To illustrate how overblown his critics' statements are, Mohney offers these statistics: 90% of the 421,000 new disability claims filed with UNUM in 2002 were paid; Only 3% of claimants denied benefits in 2002 appealed; Less than half of 1% of all new disability claimants chose to pursue litigation; and Court judgments against UNUM represented one one-hundredth of 1% of new claims.
So what do advisors do now? How do you reconcile this contradictory information, and is it necessary to take additional steps to warn your clients about problems they're likely to have if they ever make a claim against the DI company you're recommending? Mohney agrees that financial advisors must take precautions: "Financial planners who are counseling clients on an income protection purchase should look beyond the policy options to make sure the insurer is responsive at claim time," says Mohney.
But others would go farther. "Buying DI is like buying an airline ticket and then paying an extra 5% for flight insurance," Fox grouses. In other words, regardless of the seemingly self-canceling viewpoints on the industry's present-day claims process, make your clients aware that some folks, just like them, are paying a premium to hire professional help so they can get what's coming to them after the onset of a disability.
David J. Drucker, MBA, CFP ([email protected]), a fee-only financial advisor since 1981, is co-author of the book Virtual Office Tools for the High-Margin Practice (Bloomberg Press, 2002) and the Virtual Office News newsletter, both available at www.virtualofficetools.net.