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Rather than purchasing a Disability
Insurance Policy, many people believe
they can rely on Social Security and/or
Workers Compensation for protection.
Unfortunately, Workers Compensation will
only cover a "job related" injury or
illness and both Workers Compensation
and Social Security benefits are often
inadequate.
Comparing short
term disability insurance and
long term disability income insurance
plans:
Most plans will only pay up to 60%
of your income but be sure that the
percentage isn't any less. Be ready
to verify your stated income.
Find out how a policy defines a
disability.
Own-occupation will
provide a benefit if you are unable to
perform the duties of your "own
occupation" (your current field of
work).
Any-occupation is a lower
priced plan but to receive benefits you
must be unable to work at any
job.
See what the
Waiting Period options are.
Usually the longer the waiting period,
the lower the premiums. However, you
will need an emergency fund, sick leave
benefits etc. to support yourself during
this period.
How long are benefits received? Two to
five years will probably not be
sufficient. If affordable, select an
option that pays to age 65. You will
then have income from social security.
Ask about
Residual Benefits. Will you
receive reduced benefits if you are only
able to work part-time?
Look to see if the plan proposes a
guaranteed
renewable or
non-cancelable
policy? If non-cancelable, your premiums
will not go up, however there will
almost certainly be an additional cost
to have this type of guarantee.
Can additional coverage be purchased at
a future date regardless of your health?
A cost of
living rider will assist
benefit payments (after you become
disabled) in keeping pace with
inflation.
Can benefit payments be coordinated
with benefits received from Social
Security. This
Social Security rider could
save you money.
Waiver of
Premium, an option with many
plans, would allow you to quit paying
premiums once you are disabled. This
could be very important to you.
Make sure the company you are
considering doing business with is
Financially Sound (your broker can
assist you with this). You don't want to
be looking for another policy later in
life (when you are older and possibly
not as healthy) because the company had
financial setbacks.
A Nutshell Look
at Disability
The most
important definition in the contract is
the "definition" of disability.
As an insured you want this to be simple
and easy to understand.
If a reasonable person (you) cannot
easily understand this definition and
how/when benefits are to be paid then
the plan should probably not be
purchased.
If the definition appears ambiguous to
you then it will be subject to
interpretation by the insurance company
at claim time. It's important to realize
that the more ambiguous the Definition
of Disability, the lower the premium.
A definition that favors the insured
costs more money than one that gives the
insurance company an out.
The next critical part of the plan is
partial/residual and recovery. Partial
means that you don't ever have to be
totally disabled to collect benefits.
This is included in some contracts and
it is an extra rider in others. Residual
means the plan will pay you a benefit
for a partial disability. When partially
disabled a good contract internally
indexes your prior earnings so that your
residual benefits can keep pace with
inflation (not the same as the COLA
Rider).
The Recovery feature is how long
benefits will be paid when you are back
at work full time (and still have an
income loss) after being disabled.
The Cost of Living Rider (COLA)
increases the Total Disability Benefits
after one year of Disability. It
provides automatic increases in benefit
to compensate for the cost of
inflation.
All plans shown are "Non-Cancellable and
Guaranteed Renewable to Age 65" - this
means the insurance company cannot
cancel you (except for non-payment of
premium) and they must offer renewal to
Age 65.
Premiums are guaranteed to stay level to
65 unless otherwise noted as step Rate,
which is level for the initial period
and then "Steps Up" to a guaranteed
level premium to age 65. All plans waive
premiums during Disability.
Without proper
protection, your way of life would be at
risk if you suffered a disabling injury
or illness. Your home, your loved ones,
your livelihood. By working with an
Healthcare Consultants advisor, you can
make sure you're protecting yourself and
your family.
Healthcare Consultants is licensed for the
states of Arizona,
California,
Florida,
Colorado,
Georgia, Indiana,
Kansas,
Louisiana,
Mississippi, Nevada, New York,
Ohio,
Oklahoma,
South Carolina,
Tennessee,
Texas and
Wisconsin. |
