INDIVIDUAL DISABILITY INCOME

If an individual were to become too sick or hurt to work, the policy provides a monthly benefit to help cover daily living expenses. This coverage can be a standalone personal policy or a benefit received through work. This includes both Short Term and Long Term Disability

Short Term Disability – Benefit Period of 3 months up to 2 years
Long Term Disability – Benefit Periods of 2 years or up  to Age 70

DI Contract Features

Benefit Period – The length for which one would collect the disability benefit

-Typically range from 3 months up to age 70

Elimination Period – The time between claim and qualification for monthly income

-Typical ranges are for 0/7 days (accident/illness) up to 365 days

Non-cancellable (combines with guaranteed renewable) – The carrier cannot change or cancel the policy or increase the premiums regardless of change in income, occupation or health

Guaranteed Renewable (standalone) – The insured has the right to continue coverage for the life of the contract as long as premiums are paid but the carrier reserves the right to increase premiums

Occupation Class Designations

  •  6, 5, 4, 3, 2, 1
  • Blue Collar Industry – Lower occupation class designations
  • White Collar Industry – Higher occupation class designations
  • Occupation Classes are determined by the daily duties of the insured, not by the title they hold

 

Definitions of Disability

Any-Occupation – Benefit pays out only if you are unable to perform the duties of any occupation, regardless of training or education. (Ex. – You can no longer teach, but you can be a secretary).

-This is not very common with individual contracts.

Own-Occupation & Not Working – Benefit pays out if you are unable to perform the duties of your occupation and not working in any other field.

Transitional Own-Occupation – Benefit pays out if you are unable to perform the duties of your occupation. During that time, if you are able to work in another occupation, you can, and still collect the benefit from your original occupation, so long as the benefit and your new income do not crest the threshold of your original income.

True “Own-Occupation” – Benefit pays out if you are unable to perform the duties of your occupation. During that time, if you are able to work in another occupation, you can, and still collect the benefit from your original occupation. (Ex. – If you no longer can be a surgeon, you would collect your monthly benefits even if you decided to become a teacher. Solely protects your specific occupation.).

Rider Information

Future Increase Option or Guaranteed Insurability Option – (AKA – Benefit Update) – Allows the insured to increase the monthly benefit in the future without the need to show proof of medical insurability, but will need to show proof of financial insurability to justify the increase.

Residual & Recovery Benefit – Allows a partial benefit payout in the event of a loss of income due to a partial disability. The monthly benefit payout will be proportionate to the amount of income lost due to the partial disability.

Cost of Living Adjustment – While you are receiving monthly benefits, your payments are adjusted to keep up with the pace of inflation. Typically between 3% and 6% with simple or compounding inflation (dependent on carrier)

Automatic Increase (AKA – Future Benefit Increase) – Automatic monthly benefit increase for the initial years of the contract (typically at no extra cost)

Social Insurance Substitute Rider (SIS Rider) – This can be a portion of the Monthly DI Benefit that works in conjunction with the base benefit of the DI policy where if due to disability, the insured qualifies and receives benefits from any of the following, it will cause a portion of or the entire benefit to cease paying out:

  • Social Security Disability
  • Workers Compensation
  • Government Retirement & Disability Fund Benefits
  • Railroad Retirement Fund Disability Benefit

Catastrophic Disability Benefit Rider – Pays an additional monthly benefit in the event the client is unable to perform two out of the six activities of daily living or develops a severe cognitive impairment

Discounts & Perks

  • Business Owners can be eligible for special benefit limits and premium discounts
  • Multiple individuals that work for a common employer can receive a discount on their premiums
  • High Occupation classes can sometimes receive discounts for their specific profession