1. Disability Insurance – Social Security Benefits & Health Care Reform Course Number: Craig Gussin, CLU

2. Who is the largest Minority in America??
Question for you!!
Who is the largest Minority in America??
Just ask the question and say the answers will surprise you, it sure surprised me.

3. Answer It’s the 51 Million Americans that are currently disabled!!
(Source: the 2009 U S Census Bureau).
As of Oct 19, 2012  there are 305,652,454 people living in the U.S.
The 51 Million disabled Americans is about 17% of the population

4. What is Social Security Disability Insurance (SSDI)??
SS Disability Insurance is insurance against loss of earnings due to a significant work incapacity. It is part of the Social Security program. Workers earn disability insurance protection by having worked and paid Social Security taxes.
This is an overview of what SSDI is and how it is paid for

5. How to qualify for SS Benefits
The test of being unable to work is very strict: Benefits are paid, after a 5-month waiting period, only to individuals who have a medically determinable physical or mental impairment that precludes any substantial work activity and that is expected to last at least 12 months or result in death in less than a year.
You must be totally disabled for 5 months before you can apply for SSDI and to qualify you must have a Dr report stating that you are totally disabled for at least 12 month or wont live past 12 months.

6. How to qualify for SS Benefits
Applicants meet the test only if their impairments are of such severity that they are not only unable to do their prior work, but also unable – considering their age, education, and work experience – to engage in any other substantial gainful work that exists in the national economy.
To qualify you must be Totally disabled and unable to work in Any Gainful Work.

7. SS Disability Benefits
SSDI has been part of the Social Security program since the 1950s, and provides insurance against loss of earnings due to the onset of a significant work incapacity. Currently, 8.8 million disabled workers receive DI benefits. Although benefits are modest they average $1,130 a month in January 2013.
SSDI has been here since the 1950’s and is available to workers who are totally disabled. There are almost 9 Million people collecting benefits.

8. Disabled wage earners family members can also collect SSDI
In January 2013, besides the 8.8 million workers that received disabled worker benefits, 1.9 million of their children and 0.2 million of their spouses. People who receive benefits are a subset of the 29.5 million adults ages 21 to 64 who reported having some type of disability in 2010.
Family members of people on SSDI can also collect benefits.

9. New SS Disability Insurance applications
New SS Disability Insurance (SSDI) applications increased from 2.3 million in 2008 to 2.8 million in Two of the major drivers of the increase are the poor economy/high unemployment rate & the aging of America’s working population.3
(Source: SS Administration, Disabled Worker Beneficiary Statistics, ssa.gov)
The number of new SSDI applications have increased each year because of 2 main reasons:
-The poor economy/ high unemployment (if you cant find a job and have no $$, some people will claim they are disabled)
-The aging population

10. Social Security Disability on the Verge of Insolvency
Congress estimates the trust fund that supports SSDI will run out of money in 2016.
About two decades later, Social Security's much larger retirement fund is projected to run dry as well.
There are almost 9 million people collecting SSDI and the trust fund that supports it will run out of $$ in 2016.
Social Security will also run out on $$ in 2 decades.

11. SS Disability Benefits
The SSDI trust fund's reserves is projected to be depleted in 2016, after which tax revenues coming into SSDI would cover only about 80% of scheduled benefits.
With almost 9 Million collecting SSDI and depending on this money to live, what will they do when their SSDI benefit is reduced in 2016??

12. SS Disability benefits
Disabled workers and their families rely heavily on SSDI benefits. Nearly half of beneficiaries (46%) rely on SSDI benefits for 90% for more of their total income. Most people receiving SSDI benefits are in their 50s or early 60s, and many have life-threatening conditions. SSDI benefits are a critical lifeline for disabled workers and their families.
Almost ½ the people collecting SSDI rely on it as their main source of income.
Many of people that are receiving SSDI are in their 50’ and 60’s or have life-threatening conditions. What will these people do if their SSDI income is reduced?? They will have to find other Government programs to help them, but will there be any??

13. Did you know??
48% of VA home foreclosures are due to a disability (Source: FHA, Disability Income concept,1998).
In December of 2010, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits.
Source: Social Security Administration, Disabled Worker Beneficiary Statistics, ssa.gov
Almost ½ of all VA foreclosures are due to a disability
Over 2.5 Million people collecting SSDI are in their 20’, 30’s and 40’s.

