Many people live paycheck to paycheck, but with disability insurance, you’ll have no money issues during accidents. Michael Garofalo welcomes Carolin Mohrmann, a Benefits Advisor at Aflac, and Don Badgley, an Insurance Counselor at Northwestern Mutual and Small World Wealth Management. Join in the conversation to discuss how short- and long-term disability insurance plans augment one another. Mohrmann and Badgley acknowledge that these are tough conversations to have with anyone, so they share stories about clients, or their families, that are happy to have done so.
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Doubleheader: Benefits Advisor And Insurance Counselor Talk Short- And Long-Term Disability Insurance With Carolin Mohrmann And Don Badgley
We’ve got an interesting double-header. We’ve got Carolin Mohrmann, she’s a benefits advisor with Aflac and we’ve got Don Badgley. He is an insurance counselor with Northwestern Mutual and with Small World Wealth Management. The reason this is a different kind of episode is we’ve got a singular topic that we’re looking at from two different perspectives. We’re talking about disability insurance. Carolin’s going to provide the perspective of short-term disability insurance and Don’s going to talk about long-term disability insurance.
We’re going to talk about how these two services, Aflac and Northwestern, come together and how they augment one another. We’re also going to talk about a few other related topics because they’re both in a relationship-building industry. A lot of our readers are also in relationship types of industries. We’re going to talk about that in the context of, I want to loosely and cautiously say, post-COVID. We’re past what we hope is the worst of it. How are you both?
For a little background, too, for the readers, we’ll call this a disclosure. We do know each other professionally but within a group called Network Partners. We’ve all been members for several years. That’s our relationship but we don’t have a business affiliation. It’s not like JGS has any share in closing business for Aflac or Northwestern, but we’re affiliates and we like to share referrals and network in the community, so we have those ties to one another. Carolin, let me start off with you. If you could give a brief intro to any reader who isn’t aware of you and your services and what would they hear if they were meeting for the first time at a networking event?
I miss those. I’m happy that they’re starting to slowly open up again. As an Aflac agent, I am advising business owners on benefits and how they can improve their benefits. We have a number of different policies, with the short-term disability policy being the one that we’re talking about. Short-term disability is paycheck insurance. I’m helping put money in people’s pockets when they need it most and that’s when they’re hurt or sick.
Gaining a little bit of control in an uncontrollable situation, health issues, you can’t control that, COVID, it helps alleviate stress. Stress is horrible for the immune system and for getting better from an illness. When I talk to business owners, I’m talking about their employees. Business owners can partake in Aflac but also the employees are a primary thing where you help with your employees, offering benefits that they can’t get outside of a payroll situation.
You touched on two things I want to circle back to in a little bit. You talked about having a tough conversation with someone and the possibility of meeting your service, for one, and then also the conversation with a business owner. How is this something that you can provide an employee and to make your employment package more appealing? We’ll double back to that because Don, I don’t want to skip your introduction. If we were shaking hands for the first time at a networking event, what do you want people to know about you?
Thank you. What people think of when they think of insurance agents, they are instinctively backing up because they don’t want to experience the usual sales pitch. What I try and emphasize to new people is that it’s simply not the model I work with. My product is, principally, not even insurance, it’s analysis. It’s asking the right questions and coming up with answers, answering questions, and being sure that people understand the topic that we’re talking about. Mine is a planning process. Fitting these financial instruments into an overall plan is the art form and coordinating that with other planners, the accountant, the attorney, the banker, the financial advisor, or whomever it may be.
That’s been something I’ve been proud of for the years that I’ve been doing it. Our focus is the long-term disability insurance. Interestingly, in later years of my practice, I’ve led with disability insurance because it’s my most common claim. In the years I’ve been doing this, I haven’t paid as many death claims as I’ve been years in the business. Death claims are very rare. We tend to live to our projected age. The statistical likelihood of premature death is quite small.
The statistical likelihood of a long-term disability is insanely high. 1 in 5 people will suffer a long-term disability during their working years and it’s even more for short-term disability. We like people to be aware of that. My focus is always on making sure people understand that for most people, their single largest asset is their ability to get up in the morning and go to work.
