There are independent rating companies that rate financial institution on their financial strength. They each have different rating scales. The most well-known are: A.M. Best, Fitch, Kroll, Moody’s, Standard and Poor’s and Weiss.
The inability to perform the material and
substantial duties of ANY occupation for which you are suited by training, education, or experience. This is a very restrictive definition of disability. The insurance company will not pay if you can work doing anything else, anywhere. Basically, if you can bag groceries or answer a phone, you are not collecting your benefit.
How much money the disability insurance company would pay you if you were to become disabled.
A benefit period is the length of time during which an insurance policyholder or their dependents may file and receive payment for a covered event. All insurance plans will include a benefit period, which can vary based on policy type, insurance provider and policy premium. Most individuals are familiar with the benefit period for healthcare insurance, but disability, long-term care, homeowners, and auto insurance policies also carry a benefit period.
The length of an insurance policy’s benefit period will affect the price of the premium because the longer the benefit period, the greater is the insurer’s risk. Toward the end of the benefit period, the insurer will notify the policyholder of the cost to renew the same coverage for the coming term. For benefit periods to continue uninterrupted, the policyholder must submit the premium payment for the next term before the current coverage expires.
In some insurance policies, the benefit period begins when the insurer accepts the first premium payment—either the full amount due or a scheduled installment. However, other types of policies require that the policyholder finish a waiting or elimination period before the benefit period begins. For example, a long-term disability policy may require a wait of one year before honoring claims for payments. No benefits are payable during any probationary period.
Catastrophic coverage gives you an additional monthly income if you become disabled and in addition are unable to perform 2 of the 6 activities of daily living (eating, bathing, getting dressed, toileting, transferring and continence). This additional income helps you afford assistance that isn’t covered by your health insurance while also providing your income replacement.
This is when you request to use your insurance protection. Read your policy carefully. If you have an injury or illness that prevents you from working full or part-time, you should file a claim with the disability insurance company. Agents and brokers cannot be a part of the claims process, but we can help you understand your benefits provide you with the claims department’s phone number. The sooner you file your claim, the sooner you will get paid, after the elimination period is satisfied.
Cost of Living Adjustment rider increases your monthly benefit, while on a claim, in order to keep pace with inflation. This will help the purchasing power of your monthly benefit stay relevant to the actual cost of goods and services.
The wording of any insurance contract is very important. This holds true for all definitions included in a disability contract. The Definition of Disability determines if and how you qualify for being “disabled” under the contract and if you will get paid on a claim. There are various definitions of disability available; True Own
Occupation with specialty language, Enhanced Own Occupation, Modified Own Occupation, Transitional Occupation, Regular Occupation, Any Occupation. Physicians are best to elect coverage with the True Own Occupation definition of disability with specialty language. – This definition allows you to work in another occupation (or specialty in medicine) and continue to collect your full monthly benefit, regardless of how much money you might earn in that other occupation (or specialty). This is also known as Double Dipping.
In disability land, this means that you can receive your full monthly benefit, if on the claim, and continue to earn an income in another occupation or specialty.
This is a certain circumstance or condition where the insurance company will not pay a claim. Some exclusions are permanent, and some might be temporary, where the insured can apply to have the exclusion removed at some point in the future.
Elimination period is a term used in disability insurance to refer to the time period between an injury or disability and the receipt of benefit payments. In other words, it is the length of time between the beginning of an injury, illness or disability and receiving benefit payments from an insurer. It is sometimes referred to as a ‘waiting’ or ‘qualifying’ period. Before benefits are paid, most insurance policies require a policyholder to qualify throughout the elimination period.This means the policies require the party asking for payments to be injured, ill or disabled during this period.
During the elimination period, the policyholder is responsible for any care they require. This requirement is a common feature in policies like long-term care insurance and disability insurance. In some insurance policies, the elimination period serves as the deductible. So, instead of paying a sum of money for required care, the policyholder has a set number of days during which they pay for their own care. Elimination periods range from 30-365 days,
depending on the policy.
Insurance premiums and elimination periods have an inverse relationship. The shorter the elimination period, the higher the insurance premium will be; the longer the elimination period, the lower the insurance premium will be. When making a decision about the length of elimination period to choose, it is important for the policy holder to consider their ability to pay
for care expenses.
A future purchase option is a feature of long-term disability insurance that allows policyholders to increase their insurance coverage annually as their income increases, without medical underwriting, in exchange for paying a higher premium.