14. The top reasons every working American needs to protect their paycheck
Less than 5% of disabling accidents and illnesses are work related. The other 95% are not, meaning Workers’ Compensation doesn’t cover them.
Council for Disability Awareness, Long-Term Disability Claims Review, 2011)
The average long-term disability claim duration is 31.2 months. (2010 Gen Re Disability Fact Book)
Medical problems contributed to 62% of all personal bankruptcies filed in the U.S. in 2007, a 49.6% increase over results from a similar 2001 study. (The American Journal of Medicine, June 4, 2009 Medical Bankruptcy in the United States, 2007
65% of initial SSDI claim applications were denied in (Social Security Administration, Disabled Worker Beneficiary Statistics, ssa.gov)
About 100 million workers are without private disability income insurance. (Social Security Administration, Fact Sheet March 18, 2011)
Most people think…If I get hurt it will be at work and I will collect Worker’s Compensation, but only 5% are work related claims.
The average Long term claim is almost 3 years. How will you live and pay your bills if you are out of work for that long??
62% of bankruptcy are due to medical problems, but don’t think it has to do with having no health insurance or having a high deductible health insurance plan. We will discuss this later in the presentation.
Only 35% of initial SSDI claim applications are approved, the rest have to appeal and appeal until they get accepted or they just give up the appeal process.
Around 100 Million workers have no private disability insurance. Your clients need disability insurance and what a great way to generate new business. Remember if you don’t offer your clients disability insurance someone else will, then your client has 2 agents!!

15. Chances of a Disability
Almost 3 in 10 workers entering the workforce today will become disabled before retirement.
(Source: Social Security Administration, Fact Sheet, January 31, 2007)
In the last 10 minutes, 498 Americans became disabled.
(Source: National Safety Council®, Injury Facts® 2010 Ed.)
30% of the people entering the workforce today will become disabled. Make sure they have disability insurance. When they become disabled, they will thank you for saving their financial life and tell everyone they know about what you did for them!!
You have been talking for at least 10 minutes and during that time 498 Americans have become disabled.

16. Chances of a Disability
There is a death caused by a motor vehicle crash every 12 minutes; there is a disabling injury every 13 seconds.
National Safety Council®, Injury Facts® 2008 Ed.
In the home a fatal injury occurs every 12 minutes and a disabling injury every 3 seconds.
- National Safety Council®, Injury Facts® 2008 Ed.
We all have Automobile Insurance
We all have Home Insurance
If you are working you can always find a car or a place to live that you can afford to pay for. However without Disability Insurance how will you pay your Automobile loan or Mortgage/Rent Payment??

17. Chances of a Disability
Three out of 10 workers between the ages of 25 and 65 will experience an accident or illness that keeps them out of work for 3 months or longer.
- Social Security Administration, Fact Sheet, January 31, 2007
If you are between age 25 and 65 there is a 30% chance you will go on disability for 3 months or longer. How many people can take 3 months or longer off work with out receiving any income??

18. Protecting Your Most Important Assets
Potential Earnings to Age 65
(with 5 percent annual salary increase)
A disability could prevent your clients from earning an income. Could they afford their current lifestyle without it? This chart shows what their earnings potential could be to age 65 (assuming a 5% annual salary increase).
For example, if a client’s annual income is $50,000 at the age 35, by the time they reach age 65 and assuming the 5% annual salary increase, they have earnings potential of $3.3 million. This amount is at risk due to the chances of a disability. Explain to your clients they need to protect their ability to work and earn an income.

19. Why do you need Disability Income Protection??
The consumer needs the protection because…
Effect on the family - Despite the fact that more than 70% of American households rely on two incomes to make ends meet, only 26% of Americans have any type of disability insurance.1
Effect on the consumer - 43% of all people age 40 will have a long-term disability event prior to age 65.2
Your clients have to protect their most valuable asset – their ability to work and earn an income. They can do that by protecting themselves with an Individual Disability Income (DI) policy. The chances of suffering a disability are probably more common than you think and the effects can be devastating. What’s alarming is that despite the fact that more than 70% of American households rely on two incomes to make ends meet, only 26% of Americans have any type of disability insurance.
Your clients need to know the risks are real. 43% of all people age 40 will have a long-term disability event prior to age 65.
1 Facts from LIMRA May 2010 Multimedia Fact Sheet, based on findings from LIMRA's life insurance consumer studies. 2 JHA Disability Fact Book, 2008