I’m about making sure that people understand this and it’s not particularly likely but if it happens, you have other people you care about in your life. If your income is suddenly interrupted or permanently interrupted, the impact of that will last not just your own lifetime, but also the lifetime of the people you love. We try and keep that as the focus when talking about long-term disability.
The one thing that you both have in common, even though you’re offering different services, is that you’re opening a conversation with someone right off the bat where you’re asking them, “Will you contemplate a future that includes your illness and difficulty?” You’re asking them to contemplate a future where things aren’t so great.
You’ve both said that you are relationship builders. Your industry is based on building a relationship with someone. What’s that conversation like when you’re asking someone to do something that’s unpleasant right off the bat? How do you engage with someone when you have that initial hurdle right off the bat?Ask the right questions and make sure people understand the topic that you're talking about. Click To Tweet
People have different reactions about their own mortality and how invincible they are, whether they’re never going to get hurt. I know people are like, “I’m never going to get cancer but might have an accident.” They seem to have this preconceived idea of how their life is going to go. Some people are rooted in reality and some people are not. For short-term disability, there’s a 1 in 4 chance that you could become disabled. Ninety percent of disabilities are not work-related, so you can’t, “I’ve got workman’s comp and that’s going to take care of me.”
It’s relationship building and I do that through humor and bonding with the person. Making eye contact is a huge thing. You can gauge whether this person’s uneasy about it or not. Sometimes, it takes someone else or themselves to have an accident or an injury to realize, “This could happen to me.” In other times, people are more rooted in reality. It’s an individual thing. Paying attention and listening to that or the person helps me direct which way I want the conversation to go.
I can’t tell you the number of times that prospective clients comment to me after our initial conversation. They thought I was there to sell them something and that never happens. What I’m there to do is make them understand that there’s a process and it doesn’t have to be unpleasant. Nobody wants to talk about this stuff and I don’t blame them. What I try and emphasize is that if you have the right questions asked, you can then plan something for an unlikely event. Again, we don’t do this because it’s likely, we do it because it’s remotely possible and there are people that you love.
The thing about disability insurance versus life insurance is, in life insurance, if you die and your family’s left behind and you’ve taken care of it, they’re financially secure, but you are not there as a participant in that crisis. In disability insurance, you are the primary participant in that crisis. That can be extremely hard on you and your ability to get better. Knowing that you don’t have financial difficulties is a big deal.
The thing that surprises people when I do an initial fact-finder is that, “I’ve got group life and disability insurance.” They don’t understand that usually, especially for people making a pretty good living, may not be what they think it is. It doesn’t do the same thing as personal disability insurance. In terms of the relationship, my job is first to know you as a person, find out what you care about most in the world, and then make you understand that I will not be presenting products, I will present concepts, “Here’s how it works. What do you think?”
Can we talk about where the cutoff would be like? Carolin, you’re talking about short-term disability insurance and Don long-term. Where can we draw that line in the sand? Carolin, can you start off, as precisely as possible, how you or Aflac plans define that?
A 3 or 6-month policy is my wheelhouse. I’m out of work for up to 3 to 6 months. We cover maternity leave with our short-term disability. That is a three-month policy that is usually chosen. In a six-month policy, I run into business owners more choosing that. We do offer up to 24 months but honestly, that is more into long-term disability, which is Don’s wheelhouse. My wheelhouse is usually a 3 or 6-month policy. Most short-term disabilities fall into that category where, “I got hurt. I got sick. I broke myself. I got COVID.” These things are usually taken care of in a 3 or 6-month policy.
People are probably asking at the immediate onset of an illness or injury, you don’t always have a real accurate or precise idea of how long recovery will take. They can maybe get a broad idea of what seems likely but to narrow down exactly when you’re going to be ready to be back in action, that’s got to be tough to gauge. Don, how do you maneuver and navigate that gray area? When do you say, “This is a long-term situation?”
We overlap a little bit. Virtually all and very rarely do I write a long-term disability policy that has anything other than a three-month wait. It’s the exclusion period. You pay for the first three months and then the 90 days in the benefit will begin. Premiums are waived at the beginning of the disability but the benefit doesn’t begin until three months.
