[Promo] Disability Insurance Rolling the Dice Hot off the Press!

[Robert C. Intelisano]

Happy Friday Gotham Tribe!If you had a machine in your basement that printed money, wouldn't it make sense to take good care of it, make sure it is well-oiled and insure it?  That money-making machine is you, see below!
Disability Insurance, Rolling the Dice

I just returned from an extended Las Vegas Super Bowl Weekendand was thinking about what to write this week while on the plane back to JFKairport.  In many ways, insurance isgambling!  

There is a high probability of a disability occurrencehappening, such as someone becoming disabled either mentally orphysically.  As an Independent Insurance Advisor,also known as a “Field Underwriter,” my job is to ask questions then listen.  This is why we have 2 ears and 1 mouth as weare supposed to listen twice as much as we speak.  Nearly 50% of ALL individuals ages 34 oryounger will be disabled for 90 days or longer prior to age 65.  

As per the Commissioners Individual Disability Tables,CSO/Society of Actuaries, see the chart below:

Age     Odds ofLong-Term Disability      Averagedisability length

30                   51%                                                    4.7years

35                   48%                                                    5.1years

45                   40%                                                    5.8years

50                   34%                                                    6.2year         

 There are generally 2 types of disability income insurance:

1.     Group Disability Income Insurance: Group disability insurance is usuallyoffered by an employer at no cost or for a nominal fee taken out monthly directlyfrom your paycheck.

2.     Individual Disability IncomeInsurance: Individualdisability income insurance (DI) is usually purchased from an agent or broker, similarto life insurance.  There aresignificant advantages to doing business with an independent insurance broker!

  Advantagesof Group Disability Insurance: 

1.     Premiums are Affordable

2.     Some policies are portable meaningyou can keep it if/when you leave the company

3.     The Business Owner can protect keypersonnel in the event of disability

Disadvantagesof Group Disability Insurance:

1.     Most policies have a monthlydisability income “BENEFIT CAP” which is far less than the employee would needto provide for one’s family

2.     Few policies have an “Own Occupation”definition of disability, meaning it is much harder to trigger a claim versusindividual policies.

 Our first task is to assess the risk probability based on theclients’ age, medical history, income level, occupation, amount of coverage anddetails of the policy.  We come up with amonthly income need (usually between 40%-65% of income) then shop the policy todifferent insurance companies.  We thenpresent between 1-3 company options to the client for review.  An Agent can ONLY present 1 company option!  My job is to find a comfortable premium totransfer the majority of the disability risk to the insurance company.

Regardless of a person’s age, the ability to earn an incomeis usually their most valuable resource. Disability income insurance is the one type of insurance that workerscannot do without!  If this is the case,why do less than 50% of adult Americans own a personal disability incomeinsurance policy?  The answer is based oncost, as a typical individual disability income policy will cost between 2%-4%of a person’s salary, depending mostly on age. This is why it makes sense to apply for an individual disability incomepolicy as young as possible.

Accidents are what most people think are the main cause fordisability. This is incorrect! Depression and back pain are the most likely to trigger a disabilityclaim.  This has been exacerbated byCovid-19.  Disabilities can be triggeredmentally or physically.  As an example, myfriend is on disability from post-traumatic stress disorder (PTSD) fromHurricane Sandy.  

It is critical to consider how your bills would be paid inthe event of a disability lasting more than 3 months.  Workers should consider how long they would beable to cover their expenses.  Couplesshould also consider whether they can survive on one partner’s paycheck if theother were to become ill or injured.  Inmost cases, an individual private disability income policy is the best way to handlethis risk!

My top 3 Tips to consider when buying an individualdisability income insurance policy to protect you and your family: 

1.     Get Disability Insurance Quotes froman Independent Broker:  An independent insurance broker has amacro view of the marketplace and multiple insurance companies to shop ratesand benefits for you.  For example, wehave one insurance company that will cover a disability due to a botchedelective plastic surgery procedure.  

2.     Buy the “Own Occupation” definitionof disability: Notall companies have this definition and some charge extra for it as arider.  For example, a right-handedsurgeon gets his or her right hand mangled when closing the car door.  With an “Own Occupation” policy, said surgeongoes on claim and can collect benefits and still work supervising others.  A policy without “Own Occupation” would havean “any occupation in their field” definition and would NOT be on claim in theprevious example.

3.     Do NOT Take a Tax Deduction for insurancepremiums paid: Thisis where your CPA can make a big mistake getting “greedy” for deductions.  If you pay your premiums with “after tax”dollars, 100% of your monthly benefits are TAX FREE!  If you take the small annual premium taxdeduction, 100% of your monthly benefits are taxable!

Are you confused? These are critical individual and family planning decisions that shouldnot be taken lightly.  For a betterunderstanding of these policies and rates, feel free to reach out to me atRob at InsuranceDoctor.us.


Robert C. Intelisano, The Insurance Doctor111-14 76th Ave., Suite 207Forest Hills, N.Y. 11375  917-359-3985www.InsuranceDoctor.us
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