Individual Disability Insurance protects the most basic human need ‘the ability to earn a living’! For most people, their greatest asset is their ability to support themselves. Unless you are independently wealthy or in a position to retire today you NEED some level of disability insurance. How long could you survive without an income or maintain any other insurance coverage such as health insurance, homeowners, auto, etc.? Many people insure all the things they buy with their income, but fail to insure the very source of their income ‘their good health, education, training and experience’!
They have insured the ‘golden egg’, but forget about the ‘Goose’ that lay’s the golden egg! The need for disability insurance is real! For individuals under age 65, the odds you will be disabled for 90 days or more are 6.5-1 at age 32, 4-1 at age 42, 2.5-1 at age 52. People buy life insurance to protect their families against premature death and rightfully so. However, what these statistics say is that there is a much larger risk a person would become disabled during their working years due to an accident or sickness than die. When a person becomes disabled their income stops, their expenses usually increase due to more medical costs and their savings tumbles!
Many people buy life insurance to protect their mortgages, however according to the FHA statistics foreclosures due to death of the mortgage payer accounted for less than 3% last year. Foreclosures due to the disability of one of the primary mortgage payer’s accounted for over 48%! The numbers speak for themselves.
What would you do if you became disabled? How long would your savings and retirement plan last? Maybe you could get a loan, but what lending institution would lend money to a disabled person unable to work and repay the loan! You could depend on friends and relatives, how long could that last? You could look to the government for help, currently Social Security denies many more claims than they approve and during the waiting process you could loose everything you have! If you do not have proper disability insurance coverage, you are playing ‘Financial Russian Roulette’!
Group Long Term Disability Coverage is not enough and generally needs to be supplemented with an individual policy. LTD plans generally cover only up to 60% of your salary and the benefit is many times received taxable. Also many group LTD plans only cover your base salary and do not cover overtime, bonuses, business profit for owners and/or commissions! In addition, there are many offsets where benefits are reduced. This all of course means that a major portion of your income is uninsured. Even if your LTD plan does cover your entire income, who can afford to take a 40% loss and pay taxes on that? Also a group LTD plan can be canceled or the premiums increased at the carriers discretion upon the policy renewal. Therefore the only way to supplement group coverage and to own and control this important coverage is to purchase and own an individual disability insurance policy.
Association Group Disability Coverage is many times available to members of Professionals Associations – such as Doctors, Dentists, Attorneys and CPA’s. While this coverage is perceived by Professionals to be the same high quality coverage as an individual contract, it is not. These plans can be CANCELED by the insurance company, canceled by the organization or the carrier could increase rates to an unreasonable level. Which may leave you in a bad position regarding your disability insurance, as you maybe uninsurable and unable to get new coverage. Also the cost of a new policy with the association maybe prohibitive. Therefore you are RENTING your disability coverage unless you have purchased individual Non-Cancelable disability insurance, which is the only way you can own and control this valuable coverage.
A ‘Non-Cancelable’ policy is the ONLY policy where the original premium agreed on is GUARANTEED until the policy anniversary following the policyholders 65th birthday. Also, benefits can not be changed or altered during that time, unless you request it. All other policies can either be canceled, changed or the premium increased at the carriers discretion. There is an old saying that applies to disability insurance as much as anything else, “you can promise a person anything – as long as you reserve the right to change the terms”! This is exactly the case with all disability insurance that is not Non-Cancelable! The insurance carrier can cancel the policy or increase the price to an unreasonable level at their discretion.
The ‘Definition of Disability’ is also very important in a disability policy. This is basically the terms under which the company will consider your claim eligible for payment. All experts agree that that BEST policy considers you disabled ‘if you can not perform the substantial and material duties of your regular occupation’. This is known as a ‘Pure Own Occupation’ definition of disability, which generally includes recognized specialties for Professionals. With this definition of disability, it doesn’t matter what else you can do, if you can’t do your regular occupation at the time you become disabled you are eligible for benefits. This definition is without a doubt the most liberal and best at protecting your education, training, experience and your life’s work.
Our experience over the years shows that there are is a lot of confusion regarding disability insurance and a lot of people are relying on a ‘false sense of security’ instead of a solid insurance contract to protect their income. Have the peace of mind of knowing what your disability coverage is before you need it!
Here at Kelley Insurance & Financial we specialize in Disability Insurance Planning for professionals, please contact us for an analysis of your current disability insurance program, or click here to request a quote at no cost or obligation to you. We have many years of experience as independent brokers working for our clients, not insurance companies. We have relationships with over a dozen of the most competitive disability insurance carriers in the industry, to be certain you get the best deal possible on your insurance.