What you need to know about disability insurance.

My employer is offering a group Disability Plan. What should I do?

There are some noteworthy features that make Individual Policies an important first step in your planning process. A typical group LTD plan may lack some features. For example, when it isn’t Non-Cancellable or Guaranteed Renewable, the rates can change or the policy can be cancelled by the issuing company. Many times Group Disability policies are not convertible. If you change practices you may not be able to take it with you. If they are convertible, they are often times limited in the number of options or benefits offered. In general, Group LTD does not have an explicit definition of Own Occupation Disability or is limited to a period or 24 to 36 months. They usually do not cover Presumptive Disabilities, offer Future Increase Options, and have limited if any Cost of Living Increases. Finally, the benefits are taxable to you if they are paid by the employer, thus reducing the amount of benefits you’ll receive.

Solution: purchase as much Individual Paycheck Protection before you are required to be under an employer’s plan. If you are already under the Group plan, you can receive an Individual Policy that will be combined with the Group Coverage giving you higher limits to help offset the taxes you will be required to pay under the Group Plan.

Are the Company Ratings important in my decision process?

The stability of the company and its ability to pay claims is very important. Since these may change over time, you may want to check on the following: Best ratings, Standard and Poor’s, Moody’s, Fitch and a Comdex Score that combines them and weights the total assets of the companies.

Are the Company Ratings important in my decision process?

The stability of the company and its ability to pay claims is very important. Since these may change over time, you may want to check on the following: Best ratings, Standard and Poor’s, Moody’s, Fitch and a Comdex Score that combines them and weights the total assets of the companies.

What do the terms Non-Cancellable and Guaranteed Renewable mean? Are these important?

When a policy is termed Non-Cancellable, it means that the company can never change the stated rate of the policy as written in the policy itself. Guaranteed Renewable means that you are the only person who can cancel your coverage, regardless of your health.

Is the contract language important?

The contract determines when and how a claim will be paid. Definitions of Your Occupation, Residual and Recovery Benefits are very important and we will work with you to determine the best option for your needs.

My practice earns a gross income which is different from my take home pay? Can I insure this?

Much of your earnings go to pay expenses in the practice. Individual Disability Insurance will cover what you take home, an Overhead Expense Policy will cover the medical practice expenses and should be designed to pay them as soon as possible. These premiums are deductible no matter what entity your practice is.

We have insured our practice with Life Insurance, in the case of an owner dying, to help his family get his value of the practice at death. Is there a vehicle available that will provide income to the practice or partners in the event of a Disability?

Several companies have Disability Policies that will pay a monthly benefit, a lump sum or a combination of these in the event that an owner of the practice becomes permanently disabled. It would be suggested that a review of the Buy-Sell/Business Continuation documents be done to design the appropriate coverage to insure the plan.

Can I insure my retirement contributions?

Currently there are both separate policies and options that some companies offer and will insure the contributions to retirement. These can be based on actual contributions or as a percentage of your income.

How do I decide what benefits are most important to include in my Disability policy?

We will be happy to guide you in this area. You may want to consider Cost of Living Increases as inflation protection which can be somewhat expensive but crucial if there is a long term illness. There are others that should be looked at on a personal basis.

Once I have decided which policy I want, what is the underwriting process?

The process usually will take from 3 to 8 weeks. It consists of an application with signatures and includes a medical portion. An exam by a paramedical firm is conducted at your convenience. Attending Physicians statements are provided by your personal physicians to the company. A personal history interview on some occasions will confirm the medical portion of the application. Documentation or proof of income may include tax returns, W2’s or an employment contract. An initial check for the premium in most cases may accompany the application to conditionally bind the application during underwriting.

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