Graded Lifetime Benefits
Berkshire is one few remaining disability insurance companies offering graded lifetime benefits. Rates for graded lifetime benefits are significantly higher in today’s market than they were just a few years ago. You can see less than 1% of the policies sold through our firm use this option. We believe it is just cost prohibitive to have this option.
Limited Benefit Periods
Some people do choose to have a limited benefit period. It is much less expensive to own a 2, 5, or 10 year benefit period than it is to own a benefit period to age 65 or longer. If you plan according to disability insurance statistics alone, a 5 or 10 year benefit period would cover the average length of a claim. It is also much riskier because if you were permanently disabled that would mean getting your last benefit check at 5 or 10 years instead of at your retirement age.
Other people who own a limited benefit period policy have it because the underwriter on the case limited their benefit period because of medical history preventing them from getting coverage to age 65 or longer. It may be because of a history of elevated cholesterol, mental and nervous history, or any other medical history which prevents an underwriter from offering full coverage.
One never knows if they will ever suffer a long-term disability, or what it is that might cause the disability. If we did, then we would know exactly what type of individual disability insurance policy to purchase. Since we don’t know, my recommendation is always to secure the longest benefit period you can afford. While you would look smart to have a 5-year benefit period policy if your disability lasted only 4.5 years, you wouldn’t look so intelligent if you owned a 5-year benefit period and were permanently disabled.
This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.
Registered Representative of Park Avenue Securities LLC (PAS). Securities products offered through PAS, member FINRA, SIPC. General Agent of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Financial Balance Group, LLC is not an affiliate or subsidiary of PAS or Guardian.