Disability Insurance
According to a recent study, most people estimate they have only a 16% chance of becoming disabled during their working years1 - in spite of the following startling facts2:
- If you're under age 35, chances are one in three that you will be disabled for at least six months during the course of your career.
- Men have a 43% chance of becoming seriously disabled during their working years.
- Women have a 54% chance.
- At age 42, it is four times more likely that you will become seriously disabled than that you will die during your working years.
Disability Frequently Asked Questions
- » Who needs disability insurance?
- » When should I purchase disability insurance?
- » How much will coverage cost?
- » How much benefit should I have?
- » How much benefit can I have?
- » What options should I choose?
- » How do I determine the correct Elimination Period?
- » How do I compare policies from different companies?
- » If I have a group disability insurance policy, do I also need an individual disability insurance policy?
- » Should I purchase disability insurance through my association?
- » What type of medical exam is required?
- » How long does the underwriting process take?
- » When does my disability coverage begin?
Who needs disability insurance?
If you are dependent on your income and it would cease or decline if you were to become disabled, you are a good match for disability insurance.
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When should I purchase disability insurance?
As soon as possible. There are several reasons not to "put it off until later." The most obvious reason is the cost of coverage will increase as you get older. If you are earning an income, you need to protect it now. Also, if you are currently in good health, you should have no difficulty qualifying for a policy. If your health declines or if you experience a disability, you may no longer be qualify for insurance (if you are still insurable, it will undoubtedly be at a higher premium).
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How much will coverage cost?
You should expect to pay between 1-4 percent of your annual income. These percentages are a rough estimate, based on selection of certain benefits and options. Our representatives will assist you in purchasing the coverage that fits both your needs and your budget.
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How much benefit should I have?
Factoring in all other sources of income, you should have enough coverage to maintain your current lifestyle until you are able to return to work (group disability policy, investments, etc.).
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How much benefit can I have?
Most insurance companies will cover up to 50-60% of your income. All companies have a maximum amount they will cover.
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What options should I choose?
Each company will offer different riders, but most have the following options we typically recommend:
- Residual disability provision:
- Under a residual disability provision (either in the policy or available by rider), an insured receives a percentage of his or her disability benefit based on the percentage of income loss the sickness or injury has caused.
- Inflation protection:
- Individual disability income policies generally offer a cost of living rider that will adjust benefits for inflation during a long-term claim.
- Future increase option:
- As long as your increased income qualifies for more coverage under the company's issue limits, the future increase option guarantees your right to purchase additional coverage up to a stated age without evidence of insurability.
How do I determine the correct Elimination Period?
Individual disability insurance policies contain an elimination or "waiting period" during which no benefits are payable. Generally, you have a choice of waiting periods ranging from 30 days to one year. The longer the waiting period, the lower the cost of the plan. Based on your savings and other sources of income, you should determine how long you can be without an income.
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How do I compare policies from different companies?
It's very difficult to "compare apples to apples" when comparing policies from different companies. Read the policy language and definitions carefully, as they vary greatly from company to company (e.g., what is the definition of Own Occupation; how do they value Residual Disability? etc.).
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If I have a group disability insurance policy, do I also need an individual disability insurance policy?
If you have a group policy, you might still consider purchasing an individual disability insurance policy for several reasons: If you terminate employment, you probably won't be able to take the policy with you; the benefits in group disability policies are limited; most group plan benefits are taxable because the employer pays the premiums; because of benefit caps, highly-compensated individuals are often under-insured. Also, group insurance policies usually "integrate"; i.e., they are lowered by other benefits you may receive such as social security disability or state disability plans.
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Should I purchase disability insurance through my association?
You should definitely look at coverage through your association. However, you should compare the coverage offered by your association with individually owned policies offered by other reputable disability insurance carriers. Then, select the policy that offers the best coverage for your situation.
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What type of medical exam is required?
The type of exam and tests required will vary by the amount of coverage requested and insurance company underwriting guidelines. We will have your insurance carrier's medical or paramedical examiner contact you and set up a convenient appointment for a physical exam. The physical exam can take place in your home or office, and is performed by a medical professional at no cost to you (the insurance company pays for the exam). The exam typically includes blood and urine specimen, blood pressure, height and weight measurements and medical history questionnaire. You can receive the test results from the insurance company upon request.
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How long does the underwriting process take?
All Insurance companies will have their underwriters review your application before issuing your policy. This process usually takes 3-6 weeks depending upon how fast you schedule your exam and how fast additional requests such as requests for medical records are met.
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When does my disability coverage begin?
Your coverage will begin after the company approves your coverage and when the insurance company receives your signed documents along with the first premium payment (upon completion of underwriting).
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