Long-term disability is anything longer than six months. Some disabilities are what we call presumptive disabilities. A presumptive disability is something that you have lost that’s irrevocable. The doctors say, “This is never coming back.” That’s the loss of two limbs, blindness, loss of sight, deafness, you’re never going to hear again, or the power of speech. If one of those occurs and is diagnosed, the benefit is never questioned again.The younger you are, the less your insurance costs, and the more financially effective you are for the long-term. Click To Tweet
A professional person who has a car accident and is in a wheelchair, that’s pretty bad. They’re never getting out of that wheelchair. They could also go back to work full-time but they’ve lost the use of two limbs. They will continue to receive the benefit, not just until age 67 or 70, depending on how we structure it. If it’s a presumptive disability, we will pay that benefit for life tax-free.
That is profoundly different than group coverage. Individual coverage is also portable. Not everybody stays in the same employment. Maybe your new job will have a group again, maybe it won’t. Whatever you do personally, protecting your income for yourself, that’s portable and that goes with you. That’s a huge issue with long-term disability coverage as well.
Carolin, do you have something to add to it?
I like what he’s saying about portability. Your short-term disability policy through Aflac will be through payroll. There will be a payroll deduction and the company is forwarding the premiums. We’re also portable, so when I move from ABC Construction to XYZ Construction, I can take my Aflac with me. That’s a very good point and we always stay at the same premium price.
We were narrowly talking about the trucking industry. As of now, someone on our Network Partners calls, in the neighborhood of 60,000 truckers are needed in the US. We were talking about how port closures out on the West Coast are affecting supply and everything like that. We were more generally talking about labor and employment.
One way that employers sometimes try to attract talent is by not just offering a good salary, but also a good benefits package. Carolin, the one thing that you always bring to the table when you’re talking to an employer is you can offer this in different ways that fit your budget to attract new talent and convince them, “This is an employer that I might want to work with.” What’s that conversation like when you’re trying to show Aflac in that light?
In Aflac, there are a number of different ways to pay for it. The traditional way has always been the employee pays for it. It’s a pre-tax payroll deduction, except for short-term disability. It’s a post-tax deduction. When you receive the benefit, it’s tax-free. Employers can also do a defined contribution. They can say, “I’m going to pay 50%. I’m going to pay $5 a week,” or they can set the amount. There are so many different ways to do it and attracting employee benefits.
The job is the job and you can’t make that any different than what it is aside from increasing salary to attract employees and a good benefits package. If I have to choose between this group and that group, this business and that business, as an employee, I’m going to be looking closely at the benefits package, “What are they offering? I can’t get Aflac short-term disability any other way except through payroll so I’m going to pick a job that offers me Aflac.”
You’re typically talking to the individual. At what point in someone’s career are they a likely person to be considering speaking with you and benefiting most from what you have to offer? I’m picturing a 22-year-old college student probably wouldn’t want to even sit down and have the discussion. Someone a bit older with a family and they start thinking about these things, and then suddenly it becomes some more, “Maybe Don Badgley had someone I could sit down. Maybe I could have a coffee with them for a few minutes. Maybe we could talk for a few minutes.” At what point in someone’s career does that seem most useful?
It would depend on the career. If this is a professional career and it’s someone in their twenties and just passed the bar, they should have that conversation immediately. It may not be possible for me to add long-term disability if there’s already a group plan in place. A lot of private firms and companies don’t offer long-term disability, group or otherwise. What astounds me is how few people know what their benefits even are. They got the job. They’re happy they’ve got the job, they read the HR and personnel folder once, and have already forgotten what it is.
For me, that conversation can be productive no matter where you are in your career. The farther you get into your career, the less likely it is, unless you’re the owner of the company, that you’re going to even know what your coverages are. Maybe I can’t help but having the conversation. By the time we’re done with it, you’ll know exactly what you have, how it works, and how it protects you and your family. That’s simply part of the conversation and extremely valuable for people.
