HOUSTON BUSINESS REVIEW

Health Tip: Disability Incurrence Traps , and proper planning for Disability Insurance
By Mike Alexander Sr.

Mike is involved with several organizations including the National Association of Health Underwriters, Independent Insurance Agents Association, East End Chamber of Commerce, Better Business Bureau and the National Association of Small Business Owners, to name a few. Mike is a licensed Risk Manager and highly regarded in the insurance industry.

For more information on ABM and Mike Alexander, visit their site here.

One out of 4 Americans will miss at least 90 days of work due to an injury or illness between the ages of 35 and 65. Disability insurance can prevent these medical disasters from becoming a financial nightmare.
However, most DI products are purchased through deeply flawed policies thru an employer group plan. Employees with this group coverage are not adequately protected.

Here is what to watch for with Employer group DI plans.

Employer sponsored DI plans in which all of part of the premium is paid by the employer typically claim to replace 60 to 70% of an employees income when disabled after the waiting period.
However these promises are empty and deceptive. Insurrersare allowed to reduce the benefits that pay dollar for dollar for any benefits the Disabled employee receives from his state workers comp plan, SSDI, and even cash settlements received for pain and suffering, in an accident case.
Any money these policies pay our are taxed, which leaves even less money for the employee.

Other issues:
An employer might eliminate the DI plan at any time.
An employee may not be able to take this DI policy with him if he quits or is terminated.
If a claim is denied , the employee must sue in federal court, and there is no trail by jury, no recovery for emotional distress and no punitive damages, since group Di plans fall under ERISA guidelines.

Why everyone should have an individual DI plan along with your employer paid plan.
You will receive your income befit Tax Free, You not your employer ,have control over the coverage. and if your claim is denied by the carrier, you can sue in court and demand trail by jury in the state court.

The downside to individual DI plans is cost. Individual DI can be expensive to purchase
Two way to reduce your cost:Increase your waiting period from 90 days to 180 days, this should reduce your cost by 20%, to do this , you should have a 6 months of salary in the bank to live on.
Women should ask their agent if unisex policies are available, this could save you as much as 20% for Women.

Features you should look for in Disability coverage's:
Own Occupation Protection:: without this provision in your policy the insurer could reduce your benefits by the amount you could earn, even in a line of work that you don't like to do.
(Example: A dentist is in a car wreck and loses full use of one hand. Without ""own Occupations protection""her insurer could say that she could still work as a helper and reduce the DI benefits by the amount she could earn . With the full Own Occur protection, the dentist would receive the full benefit for as long as she cannot function as a full time dentist.

Non Cancelable & guaranteed renewable to age 65:
With this provision in your policy, your insurance company cannot cancel your coverage until you turn 65 and go on social security Di. Another great benefit is that NonCancalble policies have Fixed premiums for the life of the policy.

Total Disability & partial Disability coverage:
some policies will cover for a partial amount if you could work part time and return to work part time, the plan would pay you the difference for your partial pay.

Features I recommend:

COLA : cost of living adjustment
This feature will increase your benefit each year that you are not disabled and help keep place with inflation

FUTURE INCREASE Option
when you income rises over the years, you want to be sure your policy will allow you to increase your benefits each year.

Ask for a two year contestability cause in your policy, once your policy has been in force for two years, the insurance company cannot contest any statement in your application.s

Be sure you ask your agent for at least 4 different quotes from different carriers. One plan does not fit the needs of all people. Also be sure that the company is A rated or better with Am Best.

If you would like a free quote on 4 carriers, please email me at macbs@flash.net or visit our web site at wwwl.abminsuranceservices.com
The top 'Four DI Companies are

• Guardian
• Mass Mutual
• Northwestern
• UNUM