’s Story

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Jolly’s Follies

Monica’s Story

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Mr. George

Monica’s Story

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Casa Georgie

Monica’s Story

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HUMPTY DUMPTY THE BLONDE

• Humpty Dumpty had a slip and fall and all the king’s horses and the king’s greatest men continually attempted to piece Humpty back together again.

• They tried and they tried with all of their might and always put up such a valiant fight.

• To mend the young broken egg who crumbled like a shell, to piece back together the egg to make whole.

• We honor and cherish your gallant efforts to achieve a life again given to the woman in such dire need.

By: Monica Soltes, April 2005

Monica’s Story

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• "Success is the number of lives that you can positivelychange or affect” ~ Monica M. Soltes

• "Success is the number of lives that you can positivelychange or affect” ~ Monica M. Soltes

Reasons to Invest in and Recommend Disability Insurance:

• For your children, spouse, friends, family and parents

• Consider ‘Disability Insurance’ as ‘Living Insurance’

• Do not risk having shelter, food, clothes, medical care, independence

• Plan that a disability could be a long-term or lifetime high risk exposure

• Share a ‘dramatic’ disability story to encourage planning; being unprepared and becoming disabled is a ‘traumatic’ experience for all

• Become a hero in someone’s life story

Monica’s Story

Call to Action: How can you help?

www.disabilitycanhappen.org

As CDA Succeeds in Raising Disability Awareness…

Risk of “losing your ability to earn a living” is elevated to a most

important risk to protect

Wage earners will be prepared to understand & manage all the

financial risks associated with disability

Benefits decision makers (advisors, employers, employees) will be

better equipped to make best choices and recommendations

Disability Planning will be an essential to every financial plan

“We” will deliver real value to the market place by creating more

personal financial security

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Call to Action:…What Can YOU Do To Help?

• Visit and use the CDA website

• Use CDA tools, data and information – andrecommend them to others

• Discuss CDA: on Social Networking sites, inDI Forums, study groups, etc.

• Tell us what you need to inform and educate wage earners, employers and others – we will deliver!

• If your company(ies) are already supporting CDA – please tell them THANK YOU… and to keep doing it!

• If your company(ies) are not already supporting CDA – please tell them they must… we need all companies to join!

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The Council For Disability Awareness……a Rising Tide Lifts All Boats!

Thank You!

www.disabilitycanhappen.org

Barry Lundquist, CLUThe Council For Disability Awareness

75 Pearl Street, Suite 205Portland, ME 04101

207-774-2634