20. Why do you need your own Disability Income Protection?
In the U.S., a disabling injury occurs every 3 second, a fatal injury occurs every 4 minutes.
(Source: National Safety Council®, Injury Facts® 2008 Ed.)
The Consumer Needs Disability Insurance!!
A disabling injury occurs every 3 seconds and a fatal injury occurs every 4 minutes.
You need to have a emergency saving account with at least 3 months income in it in case you cant work.
Only 40% of adult Americans have separate emergency savings funds.
(Source: National survey commissioned by the Consumer Federation of America (CFA) and carried out by Opinion Research Corporation, February 2007)

21. What employees think
43% of employees indicated protecting financial assets due to an unexpected event as a main concern.
45% of employees feel not at all knowledgeable about individually owned disability insurance.
Take a look at some of the findings from the 2009 Principal Financial Well-Being IndexSM Survey: - 43% of employees indicated protecting financial assets due to an unexpected event as a main concern.
- 45% of employees feel not at all knowledgeable about individually owned disability insurance.
How long would their long-term financial security last if they were disabled?
The Principal Financial Well-Being IndexSM, 2009

22. Despite the fact that more than 70% of American households rely on two incomes to make ends meet, only 26% of Americans have any type of disability insurance.
- Facts from LIMRA May 2010 Multimedia Fact Sheet, based on findings from LIMRA's life insurance consumer studies.
According to a recent study conducted by the CDA, workers ranked the ability to earn a living as most valuable in order to achieve long-term financial security. Personal possessions ranked the least important. Despite this fact, according to a 2010 LIMRA study, even though 70% of American households rely on two incomes to make ends meet, only 26% of Americans have any type of disability insurance.

23. If employees become too sick or hurt to work, they have a lot to lose…
Current standard of living
Future earnings
Their home
Retirement savings and other assets
Insurability
Credit rating
Peace of mind
In 2009, Over 60% of all U.S. personal bankruptcies were due to an inability to pay for medical expenses.
The American Journal of Medicine
Employees have a lot to lose if they become disabled. They need to understand losing their income will impact their current standard of living and any future earnings they may have earned. It impacts their home with being able to make their mortgage payment along with any saving they are currently doing for retirement.
If they cannot meet their financial obligations, they will also start impacting their credit rating. Also, once a disability strikes, even if they recover and go back to work, they may not be able to attain disability insurance coverage due to their medical condition. Its startling to know that in 2009, Over 60% of all U.S. personal bankruptcies were due to an inability to pay for medical expenses.
Disability Income insurance will give them a peace of mind knowing they will have help covering expenses during a disability.

24. 60% of your salary might pay for
Your house
Your vehicle
Your house?
Your vehicle? 24

25. 60% of your salary might pay for
Clothing
Food
Clothing?
Food? 25

26. 60% of your salary might pay for
Gas
Insurance
Gas?
Insurance?
Taxes?
Taxes 26

27. Most people think it won’t happen to me?
Why Disability Insurance??
Most people think it won’t happen to me?
Many people think that a disability won’t happen to them, but it could!! 27

28. Why Disability Insurance??
30%
of people age 35 to 65 will suffer a disability for at least
90 days.
Did you know that approximately 1 in 3 Americans, during their work career, will experience a disability that will last at least three months.
Source: 2005 Field Guide to Estate Planning, Business Planning & Employee Benefits, by Donald Cady 28

29. Why Disability Insurance??
can expect to become disabled for
5+ years.
One in seven of us will be disabled for five years or more.
This percentage may strike you as high but there are reasons for the high incidence of disability.
Source: America’s Health Insurance Plans, National Association of Insurance Commissioners, U.S. Commerce Department 29

30. Why Disability Insurance??
51%
of our claims last longer than
5 years.
51% of Principal Life’s claims last longer than five years
How will you pay your bills if that happens to you and how will your client pay their bills if it happens to them??
Source: Data from Principal Life Insurance Company – As of 12/31/2009 30

