Available Discounts You Can Use
There are many ways to purchase a policy. Before the advent of the internet, people who wanted to buy a disability insurance policy met with their local agent who presented them with a quote from their preferred carrier. An application was taken and a few weeks later, the client had a policy to protect their income. Since insurance began being sold online, this process has been reinvented for consumer and agent alike.
Online sales have allowed clients to search for multiple quotes from multiple carriers, all without leaving their computer. Similarly, agents are now able to provide quotes and advice via email and phone, all without leaving their office. The internet has allowed consumers to get much more information from many more insurance carriers in a much shorter period of time.
The successful agent has had to become even more informed as to the options for consumers because they know that if they are not, the consumer will simply find someone else with a click of their mouse. Like most things, competition online has made for a better experience for the consumer.
Part of this better experience is being able to find the policy the consumer wants at the most competitive price. Disability insurance is a highly regulated product. Companies must file their products with the state insurance commissioners in every state, and these products must be approved for sale before any agent can present them to their clients. Once the policy is approved for sale, every agent who is licensed to sell it is provided with the same company approved software to run an illustration or quote.
Often times, I am asked if a client can get a better deal (i.e. lower price) from another agent. Since we’re all using the same company-provided quote software, the answer is no; that is unless one agent knows how to get the client a discount that the other agent doesn’t know about. While every disability insurance policy has standardized pricing for every agent appointed to sell it, some agents are better at getting their clients a company approved discount on the policy. Here are some of the most common types of discounts you should be looking for.
There are several professional associations that insurance companies recognize, and thus provide discounts on their products. These discount are usually on the order of 10% from the standard pricing. Typically, these associations are found in the medical, legal, accounting, and other professional fields.
To take advantage of one of these association discounts, the insured needs to be a dues paying member, and be able to demonstrate this to the insurance company at the time of application. Typically, the discount applied to the disability insurance policy will remain, even if the insured terminates their membership with the association at a later date.
It’s important to understand that association discounts on individual disability insurance plans are not the same as buying a policy sponsored by the association. Some professional associations, like the American Medical Association or the American Institute of CPA’s, offer a policy which they sponsor for their members. These policies are provided by an insurance company that has a relationship with the association, and usually do not contain the same provisions found in individual disability insurance plans.
There are differences between association sponsored plans, and individual policies purchased with an association discount. Generally speaking, the individual policy purchased with the association discount will provide the most comprehensive coverage.
Professional Group Discounts
While they may sound similar to discounts offered by professional associations, they do not require the insured to be a dues paying member of any association. A professional group is simply a number of employees at a single employer that are applying for disability insurance with an insurance carrier. Usually, there need to be at least three employees to receive a discount of approximately 10%.
The employees apply and pay for their own policies, and are fully medically and financially underwritten. Therefore, they can be turned down for coverage, which may affect the discount for the rest of the group.
A good agent will usually talk with their client about any other possible interest at the clients place of employment to help their client save money through this discount. If you’re applying for disability insurance, it could be worth your time to ask around at work and see if anyone else is interested. If they are, it could mean a savings on your premium as well.
Qualified Sick Pay Plans
The best way to get a discount on your policy, especially if you are a woman, is to have your employer pay for the coverage. If you’re an employee, this is obvious. If you’re a business owner, buying a policy for yourself and a couple of your employees may save you a lot of money.
A qualified sick pay plan (QSPP) is simply a formal arrangement between an employer and employee to provide income replacement in the event of disability. This income replacement is typically provided for through a disability insurance policy purchased on behalf of some or all of the employees.
A little known fact is that rates for DI for WOMEN are higher than for MEN. This has to do with the morbidity experience of the insurance companies. Anecdotally, female rates for LIFE insurance are less than male rates, as the mortality experience for women is lower. The discount for a QSPP is not only 10%, but also unisex rates. This can amount to a savings of up to 30%-40% for insured women.
A savvy agent working with a female business owner is smart to ask if she wants to offer coverage to select employees as well. If she does, then the premium on her individual policy could be substantially lower than what she would have paid alone.
Non-Smoker & Multi-Policy Discounts
There is also a lower premium for those who do not smoke. While this is fairly well known, what is lesser known is that if you DO smoke and do not qualify for this lower rate, you may still be able to get it in the future should you stop smoking. Most insurance carriers will apply the non-smoker rate to a policy that is in-force if the insured can demonstrate that they have not smoked for twelve months, and if their blood work indicates no nicotine is present.
Finally, if you’re also getting another type of insurance policy, like life insurance, there could be a multi-policy discount applied as well. Often times, it pays to shop for life and disability insurance at the same time.
Medical Resident Discounts
Medical residents may be eligible for a discount on disability coverage, in addition to special limits on how much coverage is available to them. These discounts are set by agents who have a relationship with the school of residency. The agent typically presents to residents each year to explain the importance of protecting their income, and the benefits of buying a policy through the residency discount program.
A residency discount program will usually provide for a 10% discount off the standard rate, and sometimes more. Occasionally, unisex rates will also be offered, making the program very attractive to the female physicians.
Most insurance companies will offer a starting monthly benefit of $5000 to medical residents, regardless of their current income. This $5000 can be increased once the residents graduate and start earning more income. The discount that was applied to the original policy is maintained with any subsequent purchases, so buying through a residency discount program is a very value for those who have access to it.
Companies set the pricing of their disability insurance policies, and once approved by the state insurance commissioner, this pricing cannot be changed by the agent. The advent of the internet has allowed for much faster and more efficient shopping of policies; thus, agents who sell DI polices on-line, have to be knowledgeable about the products and how to buy them at the lowest possible costs.
It is critical to work with someone who specializes in the sale of disability insurance, and knows how to maneuver through the various options to get any and all applicable discounts available to you. The best agents have databases of these discounts, and are always presenting clients with options to help reduce the cost whenever possible. If you’re shopping for a policy, and are just seeing a standard quote, be sure to ask what discounts may be available. The best agents know.
The information displayed on this page are the opinions and views of the author, and are not necessarily the opinions and views of The Guardian Life Insurance Company of America (Guardian), or any company that is an affiliate or subsidiary of Guardian.
William Olmsted holds a Financial Representative contract with The Guardian Life Insurance Company of America based out of New York, NY.
2017-51644 Exp. 12/19