Financial advisors may be missing opportunities to help some clients avoid disabilities, or at least make sure they have disability insurance coverage, according to Dr. Stuart Heckman, assistant professor in the College of Human Ecology at Kansas State University.
Some people are more prone to end up physically or mentally disabled and therefore have more need for disability insurance, an area of coverage that frequently does not get much attention in the financial planning world, Heckman says. Most people who have disability insurance get it through an employer.
Heckman won the Best Applied Research Award at last autumn's Financial Planning Association conference in Boston for his paper entitled "Financial Catastrophe Due to Disability: Which Households Are Most at Risk."
People with lower levels of education and single people are more likely to end up disabled, says the professor, although his work has not determined why there is a correlation between these demographics and disabilities. In addition, people between the ages of 46 and 65 are more likely to be disabled than younger people, and blacks are more likely to be disabled.
“When I presented the paper at FPA, I joked that being married seems to be a decent hedge against disability,” he says.
“Financial advisors should be aware of this so they can help their clients who are more likely to become disabled,” Heckman says. “Planners need to be aware of the important role their advice can play in a person’s life.”
Heckman, who is a certified financial planner, advises using resources such as the Council for Disability Awareness or Mental Health America as go-to places that address disability risk.
“Disability can be a financially catastrophic event for households, so there can be significant monetary value in advice that helps households reduce risk exposure,” Heckman says.