What do you know about Disability Insurance?

[tinatark]

We are looking for disability (income replacement) insurance... new to this - are there any questions I should definitely ask, anything I need to look for?

I've called our local broker for a quote, as well as Western Southern Life (our life insurer)

Thanks!

 

[poohbear1029]

In my former life, this was my career.

It depends on what your DH does for a living. Most companies have different classes of policies based upon risk. IE, risker if your husband is say a lumberjack v. an accountant. Same if self employed v. an employee.

You want to ask about definitions of disability....pm me if you want more detail.

Also, many policies have options or built-ins for scenarios where your husband is partially disabled and can work some. Some of those pay a flat amount. Individual policies usually have a Monthly Benefit....for discussion lets say $1000. A flat rate partial rider might pay 50% of that for a defined period. A Residual or Proportionate might pay a % of the monthly benefit based upon the % of loss DH is incurring.

Also, important.....many policies have what they call Presumptive or Total Loss of Use. Ie, if DH loses one hand and one foot, or use of legs, speech, hearing or vision.....policy may pay full amount even if he can work.

Important is considering Future Income Options or Disability Purchase Options. This buys you the right at defined periods and increments to increase his coverage in the future...typically it would not need any more medical underwriting, they would just look at see if his income supported increasing the policy.

Social Security Riders ----- pay your DH an additional amount when he is denied or not eligible for Social Security.

Waiting Period - # of days your DH must be disabled before you even begin to accrue benefits. IE, he may have to be disabled 90 days with no payout from the insurance company....then on 91st day benefits begin to accrue and he can get check 30 days from there.

Oooh.....Cost of Living Benefit.....this would increase your husband's benefit by a defined % on an annual basis during periods of disability.

Also....be sure to ask if the policy has any built in exclusions or limitations. Many policies now limit mental nervous disorders to lets say 2 years of benefits.

Lots to consider.....feel free to PM me with questions either before or after you meet with an insurance advisor.

 

[Michie]

poohbear, you are my new best friend!! I will get my duck folder out and see if I still carry on the boys and see if I should

 

[mickeyfan2]

Also make sure the DI is for the actual job he does. Some only kick in if he cannot do any job. Those are all but useless. For example, you husband is a salesman and he travels for work. If he has a disability that make him incapable of traveling on a reqular basis, then he is disable. He maybe able to get a job as a telemarketer.

 

[poohbear1029]

Also make sure the DI is for the actual job he does. Some only kick in if he cannot do any job. Those are all but useless. For example, you husband is a salesman and he travels for work. If he has a disability that make him incapable of traveling on a reqular basis, then he is disable. He maybe able to get a job as a telemarketer.

Exactly....there are 3 basic definitions in the industry.

"Own Occ" --- you cant do your occupation, but if you can do a different one, you may still be able to collect.

Modificed Own Occ - you cant to your occupation, but if you chose to do another occupation, you may not be able to collect - or you may be partially disabled.

Any Occ - typically if you can do any occ you are suited for by education, training or experience, you might not be disabled.

These are generalizations, obviously - but give you a general idea.

There are some newer policies out there that are more of a Loss of Income policy and have different definitions that above and work a little different.


Ohh - if your DH is a business owner, he may also want to consider a second policy that covers Business Overhead Expenses if he is disabled.

 

[poohbear1029]

poohbear, you are my new best friend!! I will get my duck folder out and see if I still carry on the boys and see if I should

A new friend! Yeah! Well, I should tell you that my experience is limited to disability and not from the end of "how much coverage should I have". I worked in claims and applied the policies to claim situations.

 

[tinatark]

Whew! Thanks for the info. I will print it out to go over before we meet with the broker on Monday.

The broker did tell me about the waiting period, and about being careful of the definition of disabled.


I looked up the SS disability payout, it's a decent amount monthly - I hope it's not misleading!

 

[PrincessKitty1]

Please post what you find out from your broker! My DH is also self-employed. I have an "Accidental death and dismembership" policy for both of us through my employer , but it is a lump-sum policy and does not pay a monthly income based on the inability to work. My employer pays for long-term (greater than 3 months) disability insurance for me, but of course not for DH. We have been told by private insurance companies that "nobody will underwrite long-term disabilty insurance for self-employed people."