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It's all about definitions and how
they are treated |
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Under the ProVider Plus disability income insurance policy, there is an optional Residual Disability Benefit Rider.* This is another key to disability income insurance policy protection. Here is their definition:
"Residual disability means you are at work and are not totally disabled
under the terms of this policy but, because of sickness or injury your loss of
income is at least 20 percent of your prior income. Even if you have recovered
from the sickness or injury that caused residual disability, we will continue
to consider you residually disabled so long as your loss of income is at least
20 percent of your prior income and the loss is a result of such sickness or
injury."
In many instances, this definition can protect your ability to earn where many
other policies may not. Here's an example of how this definition might help
you.
Joe is a very successful sales manager for a software company. Last year, Joe
contracted the flu which ultimately developed into double pneumonia which
caused him to become disabled under the terms of his ProVider Plus disability
insurance policy. His ProVider Plus disability insurance policy has a $5,000
monthly benefit with a residual disability benefits rider and a 90 day
elimination period. Joe found out that disability isn't always "total." You may
suffer a partial (or residual) disability that limits your ability to work and
results in decreased income - or an initial total disability may be followed by
an extended period of residual disability. ProVider Plus has a number of unique
features that maximize your benefits under a variety of such scenarios.
Like most good policies, if you are residually disabled ProVider Plus pays:
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benefits proportionate to income loss, and
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for the first six months' benefits, at least 50% of the total disability
benefit.
However, most companys' policies discontinue residual benefits when your income
loss falls below 20%. Berkshire's ProVider Plus continues to pay
residual benefits even if your income loss is less that 20% as long as the
monthly benefit payable is at least $500.
Consider the following scenario:
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$5000 monthly benefit
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3-month elimination period
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Residually disabled for 9 months
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20% loss of earnings - $500 rule
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50% of full benefit guaranteed for first six months benefits are paid
ProVider Plus can pay $12,500 more than other policies:
| Month |
Monthly
Income
Loss |
Residual Benefit |
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| 4 |
20% |
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| 5 |
18% |
$2,500
Policy X - no payment
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| 6 |
16% |
$2,500
Policy X - no payment
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| 7 |
14% |
$2,500
Policy X - no payment
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| 8 |
12% |
$2,500
Policy X - no payment
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| 9 |
10% |
$2,500
Policy X - no payment
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As the preceding chart demonstrates, when your income loss drops below 20% most
other disability insurance policies will stop residual payments, whereas
ProVider Plus will continue to pay because of the $500 rule. In addition,
ProVider Plus will continue to pay $2,500 a month because of the 50% benefit
guarantee for the first six months. As Joe was recovering, his monthly income
loss from his disability in months four through nine is illustrated in the
chart above. As a result of the manner in which ProVider Plus can treat
residual disabilty, he was able to receive $2,500 each month where Policy X
would have provided no benefit after month four.
After the first six months of residual benefits, most policies pay benfits
strictly proportionate to the income loss for the particular month in which you
claim a residual benefit. ProVider Plus, however, pays based on the average
income loss for the preceding six months.** This approach can
provide substantially greater benefits to you when you have returned to work
and are rebuilding your earnings.
As shown below, if during the seventh month actual income loss was 40%, the
benefit would be based on an average income loss of 70%. As a result,
ProVider Plus would pay $1,500 more than its competitors.
| Claim Month*** |
Loss of Income |
|
ProVider Plus |
Competition |
Cumulative difference |
| 1 |
100% |
|
$5,000 |
$5,000 |
$0 |
| 2 |
100% |
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$5,000 |
$5,000 |
$0 |
| 3 |
%70 |
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$3,500 |
$3,500 |
$0 |
| 4 |
%60 |
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$3,000 |
$3,000 |
$0 |
| 5 |
%50 |
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$2,500 |
$2,500 |
$0 |
| 6 |
%40 |
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$2,500 |
$2,500 |
$0 |
| |
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Previous 6 Months average loss |
ProVider Plus |
Competition |
Cumulative Difference |
| 7 |
%40 |
%70 |
$3,500 |
$2,000 |
$1,500 |
| 8 |
%35 |
%70 |
$3,500 |
$1,750 |
$3,250 |
| 9 |
%30 |
%70 |
$3,500 |
$1,500 |
$5,250 |
| 10 |
%25 |
%70 |
$3,500 |
$1,250 |
$7,500 |
| 11 |
%20 |
%70 |
$3,500 |
$1,000 |
$10,000 |
| 12 |
%15 |
%70 |
$3,500 |
$0 |
$13,500 |
In this example there could be an actual income loss of 15% but a six-month
average loss of 70%. In that case Provider Plus would pay $3,500 in that month.
Over 12 months, it could mean an extra $13,500. In the 13th through the 18th
month, averaging would continue in the same way, as long as your residual
disability continued. In this chart, Joe was residually disabled for 12 months.
In months 7 through 12, he was able to collect an additional $13,500 more than
he might have been able to collect from most companies as a result of ProVider
Plus' ability to pay benefits based on the average income loss for the
preceding 6 months.**
A ProVider Plus disability insurance policy could mean an additional
$13,500 more than the competition…and that is just in the first year of the
claim!
* The Residual Disability Benefit Rider is an optional rider available to
occupation class 6, 5, 4, 4P and 3.
** Or another negotiated method to which Berkshire Life Insurance Company of
America may agree.
*** After the elimination period or total disability, whichever is longer.
More Disability
Income Insurance Definitions
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Policy Forms 0100, 1100 and 2100 are underwritten and issued by
Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly-owned
stock subsidiary of The Guardian Life Insurance Company of America
("Guardian"), New York, NY. Policy Forms NC111 and NC112 in CA are provided by
Guardian. Product provisions and features may vary by state. |
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