10 Checkpoints For Disability Protection
GE-31561 (03/05) (03/07)

What should you look for when evaluating a disability income insurance policy?

Quick—what’s your most valuable asset? Many people will say their home, investment portfolio or a priceless antique, but the asset that makes all of your other possessions possible is your ability to work and earn an income.

People often insure their “golden eggs” but not the “goose” that produced them.

Disability income (DI) insurance can help protect you from financial loss should an accident or illness leave you unable to work. DI insurance can help provide you with peace of mind and financial protection at a time when it is most needed.

If you don’t have disability income insurance, consider it. If you do have coverage, review your policy. The disability insurance marketplace has changed so much over the past several years that existing policies may need an update. What should you look for when evaluating a disability income policy? Here are ten tips.

1. Stability: Check to see that the company providing coverage has acceptable ratings from a variety of independent financial rating agencies like A.M. Best, Moody’s and Standard & Poor’s.

2. Renewability: Make sure the policy is non-cancelable and guaranteed renewable. This means the policy can’t be canceled (except for non-payment of premiums) and the premiums can’t increase regardless of your income, occupation or health.

3. Own Occupation Protection: Under this valuable provision, you will be eligible for benefits as long as you cannot perform the substantial duties of your specialized occupation.

4. Partial Disability Benefits: Medical technology and rehabilitation services are always improving. With many accidental injuries and illnesses, people are back to work on a limited schedule before returning full time. Partial disability can provide you with benefits if you are working on a limited basis with reduced earnings.

5. Residual Income Loss Benefits: This benefit helps the professional who is back to work full time, yet still has reduced income. It is designed to provide benefits after a disability as you build your business or professional practice back to pre-disability levels. With a residual income loss provision, ongoing medical care is generally not required.

6. Rehabilitation: If you have to enter a new specialty or occupation, the carrier may provide a benefit to assist you in the retraining process. This benefit should be in addition to the other benefits being received.

7. Cost of Living Benefits: These important features adjust the benefits to some measure of inflation, often the Consumer Price Index. A wide variety of cost-of-living options are offered and can be incorporated in your policy.

8. Additional Purchase Options: You can help protect your insurability today by adding an option to purchase additional benefits, which can provide increased coverage as your income grows. This valuable rider is usually modest in cost and offers you the opportunity to increase your benefits with no medical underwriting.

9. Recurring Disabilities: This feature can mean the difference between resuming benefits or sending you back to square one. For example, suppose you are unable to work due to an illness, then recover and return to your job. Suppose later you are disabled again due to the same cause. With some contracts, you are allowed up to 12 months to return to work; and if you are disabled again due to the same cause, the elimination period (or waiting period) has already been satisfied by the prior disability and benefits are paid immediately. Some contracts, however, have only a six-month successive disabilities clause. This could mean a big difference in your protection.

10. Financial Professional Service: When considering coverage, a knowledgeable financial professional can assist you in deciding which benefits are important for you today and in the future.

Disability income insurance is one of the cornerstones of a sound financial program. It is probably the most overlooked, but most needed, form of protection for the professional, business owner or executive. You should look at different policy features carefully and decide what disability income benefits you realistically need.