The future purchase option is typically valid until the policyholder reaches a specified age. The future purchase option means that even if a policyholder develops a health condition that would make it expensive or impossible to qualify for a new policy, they can purchase additional coverage under their existing policy because the future purchase option does not require the policyholder to pass a medical exam.
Future purchase options are also called “future increase options” or “guaranteed insurability.”
The cost to purchase extra insurance through the future purchase option depends on the policyholder’s age. Also, the insurance company decides how much extra coverage to issue based on the policy’s original coverage amount and the economy’s inflation rate.
The additional cost for a future purchase option is usually fairly low, making up approximately 2 percent of the total policy cost. Periodically but no more than once per policy year, the policyholder will be offered the option to increase the benefit amount on their policy. This presents an ideal situation if, for example, they become ill or disabled and can afford higher premiums later on down the road.
Also known as Future Increase Option, Benefit Increase Option, Benefit Update Option, and Future Increase Option depending on the insurance company. This rider gives the insured the ability to increase the monthly benefit typically once a year on the policy anniversary or every three years without providing evidence of good health. The only qualification is financial. The insured must be able to justify any increase according to total salary and subject to any other group or individual disability coverage the insured might own, as insurers will not over-insure you so there remains an incentive to return back to work. Some insurance companies will allow a benefit as high as $20,000 per month while others only go as high as $15,000 per month.
A provision in most disability policies that requires the insurer to renew the policy on its anniversary as long as you continue to pay your premiums.
Is an insurance policy that protects an insured from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a long period of time.
The three ways insurance companies determine a partial or residual disability claim: loss of time, loss of duties or loss of income (or a combination of these)
Mental Health Coverage specifies the benefit period for disability claims due to mental health-related illnesses such as anxiety, stress, depression or drug and alcohol related illnesses. If for some reason you are hospitalized due to a mental health-related illness, this definition does not apply but instead, your base policy definition applies and your coverage will be paid out. For mental health-related illnesses that do not put you in a hospital but still keep you from working, you can expect to see benefits paid out for these designated time frames.
This determines how an insurance company will pay a claim when the insured suffers a loss of income based on a mental nervous and or substance abuse claim. Examples of this are claims based on depression, anxiety, bipolar, alcoholism or substance abuse. Many companies restrict this type of claim to a maximum payout of 24 or 60 months while other companies might pay according to the policies base benefit period i.e to age 65 or 67. Some medical specialties are automatically given limited benefit periods due to the insurance companies prior claims experience. If you have a history of mental nervous illness, securing coverage can be quite challenging. Depending on the diagnosis, some companies are better than others. Definitely disclose and discuss this information and any other medical history, with your broker, prior to making an application, so there are no
surprises during the underwriting process.
Disability insurance protects you from the financial risk of losing your income when you become so sick or disabled that you can’t work. The degree to which you must be disabled to qualify for disability insurance benefits under your carrier’s policy is described in a section about the definition of disability.
You must meet the policy’s definition of disability in order to qualify for full disability insurance benefits. However, disability insurance policies differ on what they consider “disabled enough” for benefits. In some cases, if you can work any job, even a low-paid one, you won’t qualify for benefits under the disability insurance company’s terms. This type of policy is called an any-occupation policy. Because the bar for claiming disability insurance benefits is much higher–meaning that the carrier is less likely to have to pay out–any-occupation disability insurance is often relatively inexpensive.
The other most common type of disability insurance is own-occupation. Also called regular-occupation disability insurance, this type of policy allows you to claim disability insurance benefits even if you can earn an income doing something other than your most recent job. That means you must be disabled, but not so disabled that you can’t work at all. The carrier has a much higher likelihood of approving your disability claim under this type of policy.
Own-occupation disability insurance is the most lenient type of policy, and also the one that best protects your income; if you can’t satisfy your disability insurance company’s definition of disability, what’s the point of paying premiums? While you’ll pay more for own-occupation disability insurance, it’s also the best way to make sure you’re getting the most out of your coverage.
This is a definition of disability found in many disability policies. The inability to perform the material and substantial duties of YOUR occupation at the time of disability, and not working in another occupation. If you do choose to work in another occupation, your disability benefit is either offset by your new income or not paid entirely. This is a more restrictive definition of disability.
It guarantees that the insurance company cannot cancel your coverage. You can always cancel, but they cannot. It also governs the entire policy. The Non-Cancelable provision also guarantees that the insurance company cannot increase your premiums, nor change the definitions. Most quality disability policies either offer this as an option or have this built into the policy. This provision is typically offered in conjunction with the Guaranteed Renewable provision.
