If you are looking for another way to address more of your clients’ needs – and increase your commissions in 2025 – it might be time to consider selling disability income insurance.
Nationally, the 2024 revenue for the U.S. disability insurance market is estimated to be $19.3 billion, according to IBIS World, with growth expected in the next five years. In California and Nevada, the sales potential is significant.
In California, you can sell disability insurance if you have an Accident and Health license. In Nevada, your existing health insurance producer license also allows you to selling disability income insurance. To learn more about licensing, visit each state’s regulatory agency website for information: California Department of Insurance or Nevada Division of Insurance.
Need for Disability Insurance
The federal Centers for Disease Control and Prevention (CDC) says more than a fourth of U.S. adults (26%) are living with some sort of disability. Sightly more than one-fifth (21%) of those aged 18-44 have a disability. Having disability insurance can help an individual maintain a regular income (and associated lifestyle) when unable to work due to a new illness or injury. Disability insurance can help your clients avoid depleting their emergency funds or retirement savings when facing disability.
Disability insurance typically pays a percentage of income as a monthly benefit while the insured is recovering from a disability. There’s often a waiting period (sometimes called the elimination period) before benefit payments begin.
Different Coverage Types
There are different types of disability insurance. Some insurers offer Short-Term Disability (STD) coverage. Others offer Long-Term Disability (LTD) insurance. Some offer both. Five states offer their own programs for STD. Shorter-term protection typically pays between 40% and 70% of a person’s base salary for three to six months. Disabilities that could last longer than a year may be covered by LTD insurance. A private LTD plan typically provides a larger benefit than Social Security Disability Insurance, which is part of the federal Social Security program for those unable to work. Benefits under the federal program are based on the insured’s work history before disability. Benefits under a private LTD plan are based on the insured’s income at the time of the application for coverage.
How Disability Is Defined Matters
When considering different plans and insurers for your clients, it’s important to look at how each plan defines disability. For STD plans, the definition is typically straightforward. If the insured cannot perform the substantial duties of his/her/their (present) job due to an illness or injury, the plan will pay benefits until the insured is able to return to work after recovering – up to a specified period of time.
LTD plans may differ. They may offer benefits of six months or more if a person is unable to perform any occupation (rather than just the occupation in which he/she/they worked prior to a covered illness or injury). It is important to note what definition is used with regard to the disability. Talk with your clients about their needs, expectations, and budget, as plans that define the insured’s inability to perform in their own occupation may be more costly than plans that define disability related to one’s ability to perform any occupation. Policies with shorter maximum benefit periods typically have lower premiums.
State STD vs. Voluntary
The California State Disability Insurance (SDI) program provides short-term and Paid Family Leave (PFL) to eligible workers when off work due to a non-work-related illness or injury, pregnancy, or childbirth. Work-related disability is covered by Workers’ Compensation insurance. A person cannot generally qualify for both Workers’ Compensation and STD for the same incident. The California SDI program is administered by the state’s Employment Development Department (EDD).
Voluntary STD coverage is available through some insurance carriers in California as an alternative to the participation in the State Disability Insurance program. This type of voluntary insurance is designed to provide short-term wage replacement during a shorter period of disability.
Nevada does not have a state-run STD insurance program, although employers may offer STD through a private insurer. Individuals can purchase STD and LTD insurance privately. For more information concerning Disability Insurance in Nevada, visit the Division of Insurance website.
Word & Brown works with a variety of insurance companies that offer STD and/or LTD coverage in California and Nevada. Our carrier roster includes the following:
• BEST Life
• Blue Shield of California (CA only)
• CalCPA (CA only)
• EDIS
• Guardian
• Health Net (CA only)
• Humana
• Lincoln Financial Group
• MetLife
• Nippon Life Benefits
• Principal
• Reliance Standard
• UnitedHealthcare (CA only)
• Unum
For information provided by the California EDD, visit the Voluntary Plan web page. Additional resources are provided in an online presentation developed by the EDD.
If you’re interested in expanding your service to prospects or current clients, and you want to market STD or LTD coverage, contact your W&B representative to learn more. If Word & Brown is not yet your General Agency partner, call us at 800-869-6989, or complete our online registration form to get started
