retirement protection rider

The United States may be facing a retirement crisis. Many workers are counting on the fact they will be able to keep working and earning, but a disability can make this impossible. Insurance agents can provide their clients with protection by offering a disability insurance retirement protection rider or plan.

Forced Into Early Retirement

For some people, early retirement is a dream; for others, it can be a financial nightmare.

Many Americans lack sufficient retirement savings. In fact, GOBankingRates found that 58% of Americans expect to work during retirement. A delayed retirement can seem like a smart financial move for anyone who’s behind on retirement savings, but the reality is it’s not always possible.

The Employee Benefit Research Institute (EBRI) says 47% of retirees in 2022 retired earlier than they had planned. For a minority of these early retirees, this was a good thing – they retired early because they wanted to and could afford to. However, the majority were forced into early retirement for reasons outside their control, including 32% who said they had to stop working because of a health problem or disability not related to COVID.

An early retirement can cause financial strain. According to EBRI, 21% of retirees in 2022 said their lifestyle in retirement was worse than expected.

Disability Insurance Retirement Protection Riders

Disability insurance can help workers forced into retirement because of an injury or illness manage their finances and make ends meet. However, the disability insurance monthly benefits only last as long as the benefit period. Some policies have benefit periods of only two or five years; others continue paying benefits until the policyholder reaches retirement age. This latter option sounds good – but what happens next? Policyholders who haven’t been saving for retirement might suddenly find themselves in a financially-precarious situation.

As disability insurance doesn’t replace 100% of the person’s income, policyholders who are receiving benefits may not be able to keep up with their retirement plan contributions. To address this issue, some carriers offer a disability insurance retirement protection rider.

The retirement protection rider provides an extra benefit to replace the retirement contributions the policyholder can no longer make due to the disability. The funds from this benefit are typically placed in trust and invested. The policyholder is able to access the money only during retirement.

DI Retirement Security

Principal offers DI Retirement Security, a non-cancelable and guaranteed renewable individual disability income insurance policy. The plan makes scheduled payments into a trust when policyholders experience a qualifying disability that prevents them from working. Policyholders can start receiving monthly payments at age 65 or 67.

A disability insurance retirement protection policy can be a great addition to an individual disability insurance or long-term disability insurance policy. Individuals who are worried about staying on track with their retirement savings may be interested in this protection. Agents can also target employee groups that might be eligible for a multi-life discount and a guaranteed standard issue option. This can be a great way to help people receive the retirement protection they need while securing an attractive commission. To see how a voluntary DI Retirement Security program can work, read this case study. To see how selling both individual DI and DI Retirement Security can lead to maximum protection (and great commissions!), read this case study.

Are Your Clients Prepared for Retirement?

Good candidates for disability insurance retirement protection meet the following criteria:

  • Interested in disability insurance. Once people recognize the risk of disability and the need for disability income insurance, it’s easy to make the case for retirement protection.
  • Focused on saving for retirement. Younger workers may be more interested in options like student loan riders, but workers in their 40s and 50s are often trying to catch up on their retirement savings.
  • Don’t have enough money saved for retirement yet. According to the U.S. Census Bureau, women are especially likely to be behind on retirement savings. Only 22% of women have at least $100,000 saved, compared to 30% of men.

You can help your clients by offering a retirement protection rider or policy. Learn more about your disability insurance retirement protection options.


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