AN INTRO TO
INDIVIDUAL DISABILITY
INSURANCE
AN INTRODUCTORY GUIDE TO HOW
INDIVIDUAL DISABILITY INSURANCE
POLICIES WORK, AND WHY YOU
NEED ONE.
PUBLICATION OF:
INTRODUCTION // 2
WHAT IF YOU COULDN’T PRACTICE MEDICINE // 4
KNOW THE FACTS ABOUT YOUR DISABILITY OPTIONS // 9
INDIVIDUAL DISABILITY INCOME INSURANCE POLICY HIGHLIGHTS // 19
TABLE OF CONTENTS
CHAPTER 1
What if You Couldn’t Practice Medicine?
nesses and conditions that can cause a
disability? Just look at this breakdown:
The impact disabilities have on individuals varies – for some it’s a short-term adjustment, but for others it’s a new way of living, perhaps for the rest of their lives. Have you thought what would happen to your lifestyle if you became too sick or hurt to practice medicine? What would happen to your income or your dreams for retirement?
Individual Disability Income (DI) insurance helps protect your ability to work and earn an income. If you have a qualifying disability, this policy pays a monthly benefit to help cover daily living expenses so you don’t have to dip into your hard- earned savings. As a physician, you are eligible to purchase up to $15,000 per month in benefits.
Most Individual DI insurance policies are non-cancelable and has guaranteed premium rates to age 65. The policy has a
“Your Occupation” definition of disability. This type of policy helps protect you if you are unable to work in your occupation(s)
— the one you are actively working in at the time of your disability — until the end of your benefit period, which means you are not required to work in a new occupation. Benefits are payable (after satisfying your policy’s Elimination Period) to the end of your benefit period as long as you remain disabled.
Help Protect Your Income Today
Many optional policy riders are available that will customize the policy, such as:
• Future increase opportunities – These may be available automatically to help keep your policy up-to-date without requiring additional medical underwriting.
• Residual Disability benefit2,3 – Even if you are not totally disabled and you have a loss of earnings, you may receive partial benefits if certain requirements are met.
• Regular Occupation rider2,4,5 – If you have a qualifying total disability from your occupation and choose to work in another occupation, you’ll receive full benefits, regardless of the income you earn from the other occupation.
• Transitional Occupation rider2,3,4 – You can continue to receive disability benefits if you become totally disabled in Your Occupation, but are working in another occupation.
• Cost Savings – A 20 percent Multi-Life Discount (based on gender-neutral rates) is available when three or more employees with a common employer purchase coverage.
• Portable Policy – Your policy is fully portable, including any applicable discounts if you leave your practice.
Policy Features
We understand the many needs of physicians. That’s why we also offer coverage to help you continue saving for retirement if you have a qualifying disability. If you own your practice, we can help protect that, too.
1. Principal Life will participate with group long-term disability insurance up to $25,000 per month. 2. These riders are available at an additional cost.
3. If your policy has both a Residual Disability benefit rider and the Transitional Occupation rider, benefits are not paid out under both riders at the same time. If you meet the definitions and terms of both riders, the monthly benefit you receive is the greater of either the Residual Disability benefit or Transitional Occupation benefit.
4. The Regular Occupation rider and the Transitional Occupation rider cannot be issued on the same policy. 5. This rider is only available to 5A, 5A-M, 4A and 4A-M occupations. The Mental/
6. Nervous and Substance Abuse Disorder rider is required for 5A-M and 4A-M occupations using the Regular Occupation rider. It is not available for 5A-M and 4A-M occupations in Vermont.
Protection for Many Needs
CHAPTER 2
Know the Facts About Your Disability
Options
You may be wondering if you really need income protection. Before you decide to purchase or not purchase individual disability income insurance, know the facts.
Understanding the Need for Income Protection
There are many components to financial security, but your income makes everything else possible. Consider how much you could earn over the years and what your life would be like without that income. If you became too sick or hurt to work, you could lose your:
• Standard of living
• Home
• Dreams for the future
• Credit rating
• Retirement savings/other assets
• Peace of mind
“Why would I need individual disability income in-
surance?”
• One in 10 Americans between the ages of 18 and 64 have a disability.
• In the home a fatal injury occurs every four minutes; a disabling injury, every second.
“It won’t happen to me – I expect to stay healthy.”
“I can buy disability insurance later/It costs too
much.”
The average annual cost of individual disability income insurance is one to three percent of what you earn. As for waiting, people usually don’t get healthier as they grow older, and coverage will cost more.
• Group long-term disability insurance is a great start. Most plans cover 60 percent of your gross income and the benefits are usually taxable. But, could you survive a 58 percent pay cut (after taxes) if you became disabled?
