By Larry Schneider
The best time to get a disability insurance income protection policy (or any other form of coverage) is immediately just prior to a disability! Seriously, even though that is not an inaccurate answer, the best time to get coverage is at the earliest possible moment when both financially feasible and practical (even though there may not be an obvious need at the moment). Health can change, circumstances can change, etc., all of which can affect eligibility. Why then do breadwinners wait until it is too late?
Some reasons might be that they don't see the need or the urgency. Another reason might be that no one told them they should have it, or that this form of protection even existed. They could also have some false belief that they will never get disabled or that their employer or someone else will pay their expenses/wages if they do become disabled. Incidentally, one does not have to be a "paraplegic" in order to collect. Definitions vary, but the best one will say, "unable to do the duties of your occupation," even though you are working elsewhere, regardless of how much you earn! To learn how to select the ideal disability policy, just visit the author's web site. (www.di-resource-center.com)
To dispel some of these aforementioned false beliefs, refer to the chart that will statistically point out that "s---t happens," even at a young age!
What happens if someone wants the income protection coverage, but has already been turned down for any number of reasons and not necessarily due to health? Is the "best" time gone? No. Not if an agent knows where to go for assistance and a probable solution. There are brokers who specialize in hard-to-place situations, which can be caused by approximately 10 or so major categories (for example, health, occupation, new business, working from within the home, working abroad, overweight, etc., just to name a few).
Does the financial planner or agent have a responsibility to their client as far as the "best time" is concerned? You betcha! Should these professionals have realized that disability insurance is the cornerstone of financial planning and have recommended it? You betcha! Why is it then, that disability insurance isn't sold or presented more than the meager amount reported? Is it due to lack of product knowledge or just an oversight?
In any event, returning to "best time" the individual should apply for this valuable form of coverage is at the earliest possible moment and the sooner the better, even though they can't immediately afford the 2 to 4 percent of income (depending on age/sex/occupation) the full benefit amount/benefit period they are eligible for might cost. Given the fact that most disabilities last less than two to five years, what's wrong with recommending that period of time as a possible (initial) benefit period? As a result, the cost will then be substantially reduced. There are other solutions for lowering the cost, without reducing the benefit period as well. Remember a half of loaf of bread is better than none, besides, most carriers have an option that will allow more coverage to be purchased in the future, strictly based on financial underwriting (no evidence of medical insurability). This future increase option has some other benefits to the insured as well.
The last reason is based on premium and potential benefits. Refer to the following chart that clearly points out that the lowest cost per $100/month of benefit is at the younger ages.
Lastly, when should the coverage be discontinued? Only when that person is either self-insured or retired before the coverage terminates (which is usually age 65, however if you are still working, you can keep the coverage at least to 75 and with some carriers longer). If money becomes the issue, the policy really doesn't have to be dropped even then! Coverage can be reconfigured, to create a lower benefit amount, or to a shorter benefit period. Either of these two solutions, will lower the premium and possibly enough to keep it in force.
Larry Schneider is a disability specialist with over 35 years experience and is the owner of Disability Insurance Resource Center. He can be reached at: [email protected]. For more information on his company and his CV, his website is: www.di-resource-center.com. His toll free number is: (800) 551-6211. He is also an expert witness consultant for claims which have been inappropriately denied and a national resource for hard to place applicants as well as a brokerage for standard cases. He has also developed a DI sales/marketing Turn-Key System to help agents become overnight experts.
