Choosing Disability Insurance
Purchasing a Disability Insurance policy is much like purchasing a pair of jeans. You want to make sure the policy fits your needs while also keeping a comfortable premium. Just like you can choose between a pair of plain jeans or a pair of designer jeans, you can also choose between a plain disability policy or a policy with customized features.
All basic disability policies have a premium.
You can choose whether you’d like to pay this premium
on an Annual, Semi-Annual, Quarterly or Monthly basis.
In the event of a disability, your premium will be waived, and the policy will pay you a monthly benefit. The benefit amount is based on your income.
You will set an elimination period for your disability policy. The elimination period is the time that will elapse between the date of your disability and the date the policy begins paying you benefits. Most insurance companies offer 60, 90 or 180-day elimination periods. (Tip: Choosing a longer elimination period will lower your premium.)
You will also choose a benefit period. The benefit period tells the insurance company how long they will need to pay your monthly benefit if you become disabled. Most insurance companies offer 2-year and 5-year benefit plans, or benefits until age 65. In many cases choosing the longer benefit period is advisable because if you are disabled, you don’t want your benefits to run out while you’re unable to work.
Now let’s look at some of the “extras” you can add to customize your policy.
The Guarantee of Physical Insurability is a feature that allows you to increase your monthly benefit if your income rises. This can be a handy feature to add if you’re expecting your income to increase significantly over the next few years. When you add this feature, your monthly benefit amount may be increased as your income increases.
The Residual Rider allows the insurance company to pay a portion of your monthly benefit to you if you are only partially disabled and still able to do some work. If you have received a full disability benefit and are returning to work, this rider allows the insurance company to continue paying you a portion of your benefit as you resume work.
The Cost of Living is a feature that hedges against inflation. With this feature, your monthly benefits will be increased by 3% to account for the purchasing power of the dollar due to inflation.
The Catastrophic Rider provides an extra benefit, in addition to the monthly benefit, of your policy. In the case of a severe cognitive disorder, or in the event that you are unable to perform 2 out of the 6 daily living activities, this feature allows the insurance company to pay you an extra amount in addition to the monthly benefit already guaranteed in your policy.
The Annual Renewable Disability Income Rider is a great feature for young physicians just getting out of school because it allows you to purchase disability insurance at a much lower rate. This provides flexibility while you build your practice and income. During the first 8 years of the policy, you will need to “convert” the low-cost coverage to the standard disability rates, or your policy will end up costing you more.
The Pure Own Occupation Rider protects your specific occupation and level of training. Under this rider, a surgeon who develops a tremor would receive 100% disability benefits. The benefits would be paid, even if the surgeon was able to make the same amount of income in another occupation. If you have a very specific occupation, and/or specialized level of training, you need this rider.
The Unlimited Mental Disorder Rider eliminates the usual 2-year limitation of payable benefits on a disability policy, allowing the insured to receive full disability benefits for the duration of the policy.
Some of the features and riders are age or occupation restricted.
To get your customized disability insurance quote apply online here:
Get Your Quote for Disability Insurance
or call us at 702-660-7000