Barry Lundquist, president of the Council for Disability Awareness in Maine, authored Independent Agent magazine’s March 2013 Insurance Views column, “Educate Clients About the Risk of Disability.” IA editors sat down with Lundquist for a more in-depth discussion about Americans underestimating their chances of becoming disabled, trends in disability insurance and his career path.
IA: In the column you wrote for IA magazine, you talk about how American workers underestimate their chances of suffering a disabling illness. Do you think there is a deeper problem with people feeling invincible? Or perhaps a fear to spend extra money when the economy is already tight?
BL: “We’ve done research for years and years, and we always say that people underestimate their risk [of suffering a disabling illness]. The question is why, and what’s driving that? I have heard it described as invincibility, and I think there is some truth to that—especially with younger people.
“I have a slightly different take on it [though], and I’ve done a lot of research on this also. I found that people have a bias toward optimism, especially when looking toward the future. Most people think things will be better in the future. They think they’ll be happier, they think their financial situation will be better, they think they will be healthier. ‘I’m gonna go to the gym, I’m gonna lose weight, I’m gonna stop smoking.’
“So they recognize in an abstract way that disability is happening—they just don’t think it’s going to happen to them. And there’s another factor involved, and that’s just basic denial. We just don’t want to think of ourselves as getting cancer or having a stroke. So we sort of view the future as being rosy and we block out these negative thoughts about the bad stuff that could happen. That’s just human nature at work. I think that’s, to a large degree, the root of the underestimation.
“I don’t really think it’s a money issue. I think if people understand their risk and what they stand to lose, they’ll spend the money. Protection is not terribly expensive. The poor economy makes people more conservative and more interested in security, so it’s almost a better time [for agents] to talk to them about protecting their incomes.”
IA: Again in your column, you discuss seven ways agents can spread the word about disability insurance to their clients. Are there any additional tips you have?
BL: “The column itself was really about understanding the facts and finding good third-party resources like those we provide, and I think that’s really important for any advisor’s professional development. There is something that I would add for agents, and that is you want to have this information, but use personal, real-life stories to bring disability to life when talking to clients.
“So for example, we have Monica’s video on our website and it’s really powerful.
“[Monica] was a financial planner and she became disabled unexpectedly – young woman in her 30s, professional, and didn’t have disability insurance. She had life insurance, and health insurance, and it’s devastated her in every way, and she’s a crusader for this now. She’s a great woman and a great friend. It’s heartbreaking.
“Our research shows that when a person personally knows someone who’s experienced disability, they view their own risk as higher. So if an agent talks about a client or a relative, or asks the person [who] they’re talking to, ‘Have you known anybody who’s had cancer?’ When people personalize it, they view the risk as much more real.
“People sort of assess risk with both left- and right-brain thinking. The left brain does the logical, statistical, ‘your odds are this’ sort of analysis—and that’s how we think in the insurance business. We’re fact-based, and actuarial-based, so we really talk a lot about statistics. But oftentimes it’s the right-brained thinking that we ignore, which really relies on emotion and instinct, and gut-reaction kind of stuff. Real-life stories help people connect on an emotional level.”
IA: One of the trends in disability insurance right now is people buying more coverage through their workplace. Why is that?
BL: “Wage earners today are being asked to increasingly take on the responsibility and burden of their own financial security and financial future. For example at work, they’re sharing more of the cost of their benefits through voluntary plans. They’re making more decisions about what to buy.
“Most people don’t have pensions anymore, so they’re either fully responsible for funding their retirement or at least partly through contributions to 401(k)s. People change jobs more frequently, so even the 401(k)s don’t get funded.”
IA: You started with the Council for Disability Awareness as a consultant in 2009, after a career working in insurance. How did you feel after you were promoted to president of the organization?
BL: “Spending all these years in this business and really caring about it, and caring about the importance of people protecting their incomes, it really actually is a great thing for me. We try to educate consumers about their risk and about the impact of disability and the importance of planning.
“The sad fact is disability it more common than people think, and most people aren’t prepared. That’s what we’re trying to change, and that’s my mission these days.”
Diane Rusignola is IA managing editor.