• About
    • Differences
    • Pricing
    • Team
  • Services
    • Financial Planning
    • Investment Advisory
    • Insurance Solutions
  • Blog
  • Contact
Financial guidance for busy professionals
  • About
    • Differences
    • Pricing
    • Team
  • Services
    • Financial Planning
    • Investment Advisory
    • Insurance Solutions
  • Blog
  • Contact

How to choose a disability policy

2/8/2023

 
If you are considering getting a disability policy, it pays to know what to look for. Simply comparing prices (premiums) isn't enough. Here are a few basic guidelines to help you choose a coverage most suited for your needs.
Picture
Definition of Total Disability
How a policy defines "Total Disability" is the item you should focus on first and foremost. Whether you will receive benefits depends directly on how your carrier defines disability for your policy.

For example, here is a language from a sample policy of a carrier we work with: "Total Disability or Totally Disabled means that, solely due to Injury or Sickness, You are not able to perform the material and substantial duties of Your Occupation. You will be Totally Disabled even if You are Gainfully Employed in another occupation so long as, solely due to Injury or Sickness, You are not able to work in Your Occupation."

In other words, with this definition of total disability (referred to as "own occupation"), you are considered totally disabled if you cannot perform the material and substantial duties of your own occupation, even if you can be gainfully employed outside of your own occupation.

Obviously, the importance and benefits of the "own occupation" provision cannot be overstated.

Cost Of Living Adjustment (COLA)
With COLA, your disability benefit amount (after you are disabled) keeps up with inflation. Younger policyholders should consider adding this rider because of the longer duration of their working years. For example, if you are disabled at age 45 and unable to work, you will collect disability benefits for 20 years. It would be prudent to protect that "income" against inflation.

Mental Disorder Limitations
Most policies place limitations on mental health disorders which might include mental-, nervous- or substance abuse-related disability. They limit these benefits to a certain period, typically two years. Or, they may make you jump through some hoops like a written plan of care from your physician. There are a few companies that include mental disorders as covered illnesses, and do not place limitations or requirements, especially for a certain group of professionals such as physicians.

If available, you should always try to get a policy without limitations or requirements on mental health disorders.

Definition of Appropriate Physician's Care
Appropriate physician’s care (or "appropriate care" or "physician's care") generally means that you are receiving care for your disability—or more precisely, that you are receiving the appropriate care from the appropriate treatment provider. The appropriate care requirement is often a part of the definition of disability though some policies have it as a stand-alone requirement.

All individual disability insurance policies contain an appropriate physician's care requirement in one form or another.

The problem can arise when a policy does not define what is appropriate the same way you or your healthcare professionals do. You cannot always assume that any medical care received is in fact appropriate.

You should therefore try to avoid overly specific or restrictive definitions of appropriate physician's care.
We do not provide legal or tax advice. You should consult their own legal or tax advisor. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Comments are closed.

    Author

    Cultivant team &
    guest contributors

    ​206.486.8700 ext. 703
    info@cultivant.com

    Archives

    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021

    Categories

    All
    529 Plan
    Annuities
    Business Succession
    Charitable Planning
    College Planning
    Disability Insurance
    Estate Planning
    Investing
    IRA
    Life Insurance
    LTC Insurance
    Medicare
    Mortgage
    Multi-Generation
    Real Estate
    Retirement Income
    Retirement Planning
    Senior Planning
    Social Security
    Taxation
    Wealth
    Women's Finance

Advisory services offered through CS Planning Corp, an SEC registered investment advisor.
Insurance products sold separately from and independently of Cultivant LLC or CS Planning Corp.
Form CRS, Privacy Policy, and Additional Disclosures.

info@cultivant.com
206.486.8700 ext. 703
Get started
  • About
    • Differences
    • Pricing
    • Team
  • Services
    • Financial Planning
    • Investment Advisory
    • Insurance Solutions
  • Blog
  • Contact