• What would happen if you lost your group disability benefits? It may make sense to purchase an individual DI insurance
“I have enough disability coverage through my
employer.”
• Only 35 percent of the 2.8 million workers who applied for social Security Disability Insurance were approved in 2009. Also, the benefits may not be enough to maintain your lifestyle. For example, the maximum benefit for someone earning $100,000 a year is only $16,800 a year.
• Workers Compensation benefits are limited to only occupational Diseases or injuries arising out of or in the course of employment.policy now rather than later when it can be more expensive or not an option for you due to health reasons.
“Social Security or Workers’ Compensation will
take
• Chances are you’re not saving for a disability you’re saving for your dreams for the future, such as a new home, retirement, your children’s college education or travel.
• Even if you save 10 percent of your salary, a one-year disability could eliminate many years of savings.
• Would you want to put that burden on your family? How long could they support you?
“I can rely on my savings or my friends and family
will
• You’d be surprised at the many different types of illnesses and injuries that leave people disabled and unable to work. The most common insurance company claims are caused by:
• Back Problems
• Cancer
• Cardiac Illnesses
• Injuries
• Mental and nervous disorders
• Nervous system disorders
“Would I even have a disability that would be
covered?”
Individual Disability Income insurance is very flexible. For example, Principal Life offers riders that allow you to increase coverage without having to prove evidence of good health — allowing you to keep your benefits up-to-date with your changing life. Plus, the policy is fully adjustable with underwriting.
“My financial needs change so fast, what policy
could keep up?”
Not always. If you qualify for a Simplified DI Program, there is a quick and simple application process with no routine medical requirements. Plus, you get an underwriting decision within 48 hours after your application and telephone medical interview are received in good order. The causes of disability may surprise you! Here’s a breakdown (by percentage of claims) of some typical reasons an individual may become disabled:
“I hear that the underwriting process is long and
difficult.”
CHAPTER 3
Individual Disability Income Insurance
Policy Highlights
If you have a qualifying disability, an Individual Disability Income (DI) insurance policy can help you pay for necessary living expenses. The policy is non-cancelable and has guaranteed premium rates to age 65. This means the insurance company cannot change or cancel your policy, except for nonpayment of premiums, or increase your premium before you reach age 65, regardless of changes in your income, occupation or health. After age 65, you may conditionally renew your policy annually for the rest of your life as long as you are working full-time and meet the requirements. If you conditionally renew your policy, your premium will change based on your age at renewa
valuable asset – your ability to work and earn an
income.
The maximum monthly total Disability Benefit and Social Insurance Substitute (SIS) Benefit will issue you is based on your current income and occupation when you purchase your policy. Total Disability means during your occupation period:
• You are unable to perform the substantial and material duties of your occupation and
• You are not working.
After the Your Occupation Period, you must be unable to work in any occupation you are reasonably suited to by your education, training and experience. If you select the SIS Benefit for your policy, it is payable in the same proportion as your policy’s Disability Benefit. The SIS Benefit is paid when no Social Insurance is paid. One- third of the SIS Benefit is paid when only one of the Primary Insurance Amounts under Social Security, Workers Compensation or Railroad Retirement is paid. No SIS Benefit is paid when two or more Social Insurances are paid, or when you receive retirement benefits from Social Security or Railroad Retirement.
How Your Policy Pays
Once disabled under the terms of the policy, you must satisfy your policy’s elimination period before receiving benefits. Upon a qualifying disability, you will receive benefits one month after the elimination period is satisfied. If you remain disabled, you will receive disability benefits through your policy’s benefit period once you have satisfied your elimination period. The benefit period is the length of time you’ll receive benefits if you are disabled under the terms of the policy.
Receiving Your Disability Benefits
These benefits are automatically built into your Individual DI insurance policy:
• Rehabilitation Benefit – If you are disabled under the terms of the policy and want to pursue a rehabilitation program to return to work, an extra benefit may be available to help you pay for the cost of the program.
• Death Benefit – A lump-sum benefit of three times your maximum monthly benefit is paid to your beneficiaries if you die after satisfying your elimination period while receiving disability benefits. This benefit is payable in addition to any other benefit of the policy.
• Waiver of Premium Benefit – After you’re disabled for the lesser of 90 days or the elimination period, we’ll waive all premiums that become due during your Continuous Disability.
Individual Disability Income insurance benefits
In addition to the benefits automatically built into your policy, you may be eligible for a variety of riders to further customize your policy.
Customizing Your Disability Policy
No Cost Riders
If you meet the current underwriting guidelines, for no additional cost, the following riders on the next page can be added to your policy.
If you meet the current underwriting guidelines, for an additional fee, the following riders on the following page can be added to your policy.
Cost Riders
We’re an independent brokerage that works with top insurance companies to obtain multiple quotes and help you understand your options.