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Russell F. Porter Insurance Services

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Disability - Loss of Income:


The Living Death

There is something that seems worse than death to an able - bodied person. It is life without an able body. Especially for a breadwinner whom has accustomed his/her family to a lifestyle, a disability handicaps more that the body. The pride of an able person is to provide for his/her own.

Almost everyone possesses insurances of various kids. We insure our homes, autos, boats, businesses, life, health and so on. What happens if we fail to insure our ability to bring in the bacon? If you are like me, you were immortal until around age forty. Then our mortality comes crashing in around us. A disabling injury or illness cripples our income even if we have one year of State disability income, Social Security benefits, or even Workers Compensation benefit from our job. Why? Because these benefits are minimal at best. And guess who is the most vulnerable of all? The self employed.

A disability in our youth is stressful. So is an older age disability, but seniors often have retirement benefits to draw from to reduce financial stress, less responsibility in raising a family & less debt.

How can we protect our assets from a disability? By purchasing income replacement disability coverage in our working years and by purchasing Long Term Care coverage in advance of age. But it is not as simple as that. Why? Because our health is the crucial factor for underwriting this coverage. Our money cannot buy this coverage. Only those who are privileged with good health now are free to use their money to purchase this protection.

Likely we are all exposed to sales pitches for the Insurance industry. Most of these at one time or another have a place. Disability Income planning protects all of these. Nonetheless, it is the most neglected form of coverage in the insurance portfolio. We do not plan to fail. We sometimes just fail to plan.

I place long term plans with Mutual of Omaha and John Hancock.

Policy Features:

  1. You can decide on Accident only coverage.
  2. You can obtain both Sickness and Accident coverage.
  3. You decide how long you can wait (Waiting Period) before the policy kicks in. (Short term disability can begin immediately whereas Long Term Disability does not begin until at least one month passes). The longer you wait before your coverage begins to pay, the less the premium cost is.
  4. You decide how long you want your policy to provide benefits. (Short term usually will not go longer than two years, whereas Long term can continue until you retire, usually around age 65. This would increase the cost of your policy. The longer you want your policy to pay you, the more your premium will cost.
  5. You decide if you want a policy that will pay above and beyond what Social Security disability pays, and beyond the time limit of Workers Compensation (if injured at work), and in addition to short term disability benefits from your job's benefit package (such as AFLAC or Colonial Supplement plans). This would increase the cost of your premium.
  6. You can purchase Money Back riders called Return of Premium- for extra policy premium.
  7. You can also purchase a Waiver of Premium, meaning that once you begin filing (a claim) for benefits the Insurance Company will not bill you for as long as your disability lasts. This rider increases the policy cost.
  8. Be sure to have in writing whether the Insurance Company will accept the opinion of your personal physician about your condition, or if you must obtain the opinion of the preferred doctor that the Insurer uses.
  9. If you are self-employed, there is a Business Overhead protection policy available. That deals with the expense of running your business while you are disabled. That includes such things as the cost to hire someone to do your work, the cost of the facility from which you operate- etc.
  10. If you are disabled and unable to perform certain manual labor, you may be still able to work in a different, less demanding occupation. Be sure whether your plan will pay for rehabilitation to get you back to work.
  11. A plan that covers both sickness and accidents is more realistic.
  12. You can purchase a social insurance rider that assures to pay the difference between your Long Term Disability benefit amount and:
    1. What you receive from State Disability while it pays, (usually for one year).
    2. Workers Compensation benefits,(while it lasts).
    3. Social Security disability after it kicks in, (usually after about two years.)
    4. Most plans will waive your premium payments once you have been disabled for six months, and will also refund those first six months of premium from the date your disability began.
  13. Be careful not buy a disability plan, (even through your employment), with Before Tax money because your benefit income may then become taxable. Pay for your disability premium with after tax dollars.
  14. Those who are self-employed and are declined coverage by Insurance Companies for health reasons may be able to get some coverage through EDD.
  15. You can purchase a rider for extra premium that will pay your benefit if you cannot return to your occupation, and there is no requirement for rehabilitation to another occupation.
  16. There are varying classes of disability to consider. Total Disability Permanent, Total Disability Long term, total disability partial, Partial Disability Progressive, Short Term Disability- total and/or partial.
  17. Be sure to ask about Mental Illness benefits, as that is sometimes a legal loophole for insurers.

You need to be prepared to prove your health and income when you apply for coverage.

Most insurers will only insure you for sixty percent of your normal income.