31. A breakdown (by percentage of claims) of some typical reasons an individual may become disabled
The need
Talking Points
The causes of disability may surprise you. Here’s a typical breakdown (by percentage of claims) of some typical reasons an individual may become disabled.
Musculoskeletal system conditions
Mental Nervous and Substance Abuse disorders
Cancer, and
Circulatory System conditions
You may have seen these individuals encounter financial difficulties due to medical costs and their inability to work and earn an income. Individual Disability Income (DI) insurance provides monthly benefits to help pay daily living expenses and help keep savings and retirement assets intact. It’s basic protection clients can’t afford not to have.
When a client fails to protect their biggest asset – their ability to work and earn an income – it may jeopardize all the other financial planning you’ve helped them complete. - Dreams for a comfortable retirement
-College education for the kids, or passing on assets may not become a reality.
Protecting income is the foundation of a solid financial plan. Removing income from the foundation can cause your financial plan to crumble.
Source: Principal Life Disability insurance claims incurred as of March The above is for illustration purposes only and is not intended as an inclusive representation of all claims.
* Source: Principal Life Disability Insurance claims incurred as of March The above is for illustration purposes only and is not intended as an inclusive representation of all claims.

32. Average Length of Long-Term Disability Carrier Claim
Average Length of a Long Term Disability Claims
Condition
Length of Claim
Fibromyalgia
100 months
Mental Disorders
99 months
Aids/HIV
98 months
Cancer
81 months
Circulatory Disease
76 months
Nervous System Disease
69 months
Injury
64 months
Respiratory Disease
45 months
Average Length of Long-Term Disability Carrier Claim
(Read slide)
100 months = 8.3 years
45 months = 3.75 years
Talking Points
The duration of specific claims can be concerning without income protection
Make sure clients have income protection in place
You’re helping with other financial needs (life, annuities, retirement, etc.), but what happens to those plans if they can no longer work and earn an income?
What happens to dreams for retirement, college education funding, etc.?
These types of disabilities can wipe out years of savings in a flash
JHA 2004 Disability Rate Study & Risk Management Survey (74% Market Share)

33. What does all of this have to do with the Deficit & Health Care Reform??
For the past 3 and a half years we have heard our Politicians or the media talk about the growing number of people who went (or are going) bankrupt due to the medical expenses they have incurred. The bankruptcy would usually be attributed to not having health insurance or not being able to pay their medical expenses.
Under The Health Care Reform Law everyone will be mandated to have health insurance and that will end the majority of bankruptcies.
That is what the Government seems to think!!
For the past 3+ years we have heard the media and the politicians talk about the high number of people going bankrupt and saying how it is related to having no health insurance or having a high deductible health insurance plan. We now have mandatory health insurance for every person in the USA. Will the bankruptcy numbers change, probably not.
The Law never addressed to real reason for the bankruptcy.
Lets see what that is on the next slide.

34. The Deficit & SSDI
You are disabled with no money coming in & you think well at least I can collect Social Security Disability Insurance.
However due to the SS Disability trust fund becoming insolvent in 2016 there will not be any $$ available.
So how will you live & pay your bills in 2016 and thereafter??
Let’s say you get sick or injured and you cant work. (If you are a families that depend on 2 income to pay your bills, you have another problem. The healthy person will have to stop working to take care of the spouse/partner who is sick, if they are that disabled.)
You have no income and have to wait a year to try and collect SSDI (with only a 30% chance of getting it the first time you apply). You wipe out any savings you have, you cash in any retirement money you have, you borrow from friends, family and credit cards to try and pay your bills. You are still disabled and now you also have major debt and no way to pay it off, so you declare bankruptcy!!
If you had your own individual disability policy it would have replaced 60% or more of your income after 90 days and allowed you to pay your bills without having to borrow $$. No major debt & no bankruptcy. If you also approved & collect SSDI it will be an added financial benefit to you.
Most individual disability policies benefits are paid in full regardless if you collect SSDI or other government benefits.
This is the reason why the bankruptcy wont stop, there is nothing in the Health Care Reform laws to address how you will pay your bills if you become disabled!!
By the way, If SSDI benefits are reduced in 2016 and thereafter, then the income you were depending on while disabled was just reduced. How will you live??
So what is the answer??? See the next slide

35. The answer…. A Solid Financial Foundation
Your income is the foundation of your financial plan. It’s what makes everything else possible. So just as you protect yourself and help others protect themselves against unexpected property damage, medical expenses and loss of life, you should also help protect them against loss of income due to disability.

