Your greatest asset is your ability to earn income. What would happen to you, your family and/or your business if you couldn’t work due to an unexpected accident, injury or illness? Life is unpredictable. Be prepared and protected with Disability Insurance.
Personal disability income protection is the cornerstone to everyone’s financial strategy. It is impossible to maintain your lifestyle, pay bills, educate your children, save for retirement if you cannot work and earn an income. Disability insurance coverage replaces a large portion of lost income when you are too sick or injured to work. It can be used to supplement your employer’s disability benefits which may not provide enough income protection by itself. You may also choose to protect your retirement contributions or student loan payments with a disability income policy. Personal disability insurance allows you to focus on what is important; recovering rather than finances. A money problem is the last thing a person who is trying to heal needs. Furthermore, invading savings set aside for college, retirement etc. only makes matters worse.
As a business owner, you must consider how your business would continue and thrive if you were unable to work. Managing your employees, paying salaries including your own, meeting other financial obligations such as rent, utilities, and employee benefits all become impossible without proper disability insurance planning for your business.
When searching for the appropriate disability policy, you may want to consider a few items…….
- how much do I spend on a monthly basis
- how much of my monthly income do I need to protect
- when will I qualify for disability payments
- how is a disability determined
- how long will I be paid
Disability insurance is about risk transfer at a very reasonable cost and the design of these insurance programs is highly customizable. Dickenson and Associates specializes in disability income protection for individuals, business owners, hospital systems and private practices. We can assist in finding the appropriate coverage for your specific situation by researching all the insurance carriers.
The best time to implement disability insurance is NOW. Disability insurance protects individuals against uncertainty (i.e. an accident or unexpected illness) and you must be healthy in order to qualify. Pre-existing conditions (i.e. anxiety, depression, pregnancy/infertility, musculoskeletal issues…to name a few) could present challenges when it comes to qualifying for a comprehensive disability insurance plan; therefore, insurance must be purchased prior to any changes in health. In the disability insurance space, you will likely never be as healthy as you are today. Additionally, rates are age-based, so the older you are, the more you’ll pay each year.
Since we never know what a disability will look like, we recommend securing as much protection as the insurance company will allow based on income and other in-force coverage. When contemplating disability insurance, most individuals don’t consider the hidden costs of a disability (i.e. prescriptions, procedures, physical therapy, alternative medicine, home health care, child care, etc.). Basing your coverage on what you “need” today can be risky.
Many employers offer Group Long Term Disability (GLTD) coverage; however, this coverage typically stays with the employer upon termination. Even in special circumstances where you can take the group coverage with you, it may be a watered-down version of the original group plan with lower benefit amounts and more restrictions. Individual disability insurance is yours to take with you no matter where your life and career path may lead.
Group Long Term Disability is a great foundational benefit to your overall income protection plan; however, group plans are generally taxable and one-size fits all with little to no opportunity to customize the coverage based on your specific situation. Additionally, you are not the owner of the group plan, but merely a certificate holder. That means that coverage can be terminated, language can be changed, and benefits can be reduced with little to no warning. It’s also important to consider that insurance products are priced based on their probability of paying out at claim time and group coverage is relatively inexpensive. It may be more difficult to qualify for benefits under a group plan than under an individually-owned disability policy. What’s more, your individual disability insurance plan can be structured to provide tax-free benefits at time of claim!
If timed correctly, the answer is yes. Group long term disability policies will not reduce or offset benefit payments if you own a personal disability policy. Both policies will pay in full under the terms of the contracts. Timing is important as you will qualify for a higher benefit amount on your personal disability policy if you apply prior to the employer’s group benefit becoming effective.
This is an area that’s often overlooked, but of critical importance to your decision-making process. If you took the key components of five disability insurance plans from five different insurance companies and compared them, they would probably look similar. However, there is one major differentiator that could make all the difference for you. It’s likely that one of the main reasons you chose to work for your current employer is industry reputation and the way the business is being managed. Management, no matter what type of business, will ultimately determine how it runs…for better or for worse. Insurance companies are no different. Some insurance companies are better at management than others, but how could you know? Because they are graded by as many as five independent rating agencies to inform and protect you - the consumer. The scores are then averaged and assigned a number grade (called the Comdex score). How these insurance companies are trending over time is important to you because you’ll be making an insurance decision that you’ll carry with you for the rest of your career. You need to know whether these insurance companies are improving or declining based on their management of risk, finances and claims handling. After careful consideration of policy language, benefit amounts and premiums, the final question you should be asking yourself is…which insurance company’s management inspires confidence that the company will be around to honor the promises they made when I implemented the coverage.