This is a classification assigned to your occupation or specialty if in medicine, which determines your rates. More physical occupations and invasive specialties will have an occupational classification that results in higher rates than those in less physical occupations or noninvasive specialties.
Partial Disability Insurance (also called residual disability insurance) is used if you become unable to perform your job at full physical capacity but are able to work part-time. You will receive compensation for lost wages due to the injury or illness keeping you from working full-time. This is not an editable item, but some insurance companies have a lower threshold than others. The lower the threshold the more beneficial this rider is to you, because you have to lose less income before you start to see it being replaced.
This is the money you pay the insurance company in exchange for your insurance protection/coverage/policy. You can pay this monthly, quarterly, semi-annually or annually and you can always change the premium payment mode. Some companies charge small fees for all premium modes besides annual.
This feature is often included with the residual/partial disability rider. Recovery provides an insured with a continued benefit, even if back to work on a full-time basis. The theory behind this is that it can take time to build your income up to where it was prior to your disability.
A guaranteed renewable policy is an insurance policy feature that ensures that an insurer is obligated to continue coverage as long as premiums are paid on the policy. While re-insurability is guaranteed, premiums can rise based on the filing of a claim, injury, or other factors that could increase the risk of future claims. Most insurers offer both guaranteed renewable policies and non-cancellable policies. If premiums are similar for both a guaranteed and a non-cancellable policy, the non-cancellable policy is a better deal for the consumer because it offers the double guarantee of re-insurability and locked-in premiums.
In total, insurers typically offer three types of policies: non-cancellable plus guaranteed renewable, guaranteed renewable, and conditionally renewable.
A non-cancellable and guaranteed renewable policy guarantees that there will be no changes to your premium schedule, your monthly benefits or your policy benefits up to age 65 (or another specified age) unless you request them. The exception to this is if you file a claim, experience an injury, or if there is some other factor that the insurance company believes increases the risk of future claims. In this case, the insurance company can raise your premiums.
This type of policy is often elected when purchasing disability insurance. Most people cannot know for certain that their income will never go down in the future. If you purchase a non-cancellable and guaranteed renewable policy—even if your income goes down later in life and you are totally disabled—the company will pay you the total disability benefit you originally placed in-force.
Even though there is not a drastic price difference, non-cancellable and guaranteed renewable policies typically cost more than guaranteed renewable policies. Non-cancellable and guaranteed renewable policies are generally preferred because the policyholder will not be impacted if an insurance company announces a massive rate increase in the future.
This insurance policy is not as comprehensive as a non-cancellable and guaranteed renewable policy. With a non-cancellable and guaranteed renewable policy, the policyholder can choose to make changes to their premium schedule, monthly benefits, or policy benefits.
With a guaranteed renewable policy, that choice belongs to the insurance company and most insurance companies will try to decrease their liability if they can.
A conditionally renewable policy offers the least benefits to the policyholder compared to the other two policies—non-cancellable and guaranteed renewable and guaranteed renewable. A conditionally renewable policy offers no guarantee that your same benefits will be renewed every year; the insurance company can change the conditions of your policy every year if they choose to.
A benefit calculated as a percentage of the total benefit, based on the actual amount earned pre-disability and the amount now earned working part-time.
These are the components or features of disability policy. These can include COLA, Residual, Future Increase Option, Catastrophic Benefit and many more.
A standard long-term disability insurance policy will help cover all of your expenses. But when it comes to student loans, a student loan disability rider can give you a little bit of extra protection.
For a small addition to your monthly premium, a student loan disability rider adds on coverage to the benefit amount that goes toward student loan payments. There are some caveats to student loan disability riders:
A student loan disability rider is an affordable addition to a policy and can work well for someone
with high student loans who wants to make sure there’s dedicated protection going to that debt.
The inability to perform the material and substantial duties of YOUR occupation at the time of disability, regardless if you choose to work in a broader specialty or different occupation. Your new income plus your disability benefit may not exceed your pre-disability income. If your income plus disability benefits exceed or match your pre-disability income, your disability benefit will be reduced or not paid.
This is the medical or financial requirement that needs to be satisfied in order for your policy to be approved. All insurance companies require either a paper or electronic application to start. All companies will check the MIB (medical information Bureau) and will also check the RX systems known as a script check. In addition, most companies will need you to complete some or all of the following:
1. Answer medical questions either in person with an examiner or over the phone in a Tele-interview.
2. Labs & Vitals – Along with or separate from the medical questions, an examiner will coordinate, at your convenience, a time to draw blood, urine and take your height and weight along with your blood pressure. Depending on the amount of the insurance coverage applied for, a physical exam can also be required.