If you became disabled today would your income be sufficient to maintain your current standard of living? Disability income insurance is designed to provide for the basic necessities of daily living by replacing a percentage of your income in the event that you sustain a disabling accident or illness. However, over 70% of the working population does not have adequate long term disability insurance.
While most everyone insures their homes, cars, boats and even their lives, many fail to plan for a disabling accident or illness.
Probability of commonly insured events occurring during the course of one year:
| Risk | Chance of Occurrence |
|---|---|
| Auto accident damage | 1 in 5 |
| Disabling accident or illness | 1 in 21 |
| House fire | 1 in 96 |
| Death | 1 in 114 |
Source: Field Guide 2001, National Safety Council, World Almanac
Ironically, the chance of disability is significantly higher for most ages than the likelihood of death. The statistics below tell the story.
Odds of a disability versus death before age 65
| Age | Disabilities per 1,000 People | Deaths per 1,000 People | Disability vs Death Ratio |
|---|---|---|---|
| 27 | 5.17 | 1.46 | 3.54 to 1 |
| 32 | 5.36 | 1.64 | 3.27 to 1 |
| 37 | 7.45 | 2.14 | 3.48 to 1 |
| 42 | 10.22 | 3.22 | 3.17 to 1 |
| 47 | 13.93 | 4.68 | 2.98 to 1 |
| 52 | 17.52 | 6.82 | 2.57 to 1 |
| 57 | 23.02 | 10.23 | 2.25 to 1 |
*1985 Commissioner’s Individual Disability Table B, 1980 CSO
Have you failed to insure your most valuable asset? Ask yourself the questions below:
- Could your family continue at the same standard of living without your income?
- How long would your savings hold out?
- Could you afford to keep your home? If not where would you live?
- What about college for your children?
Adequate disability income insurance is a critical component of any sound financial plan. No matter what your occupation, a disability can have a substantial impact on your ability earn an income. Please do not overlook the importance of this valuable protection.
Key Man Disability Income Insurance FAQs
How Much does Disability Income Insurance Cost?
The cost of disability income insurance is dependent upon a number factors including: occupation, income, health and the benefits and type of policy selected. For a custom disability insurance quote, call MEG Financial at (877) 583-3955 or answer a few short questions and receive your personalized quote.
When am I Considered Disabled?
The “definition of disability” may vary significantly among insurance companies. The most comprehensive definition of disability is “own occupation” which means the insurance company will pay benefits if you can’t work at your own specific occupation even if you are working in another capacity. There are several different definitions used by insurance companies to determine an individual’s eligibility for disability benefits. For more information see the article, “Comparing Disability Insurance Policies“.
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If I am Disabled, When do Benefits Start?
Before any benefits are paid, a waiting period called the “elimination period”, must be satisfied. This is the period of time where an individual is disabled but benefits are not paid. At the time the disability policy is purchased, you can select the appropriate elimination period that best meets your needs. Elimination periods can be as short as 30 days or up to 365 days depending on the type of policy. The shorter the elimination period, the more the policy will cost. The most common elimination period is 90 days. Benefits can start after one month or up to two years after you become disabled.
If I am Disabled, how Long will my Benefits Last?
At the outset of the policy, you can choose the appropriate benefit period based on your specific needs. Benefits may be payable for two years, five years, to age 65 or to age 67 with some companies. Avery few companies offer the option of lifetime benefits. Policies that have longer benefit periods out to age 65 or 67 are more expensive than those with only 2 or 5 year benefit periods. The benefit period selected should match your individual needs.
How Much Disability Insurance Benefits can I Buy?
Depending on the type of disability insurance policy and the income of the individual, most companies will write 55-65% of annual income up to a certain maximum. This maximum is different with all companies but the cumulative maximum is $15,000 for traditional person disability income insurance. There are policies available above the $15,000 monthly benefit but these are specialty policies not written by traditional insurance providers. If your need for individual disability income insurance exceeds $15,000 a month, please call MEG Financial at (877) 585-3955 and we will prepare you a custom quote.
Can My Disability Insurance Policy be Cancelled or My Premiums Increased?
After the definition of disability, the two most important features of any individual disability policy are renew-ability and cancel-ability. You should only consider a policy if it is guaranteed renewable and non-cancellable. If your policy includes these features, the insurance company can never increase your premium rate or change the terms of your policy as long as you pay your premiums on time. Any policy offering a less than guaranteed renewable and non-cancellable features should be considered inferior.
What are the Requirements to Obtain a Disability Insurance Policy?
In order to obtain a disability insurance policy, you must to complete and sign an application for insurance, have a routine insurance exam, and provide financial documentation to prove your income. Additionally, there may be a brief telephone interview required depending on the type and size of the policy.
What is Key Man Disability Insurance?
Key man disability insurance is purchased on the life of a key employee or executive to protect the business if a disabling accident, injury or illness should occur. It provides peace of mind to companies and business owners alike knowing that the business can continue operations without major disruption if a disability strikes a top salesperson, executive or key employee. For more information, see What is Key Man Disability Insurance?
What is Disability Buy-Out insurance?
Disability buy-out insurance is designed to provide the funds needed to purchase a disabled owner or partner’s interest in the business if they become disabled. Disability buy-out insurance should be made part of any business continuation plan or business succession plan as it will assure that the disabled business owner receives a fair market value for his or her interest in the business. At the same time, it will protect all business owners from the threat that a disability may impose on the company by allowing them to buy-out the disabled owner’s interest at an agreed upon price set forth in a buy-sell agreement.
What is Business Overhead Expense insurance?
In the event that a business owner is disabled, business overhead expense insurance provides funds that can be used to recover certain operational expenses of the company. The income provided by a business overhead policy can allow the company to continue operations during the business owner’s disability. Policies are usually purchased for short term periods ranging from 12-24 months depending on the needs of the business. They are designed to “buy time” while the business owner recovers from a disability. If the disability is expected to be long term or permanent, the company can be sold at fair market value or dissolved. For more information see, Business Overhead Expense Insurance.
For any additional disability insurance questions, please call MEG Financial today at (877) 583-3955. A disability specialist can help you determine the policy that best meets your needs and provide a custom quote.
Call MEG Financial today at (877) 583-3955 with questions about disability income insurance or for a no obligation quote. You may also complete this simple disability income insurance request form and a licensed insurance professional will contact you to review options.
