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Disability Income Insurance – It's all about definitions and how they are treated |
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Disability income insurance definitions are important, if not everything, in creating a sound program of disability income insurance protection. In the long term, disability income insurance can provide outstanding benefits. Disability income insurance protection should be a part of sound financial planning.
Disability income insurance policies can provide benefits until age 65 or even for life. This is individual long term disability income insurance which should not be mistaken for LTD (LTD meaning group long term disability insurance typically offered at your place of employment).
Excellent, favorable definitions result in our recommendation of a ProVider Plus policy in most disability insurance cases.
Several examples of these definitions and the resulting benefits found in ProVider Plus disability income insurance policies are discussed below along with some hypothetical case studies. The studies point out some of the outstanding strengths of the policy and why ProVider Plus can be vital in the development a good plan of disability income insurance protection.
The ProVider Plus disability income insurance policy defines total disability as follows:
"Because of sickness or injury you are not able to perform the material and substantial duties** of your occupation. (This definition applies to the entire benefit period if you are in occupation class 6, 5, 4 or 4P)"
This seems rather straightforward. However, what is meant by occupation? One of the great advantages ProVider Plus offers is true own occupation or "own occ". This is one of many ways you can achieve disability income insurance protection for your chosen field and/or specialty.
The ProVider Plus disability income insurance policy defines your occupation as:
"The regular occupation (or occupations, if you have more than one) in which you are engaged at the time you become disabled."
The policy also says:
"You will also be totally disabled, even if you are at work in some other capacity, so long as you are not able to work in your occupation"
We believe that Berkshire disability income insurance offers one of the most favorable definitions of own occupation to the policyholder. The implications of this definition of "own occ" are that your earnings have greater protection than with other polices that have a less favorable definition, or no "own occ" at all.
Here's a hypothetical example of why you want the ProVider Plus disability income insurance definition of "own "occ":
Jill is a 38 year old attorney who worked for a large law firm. She specialized in labor law and most of her time was spent in litigation, worked about 60 hours a week and was very successful. She made about $300,000 per year. Jill has $5,000 in monthly LTD and $10,000 of monthly DI benefit, with a 6% cost of living adjustment rider and an age 65 benefit period.
Jill had a serious car accident and suffered some spinal damage and other injuries. She was completely unable to work for 8 months. Jill's doctors have told her that while she has made progress, they do not believe that she is able to perform her job as an attorney and litigator. However, she has recovered to the point where she could work in a somewhat less stressful position. Her doctors have advised her that she is capable of teaching full time at the local college.
Jill applied for a full time teaching job and is now earning $60,000 a year. Jill's LTD policy had no "own occ" feature. While it did pay her $5,000 after the 90 day elimination period for 5 months, now that she is able to work full time, the benefit is no longer payable. Suddenly, a young attorney with a successful career and the opportunity to become very successful financially has lost the majority of her greatest asset, the ability to earn. She certainly needs disability income insurance policy protection!
We believe that great disability income insurance policy protection should protect the ability to earn. Let's review Jill's ProVider Plus policy to see what it will do for her. Because she was unable to work in her occupation, the ProVider Plus disability income insurance policy considers her totally disabled, even though she is working full time as a college professor. The benefit of $10,000 a month is still payable. It has a compound cost of living adjustment. This means as long as Jill is unable to work as a labor law (litigation) attorney (as a result of illness or injury) and she meets the provisions outlined in the policy, she will collect the monthly benefit for her entire life!
This could result in total benefits payable to her totaling 5-7 million dollars or more. Because she was paying for her DI with after tax dollars, all benefits are received by her income tax free.
Clearly, ProVider Plus disability income insurance offers an outstanding "own occ" definition designed to help protect the ability to earn!
1A) For occupation class 3, pure "own-occ" benefits are payable for 5 years from the ProVider Plus disability income insurance policy. After that-in the same claim- you are considered totally disabled if you are unable to perform the material and substantial duties of your own occupation and are not at work in any occupation.
Medical and dental specialists benefit from ProVider Plus' specialty language. If your occupation is limited to a single medical specialty certified by the American Board of Medical Specialties or a single dental specialty recognized by the American Dental Association, that specialty will be considered to be your occupation
** "major duties" in CA (Policy Forms NC111 and NC112)
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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