| Be
more concerned with quality than price. |
| |
|
Like life preservers and
heart surgery, price should not be the
first consideration when it comes to
disability insurance. Expect to pay
1% to 4% of your income for a good individual
policy. When you consider that the future value of your income
could exceed $10,000,000, good coverage is a bargain. |
|
| |
| Look
at the company ratings. |
| |
|
Your disability company
could potentially be paying your salary
for the next 20 years. It’s important
they be financially sound. |
|
All disability companies
are rated by third party rating companies.
We don’t recommend |
| |
anything lower than an
“A” rating by AM Best; an
A+ or A++ is even better. |
|
| |
| Be
careful of group plans. |
| |
|
Group plans may be changed
or canceled at any time. This could
leave you without |
| |
coverage when you need
it. |
|
Most group plans can’t
be taken with you if you should decide
to switch employers. |
|
Most group plan benefits
are taxable and don’t cover bonuses,
leaving you with a lower net after-tax
benefit. |
|
Many group disability
plans have a restrictive definition
of disability. They require you to be
COMPLETELY disabled before they will
pay a benefit. In other words, if you
have the ability to do any type of work,
benefits may not be payable. |
|
Benefits may be offset
by income received by workers comp or
social security. |
|
Most group policy benefits
don’t keep pace with inflation. |
|
Many group plans don’t
cover a partial disability (the most
common type of disability). |
|
| |
| Make
sure you understand the definition of disability. |
| |
|
This can mean the difference
between getting paid and not getting
paid. |
|
| |
| Buy
from a specialist. |
| |
|
There’s a lot to
understand about disability insurance.
Most insurance agents don’t know
how the contracts work. Find someone
who specializes in it. |
|
| |
| Consider
the inflation protection benefit. |
| |
|
A person disabled for
20 years with a $5,000 per month benefit
would be paid a cumulative benefit of
$1,200,000 without adjusting for inflation;
$1,641,000 if the benefit were increased
by 3% per year. |
|
| |
| If
three or more people from the same employer
buy a policy, there can be substantial savings. |
| |
|
In some cases, three or
more women physicians can save nearly
50% per year when they buy their policies
together. |
|
| |
| The
90 day waiting period is usually the most
cost effective. |
| |
|
There is a substantial
savings in choosing a 90 day waiting
period over a 30 or 60 day |
| |
period. Going beyond 90
days doesn’t affect the premium
very much. |
|
| |
| Just
because your association sponsors it, doesn’t
mean it’s good. |
| |
|
In almost all cases, association
plans are group plans (see group plans). |
|
Make sure you read the
master association contract (not just
the marketing piece they give you) so
you can understand all of the contractual
provisions. |
|
| |
| Make
sure your policy is guaranteed renewable and
non-cancelable. |
| |
|
This means the insurance
company can never raise your rates or
cancel you policy. |
|
Another reason to think
twice about group or association plans. |
|
| |
| Buy
from a broker. |
| |
|
A broker will represent
more than just one company’s point
of view and can offer you |
| |
objective advice. |
|
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