The group disability insurance usually covers up to a maxim benefit. It’s usually taxable. If your benefit is $1,000 a month, you think you’ve got $1,000 a month, you don’t. You’ve got $700 a month. How does that impact the family? Doing that analysis is extremely important. You’re right. It is probably an easier conversation for someone who’s established in a career, has a family, and understands that they need to deal with these things but I don’t turn anyone away who asks. If they have questions about it, I’ve got answers.
What are the most common questions that you’re getting at these meetings?
At these meetings, I’m not just talking about long-term disability insurance, I’m also talking about life insurance and long-term care insurance. Those are my three areas of expertise and I tie all of those together. The common questions are, “Why would I need this?” The most common question is, “What’s this going to cost me?” People ask that all the time and that varies. If you ask what the best age to do it, the younger you are, the less it costs. It’s that simple. The sooner you do it, the more financially effective it is long-term.
All of those factors come into the conversation and it always goes back to getting people focused on their single largest asset. If you make $100,000 a year and you’re 25 years old, we’re talking about millions of dollars exposed. If you had a multimillion-dollar home, I’m sure you’d insure it for maximum value. Yet, group insurance almost never insures for maximum value. We’ll offset that differential for the taxable piece. If you’ve got a $1,000 a month benefit, we’ll fill that gap for you with long-term disability.
There’s another piece. Group long-term disability insurance is underwritten at claim. Individual disability insurance is underwritten at application. How important is that? What it means is that your group insurance will be underwritten by the insurance company and the insurance company’s doctor will decide if you’re disabled enough, usually requiring total disability, to make any claim. In personal disability insurance, your doctor is consulted at application but if you ever make a claim, your doctor decides whether you’re disabled.
That is a massive difference in terms of your likelihood of even receiving, and total disability is not required. One day lost work, 20% lost work. We’re beginning to pay a claim. We pay proportionally, not available. We can index it for inflation, can’t get that in the group disability. The differences are massive. Once people begin to understand that and realize that their income is their biggest asset, we have a place to go.
Carolin, what questions are you often getting?
There were so many things done with saying, “That’s such a good thing. I want to comment on that.” Tying the policies together, I do that as well. I’m educating a short-term disability policy but I also offer an accident, hospital, cancer, heart attack, stroke, vision, dental, and there are a whole bunch of things. I have that conversation and I find out their needs.
If I have a twenty-something-year-old that still lives at home with his mom, the need for short-term disability might not be as great as the woman who is going to get pregnant in the next year, or the construction worker that is doing more of a physical job, or someone who does a lot of weekend activities and they’re hiking, canoeing, hang-gliding, and whatnot. We need to get you a short-term disability policy.
It depends on what that person’s doing and what their lifestyle is like. Some of the more common questions I’m being asked in general is, “Do the policy premiums ever increase?” You know that if you use your car insurance, you’re going to pay for it. Aflac’s policy premiums don’t increase. We take the application and that’s the date for the rest of your life. It’s portable. We have guaranteed issue options. A monthly benefit of $3,000 or less is a guaranteed issue. It doesn’t matter if you have a fake knee and constantly fall, if you have cancer, or if you have any of these things.
We do a twelve-month look-back. If there’s anything diagnosed or treated in the past twelve months, that specific thing or things are not covered for the first twelve months but you can still have the policy. After the twelve-month wait on your specific pre-diagnosed thing, you’re in for everything. That’s beneficial to someone who has a chronic ongoing condition, “I have crones, multiple sclerosis, and these kinds of things.” This is great because, after the twelve months, that’s covered forever.
The maternity leave is a huge draw. You go off work, you’re used to bringing in $2,000, $3,000 a month, and then all of a sudden, you’re off work. Being a mother, your hormones are going crazy. You’ve just given birth. You want to be with the new baby. You’ve got the thing with the paycheck and the bills need to be paid. Aflac’s short-term disability covers maternity leave, so that’s a big help.
As we’re coming to the conclusion, I thought it’d be cool that we could start with you, Carolin. I’d love to hear a home run story from both of you, something that pops out in your mind. Keeping the client data hidden, but a story that reflects something that you look back on and say, “I’m proud to have been a part of this.”
