As you enter the workplace, you may be given the opportunity to participate in an employer-sponsored plan. In general, group plans are designed to provide a basic level of disability coverage at a modest cost and with minimal underwriting. A typical group disability plan covers up to 60% of your income. Some cover as much as 66 2/3%. However, benefits are generally subject to a cap e.g. $5,000 - $10,000 per month, which may leave you underinsured. Typically the benefit payable under an employer-sponsored group plan is offset by payments from government programs such as Social Security disability benefits.
Individual disability insurance may offer the most generous level of benefits, plus a wide array of policy options to tailor coverage to fit your specific needs. The policy is owned by you, which means that you can take the coverage with you, regardless of where you practice. You must qualify financially and medically for an individual disability insurance policy.
There are differences among individual DI policies. The best policies are:
When tailoring an individual disability policy to meet your requirements, these are the details you must consider:
- How long do I want to wait before benefits begin? (Elimination period)
- How long do I want benefits to last? (Benefit period)
- How much benefit might I be eligible for? (Monthly benefit)
- Am I protected if I am partially disabled? (Stress the importance of coverage for partial or residual disabilities.)
- What happens when I recover, but continue to have a loss income?
- As my income rises, can I guarantee my right to increase coverage in the future, without medical underwriting? (Benefit Purchase Option Rider)
- Will my benefit keep pace with inflation when I’m disabled? (Cost of Living Adjustment Rider)
Do I need life insurance?
- Ask yourself: Will someone suffer financially if I die? If so, you may need life insurance.
How much do I need?
- Do a financial needs analysis to figure out immediate expenses (funeral costs, mortgage and other debts, uncovered medical costs, taxes, estate settlement costs, etc.)
- Then calculate ongoing expenses (food, housing, utilities, transportation, health care, clothing, insurance, etc.)
- Finally, determine future expenses (college, retirement, etc.)
- Combine the amounts needed for current and future financial obligations, then subtract spouse’s earnings, savings, investments, and life insurance you already own. The balance = the amount of life insurance needed.
What kind of life insurance should I buy?
- The two questions to ask are: How long will I need to be insured, and what can I afford to spend?
- Remember: The cost of life insurance typically increases with age, and one of the biggest mistakes is to underestimate how long you’ll need to be covered.
Term Life vs Permanent Life
Life Insurance Riders
Today’s policies offer many additional riders that add value during the insured’s lifetime:
- Waiver of premium to pay premiums, or cost of insurance, should the client become disabled.
- Accidental death to pay additional proceeds in the event of accidental death.
- Child riders to offer coverage on children of the insured at a lower rate than an additional policy.
- Living benefits, or accelerated benefits riders that allow the insured to access the death benefit amount for care if he or she becomes chronically or terminally ill, as described by the rider, and meets the other requirements of the rider.
Long-term care insurance is an insurance product that helps pay for the costs associated with long-term care. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.
Final expense insurance is designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses.
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