Guardian Disability Insurance Brokerage

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Disability Insurance For The Fee-For-Service Professional
Providing income protection with an unlimited recovery benefit period
by Thomas Lloyd

Increasingly in today’s business world, more individuals are generating their income not by a fixed salary but based solely on a fee-for-service time frame or billable hours. Whether you’re a 1099 small business owner/consultant that contracts their services out to a company or a lawyer that bills his clients, your level of income is completely dependent upon your own ability to work successfully. If a long term sickness or disability (90 days or more) prevents you from working, this not only will create an immediate void in income but potentially a long term void when you return to work rebuilding your client base.

For argument’s sake, let’s say you are a small business owner or independent computer consultant unable to work for 24 months because of a disability or sickness. When you return to work full-time my general hunch is your income will be significantly lower than where it was before you suffered that disability. Moreover, it may take an extended period of time to rebuild your business if you’ve been unable to work – perhaps years to reclaim that pre-disability level of income.

Having a disability insurance policy that provides own-occupation disability protection is certainly important but what about the period that follows – when you return to work full time but still have a loss of income due to your sickness or injury? This is why it is crucial to have a residual disability benefit rider on your disability policy.

Be aware that not all residual riders are the same on all contracts. Most require both a loss of time or duties AND a loss of income of 20% or greater to trigger a benefit. Some provide recovery benefits for a limited time period (12 to 36 months). The most comprehensive residual rider available on the market simply requires a loss of income due to sickness or injury and has a recovery benefit for up to the entire benefit period.

As an example, if you were disabled for a year because of an illness like cancer, and then returned to work completely healed after a year, but continued to suffer a loss of income as a result of that disability, a policy that has a residual disability benefit rider with a recovery provision that requires only a loss of income requirement could continue to pay you a recovery benefit. The most comprehensive recovery benefit is one that has a loss of income requirement of at least 15% with no requirement to return to full time work or work as many hours as previously worked.

Make sure your disability insurance policy includes a residual disability benefit rider that contains an unlimited recovery benefit. This simple rider may be the most important aspect of your contract as a fee-for-service professional. If you would like more information about which companies offer this type of rider, please feel free to email or contact me directly at 1-888-513-2300.