Disability Insurance Options
The definition of total disability is a key factor in determining how valuable the policy will be during a disability.
The best contract offers a “true own-occupation” definition of total disability. It considers you totally disabled if, solely due to injury or sickness, you are not able to perform the material substantial duties of your occupation, even if you are gainfully employed in another occupation.
This definition of total disability makes it possible to work in another occupation and still be eligible for disability benefits.
Sometimes an illness or injury doesn’t cause a total disability, but it limits your ability to work and reduces your income. Or, you might suffer a total disability and return to work, but not at your pre-disability level of income. For these reasons, you should look for a policy that provides benefits for partial (also called “residual”) disabilities.
Different contracts have different requirements. The Provider Plus Residual Disability Benefit Rider* provides a benefit when, due to injury or illness, you suffer a loss of 15% or more of your income.
Other companies may pay only if you have a 20% loss of income or more, and some may require a loss of time or duties.
The Provider Plus policy replaces lost income dollar for dollar, up to the policy’s monthly benefit, for the first 12 months, then benefits are proportionate to loss of income. If the loss is 75% or more, they consider the loss 100%.
Different companies have different ways of paying out on a residual claim.
When you choose a policy one of the options you need to decide is when do you want your benefits to begin once you become disabled. Benefits are payable from one month to up to two years after you become disabled.
Make sure the policy you purchase does not require the days you are disabled to be consecutive and allow an “accumulation period” to achieve the elimination period requirements.
This is the amount of time you will receive your benefits during a continuous disability from the same cause. Different carriers offer different benefit periods that range from 2, 5, 10 years, to age 65, to age 67, to age 70. Some carriers offer a graded lifetime benefit. Generally, the shorter the benefit period, the lower the premium will be.* The loss of income Indemnity payable under the Residual Disability Benefit Rider will be reduced by benefits payable under disability insurance policies that were in force before this rider was issued should the sum of all disability benefits exceed actual lost income
Cost of Living Adjustment Riders
This rider is in place to protect against inflation. The rider is triggered only when you are on claim and have received benefits for at least 1 year. Depending on which carrier you choose the benefit can be increased by 3% or less or a maximum of 6% as long as you are on a claim.*
Future Increase Option Rider**
This rider insures that benefits keep pace with rising income by providing the opportunity to purchase additional coverage on each policy anniversary until age 55, without further proof of medical insurability. This rider is extremely important for residents and fellows as well as young physicians who are signing their first contract. The potential for your income to grow substantially is a reality and your medical insurability should be protected utilizing this rider. You have to medical qualify for this rider.
An optional rider offered by some carriers to provide extra protection from the financial impact of severe disabilities resulting in cognitive impairment, the loss of two or more Activities of Daily Living, or irrecoverable loss of sight in both eyes, hearing in both ears, speech or use of both hands, both feet or one hand and one foot in their entirety.
*This benefit is not necessarily protection against increases in the cost of living.
**Restrictions and limitations apply. While medical information is not required when exercising a future increase option, applications to exercise an increase option will be financially underwritten taking into consideration both the applicants then current income, as well as all disability insurance which is then in force, or for which the insured has applied or is eligible to receive.