Any maternity leave story is always a hit. There was another claim, and I talked to this person and said, “I want to share your story without your name.” She’s like, “Fine, go ahead,” because she’s a huge proponent of Aflac. She was a client of mine and she was 35 or 40 years old, so she’s young, fit, and healthy. It was Mother’s Day and she’s out in her backyard and she’s walking around admiring her new gift, which was a lawnmower. It’s an interesting gift choice.
There was a little divot in the lawn and she twisted her ankle. She broke her ankle and she’s out of work for about a month and a half. This is a single mom that needs to provide food and pay the mortgage. She was out for a month and a half and so many people live paycheck to paycheck. With her accident policy and her short-term disability policy, she had no money issues. She was able to keep the lights on, pay the mortgage, and feed the children on a policy that doesn’t cost that much per week.Many people live paycheck to paycheck, but you'll have no money issues with your accident policy and your short-term disability policy. Click To Tweet
The accident policy is a no-brainer. That’s $5 a week. The short-term disability is always flexible because you can adjust your elimination period and how much you have. You’re eligible for a maximum amount but you can always lower it. It was something that she could afford in terms of the premium and could not afford to have the actual benefit because it’s her primary asset.
Don says it all the time, your biggest asset is your ability to work. If you can’t work, you’re in a little bit of trouble, especially since you’re the person this is happening to. Once you’re dead, you’re dead and the people left behind have to deal with that. With short-term disability, there are worse things happening to you than dying. Staying alive and being a drain for your family is something that you want to take care of.
A good referral for me, as Don always says, is somebody who loves somebody. You want to take care of the people that you’re with and possibly leaving behind. Something as simple as you’re out walking on the weekend and twist your ankle, that could totally upset your entire apple cart. You need to have something in place.
That’s a great story. Don, would you share one of your home runs as well?
For me, and I know Carolin would agree with this, every time someone incorporates this kind of planning into their overall plan and agrees that they need to protect themselves and their loved ones, that’s a home run. The claims are few and far between, even with disability insurance. The story that always comes to me is it was a young professional person.
He became a client in his twenties, which goes back to your earlier question. He got cancer in his late 30s and died in his 40s. He had three minor children. His family was completely financially secure throughout this entire process. His income was uninterrupted because we were there to fill the gap. We also not only paid his disability income tax-free for him, but we also paid the premiums on his life insurance during this almost six-year period.
That is a big deal. I don’t like to think of that as a home run. I think of that as we did our job and he did his job. His family, I’m still close touch with. You get close to people. I know they will be forever grateful that he sat down with us and was willing simply to have a planning conversation surrounded with the center of gravity, being his wife and children. That, to me, is the ultimate home run. It’s simply being able to help people do this planning.
I understand what you mean. You’re saying it’s not something we celebrate. We’re not happy about the misfortune like you would celebrate hitting a home run but you feel like, “This is why we have this in place. Considering the circumstances, we’re happy we did this.” I thank you both for coming on. I appreciate both of you joining us and thanks for your time.
Thank you for having me, Michael.
It’s my pleasure. I appreciate it.
Thank you for reading.
About Carolin Mohrmann
Carolin arrived from the Great White North in 2006 with two young daughters in tow and instantly fell in love with the Hudson Valley.
After completing her education at SUNY New Paltz in 2015 Carolin felt her education degree pulling her towards educating adults more than children.
Aflac was a perfect fit right from the start. Carolin’s innate teaching ability combined with her love of helping people has propelled her to the top of her field. Carolin’s clients see her as an advocate for their business in her integrity, professionalism, and authenticity.
Carolin’s dedication to her clients make her a valuable ally to any business. Carolin_Mohrmann@us.aflac.com Supplemental Health Insurance
About Don Badgley
As an Insurance Counselor with Northwestern Mutual, I work with clients to identify their financial security needs and then focus on solutions that can help make their goals a reality.
I rely not only on my own knowledge and experience but also on my expertise of a team of specialists.
Visit my website at http://www.donbadgley.com for additional information.
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