36. Common Definition of Accidents and Illnesses
Directly and independently of all other causes
Caused by an accidental event
Accidental bodily injury
Illness
Illness commences after the effective date of the policy
Illness manifests itself after the effective date of the policy
<read slide for talking points>

37. Group Long-Term Disability (LTD) Insurance
Individual Disability Income Insurance
Combination program
Type of Plans
Read Slide
We are going to discuss these plan designs and how you can make them work to your clients benefit.

38. Group LTD Benefits
Group LTD coverage is sponsored and often paid for by the employer
Easy to Administer
One master policy covers all employees
Typically replaces 60% of pre-disability earnings
Starts when sick leave and short-term benefits are exhausted
Continues for 2-5 years or until retirement age
For most businesses, it is more economical for the employer to provide Group LTD to their employees because the coverage is sponsored, and often paid for, by the employer. Since there is one master policy that covers all employees, it is easy to administer.
Group LTD usually covers about 60% of the employees earnings prior to disability. It also usually starts after any sick leave and short-term disability benefits have been exhausted and will continue for years or until retirement depending on what benefit period the employer chooses.

39. Group Long-Term Disability insurance is a good start…
But could you survive a 60% pay cut?
Group LTD is a good start in protecting your clients income, but remember since the employer usually pays the premiums, benefits will be taxable at claim time.
Your client might look at their group coverage and think they will be getting 60% of their $5,000/mo salary which is $3,000/mo of disability benefit. When they will only be getting $2,100/mo in benefit after taxes. (3000 x 30% tax bracket = 2100)

40. Perception: Group disability insurance coverage is enough; there is no need to offer individual disability insurance.
Reality: Group LTD is a great start, but these benefits are usually taxable. A typical policy covering 60% of an employee’s income will only cover 42% after taxes. Plus, most group disability plans don’t cover bonus and incentive pay, which can lead to an even larger income protection gap.
Read slide
When discussing individual disability insurance with companies that already offer group disability insurance, it’s important to stress the flexibility of individual coverage. Depending on their objectives, the employer could offer individual disability income insurance in any of these ways:
Pay for coverage for only a select group of employees and allow other employees to participate on a voluntary basis
Offer individual coverage only on a voluntary basis.
Purchase coverage for all employees.
Regardless of how the benefit program is structured, employees ultimately receive the same quality, portable coverage at a multi-life discount. The amount of discount offered will vary depending on participation levels.

41. Individual Coverage Can be employer sponsored or voluntary
Base salary, commissions, and bonuses covered
Non-cancelable coverage
Insured owns the policy – portable policy
IDI Coverage is another way for employers to protect themselves and their employees against a disability. The individual coverage can be sponsored and paid for by the employer or offered on a voluntary basis. With IDI you can cover the employee’s base salary and any consistent commissions and/or bonuses that they receive.
With this type of coverage, the policy us non-cancelable meaning that except for non-payment of premiums the policy cannot be changed or cancelled for any reason. And the employee owns the policy so if they were to leave the employer they could take this policy with them. You should look for a company that allows the employer paid premium to be taken over by the employee and allow any discounts that the policy may have received to remain and not increase the premium.

42. Perception: Many employers already offer group disability benefits and do not want the additional expense of adding individual disability insurance.
Reality: Employee benefits continue to be the “hot topic” at companies across the U.S. Most employers realize that to attract and retain quality employees, they need good benefits programs.
Due to the health Care Reform laws many business are changing the employees benefits they offer. Employee benefits are the hot topic in most business and reduction in employee benefits is happening a lot. However to keep good employees you need to offer a good benefit package, why not educate the business owner and employees on why to have your own disability policy and the benefits of it??

43. Why you need personal disability insurance
Personal Disability Income Coverage provides needed protection for workers and their families.
Personal Disability Income Coverage ALSO Reduces the Need for Government Assistance…and contributes to controlling the deficit!
We have discussed why disability insurance is so important in protecting worker and their family along with keeping them from having their whole life change and maybe going bankrupt. Personal disability insurance also helps you from having to depend on the government for help. The less help we all need from the Government we can help control and maybe reduce the deficit.

44. Questions?