3. Look For Discounts Everywhere
I can’t say that every policy should have a discount on it, but if your agent looks hard enough, they can probably find a discount for you somewhere. The easiest discounts to obtain are the “non-smoker” or “preferred risk” discounts. A little more difficult to obtain and find are some of the available associations or work-related discounts. There is a multitude of associations across the country that have endorsed different carriers in order to obtain a discount for their members.
Medical and dental associations are notorious for offering discounts, and just about every state bar association is also offering a discount to their members. Experienced agents keep lists of available association discounts and can utilize that list to make sure you get the best possible rates. Many times you can also get a discounted policy if a couple of people in your office sign up at the same time.
4. Always…. I Repeat “ALWAYS” Buy The Enhanced Partial Disability Benefit Rider
Some carriers offer this as an optional rider, and some carriers make partial benefits a part of the base contract. Most disabilities are illness claims, not accident claims2. When most illnesses onset, they don’t hit you like a ton of bricks. It takes time for a person to become too sick to perform the material and substantial duties of their occupation.
Most successful people tend to fight their illness in hopes of being able to keep working. This is where a partial disability rider is very important, it allows an insurance company to pay you a portion of your monthly benefit while you are still working, so long as you demonstrate a loss of income of more than typically 15% or 20% because of the disability. Some riders can also allow the insurance company to pay you partial benefits during your recovery from an illness or accident.
Think about it, if you recover from an extended illness it’s not like you just go back to work full time and at full pay again. Many people need to rebuild their business or practice, and financially it may be a while until they do. An Enhanced Partial Disability Rider can protect both scenarios and is a vital component to a good disability insurance policy.
5. Expect To Spend Between 1-3% Of Your Annual Income
There are no two disability insurance policies that are the same. Each policy is made up of a series of different benefits and features designed to provide different levels of coverage. Some policies are going to be more expensive than others, and the price is going to be reflective of just how comprehensive your level of protection is going to be. The price will also more or less depend upon many factors including your age, occupation, sex, health history, amount of coverage, state, and optional riders.
6. Evaluate Your Agent Early In The Process
Just because an agent is knowledgeable in life insurance, investments or annuities does not mean they are knowledgeable in DI. Just ask them what the differences are between a pure own-occupation, modified own-occupation, and gainful occupation definition are…then listen to their answer. If they stumble here, I would suggest finding another agent who understands what different carriers are offering, to make sure you get the best contract available to you on the market.
7. If You Are Buying Disability Insurance Because Of A Serious Medical Condition… Your Options Are Limited.
Unfortunately, many people wait until they are diagnosed with a serious medical condition before they attempt to buy their own individual policy. The most comprehensive policies in the market are no longer available to these people, it would be like trying to buy flood insurance on a home next to the Mississippi River after a levee broke.
There are a few carriers however that do offer a graded risk disability policy for people with serious medical conditions. Under these policies the longer you are able to work without filing a claim, the more comprehensive your disability protection becomes. It’s not the best coverage available on the market, but it’s better than not having your income insured against sickness or injury.
8. If You Are Younger, Maximize Your Future Increase Option Availability
Many policies allow you to buy an optional rider, sometimes referred to as a “Future Increase Option”. This optional rider provides a specific amount of future insurance you can purchase should your income increase without the need to provide further evidence of good health.3 My suggestion to people in their early working years is to buy the maximum amount you can.
You are in the best shape of your life now; your health history is most likely not going to get any better than it is today. Lock in your ability to secure more protection later in life with this rider.
9. Ask Lots of Questions, And Do Research On-line
Nobody expects you to become an expert before you buy a policy, but make sure you understand the basics of what you are purchasing. Ask a lot of questions, and if your agent is not giving you quality answers just work with a new agent. You can find disability insurance agents online, or just do a search on Google for a local agent. There is also a multitude of resources available to you online to help you understand individual disability insurance a little more.
10. Get The Best Disability Insurance Policy In The World
Like I mentioned at the beginning of this article, there is a “Best DI Policy In The World”, and it is the one that is in force at the time you need it. Don’t be the analytical person who spends a year analyzing all the various carriers options and ends up getting diagnosed with diabetes while he or she is deciding which option to buy. The honest truth is the vast majority of DI carriers offer quality contracts, and you aren’t going to make a huge mistake buying any of them.
There are a lot of differences, and I prefer buying the most comprehensive levels of protection I can for my income, but just make sure you buy a disability insurance policy quickly. You, and your loved ones, need to have your most important asset protected - Your ability to continue to earn an income.
Ratings are subject to change.
2014 Council for Disability Awareness Long-Term Disability Claims review (disabilitycanhappen.org)
Restrictions and limitations apply. While medical information is not required when exercising a future increase option, applications to exercise an increase option will be financially underwritten taking into consideration both the applicant’s then-current income, as well as all disability insurance which is then in force, or for which the insured has applied or is eligible to receive.
A person’s eligibility for benefits is determined on a case-by-case basis, taking into consideration the factual circumstances presented as well as the terms and conditions of his/her policy(s).
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.
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.