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Disability Insurance Plans – Other Exceptional features and riders of ProVider Plus |
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Graded Lifetime Extension Benefit (X45) Period
Waiver of elimination period feature
Future Increase Option (FIO) Rider
Automatic Increase Rider
Group Disability Insurance Replacement Rider
Cost of Living Adjustment Rider
COLA increases remain upon recovery with ProVider Plus
Graded Lifetime Extension Benefit (X45) Period
Provider Plus is one of very few disability insurance policies today that offer a form of "lifetime" benefit period. Disability insurance plans should offer protection beyond working years as retirement plans may not get funded if one becomes permanently disabled.
This benefit can be essential in helping to protect an individual's retirement.
The reason for this is that during for working years, individuals tend to make contributions to their retirement plans. A total disability (or perhaps even a partial disability) could eliminate or significantly reduce contributions to retirement plans and good disability insurance plans should be able to offer protection for this possibility.
The older one is, the more one should have (hopefully) already funded a retirement plan.
Carl is a 42 year old dentist who has the ProVider Plus policy with a $7,000 per month benefit, residual rider, COLA Rider and the X45 graded lifetime extension benefit. When he reviewed various disability insurance plans,* he opted for this one with these features.
Carl was riding his motorcycle and had an accident. His right hand was severely injured and lost his thumb and two fingers. As a result, he will never again be able practice dentistry.
He will be able to work again, but not in his specialty. Under his ProVider Plus disability insurance policy, he is entitled to full benefits for the rest of his life as long as he remains totally disabled. This means he will receive $7,000 per month (with cost of living increases) and at age 65, the benefits shall continue. Many other disability insurance plans may not have offered him this much protection.
In other words, the ProVider Plus policy is not only protecting his ability to earn, it has also provided him with a secure source of retirement income. If Carl lives to age 85, he will collect $7,000 per month plus cost of living increases (per the policy) occurring to age 65 for 20 years longer than most other policies would have paid him. (In fact, many other polices would have stopped paying him long before age 65 because as he would have been able to work in another capacity, he would no longer be considered disabled!) If the benefit grew to 12,000 due to cost of living increases by Carl's age 65, he would receive about $2.8 million over the 20 year period, income tax free. ($12,000 x 240 months)
Had this accident occurred when Carl was 50, the lifetime benefit (after age 65) would be lower, but would still be for his lifetime.
Carl would get his full $7,000 per month plus cost of living increases (per the policy) until he reaches age 65.
After age 65 as long as remains totally disabled, his benefit would be 75% of whatever his benefit had increased to by age 65. The X45 graded lifetime extension benefit reduces by 5% per year after age 45. At age 50, the lifetime benefit is 75% of what the full benefit was by age 65. If his benefit had grown to $11,000 by age 65 due to cost of living increases and he again lives to age 85, he will get 75% of $11,000 for the 20 year period or $1,980,000 ($11,000 x 75% = $8,250 x 240= $1,980,000). Part of the rationale here may be that by age 45, some of his retirement should already be funded. However, unlike many disability insurance plans, ProVider Plus disability insurance can pay him for life.
The Graded Lifetime Extension Benefit Period is available to occupation classes 6, 5, 4, 4P and 3. It is not available in California.
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Waiver of elimination period feature
Unlike other disability insurance plans, this unique feature of the ProVider Plus disability insurance policy states that there is no new elimination period for subsequent disabilities from any cause, if your original disability lasted more than six months and you received any benefits from the policy. The second period of disability must occur within five years of the first. This would entitle you to benefits from the first day of the second period of disability even if the second disability were for a minimal period of time or was caused by an accident or illness not related to the first period of disability.
Beverly has a ProVider Plus policy with a $3,000 monthly benefit and a 180 day elimination period. She contracted a severe case of Lyme disease with complications which resulted in her being unable to work for eight months. As she satisfied her elimination period, was disabled for more than six months and received benefits from her policy, if she becomes disabled from any cause within the next five years, she will be able to receive benefits beginning the first day of her second disability.
Unfortunately, four years later Beverly lifted something heavy and ruptured a disk in her back requiring surgery. This caused her to miss six months of work. The ProVider Plus policy waved her six-month elimination period and paid her benefits of $3,000 per month for the full six months. Other disability insurance plans would have required a new elimination period and as she had a six-month elimination period, she would have received nothing from any other policy.
An $18,000 difference!
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Future Increase Option (FIO) Rider
Another outstanding rider. Other disability insurance plans may have FIO riders, but ProVider Plus' FIO Rider gives you the ability to increase your coverage with all of the benefits of the base policy. This option allows you the opportunity to purchase additional coverage without evidence of medical insurability. Subject to policy provisions, you will have to provide evidence of income, other insurance which you have or may be eligible for and prove that your income warrants the exercise of additional coverage under the FIO Rider.
Leslie, age 40, has a ProVider Plus disability insurance policy with a $5,000 monthly benefit, residual disability rider, 90 day elimination period, and $10,000 FIO Rider.
She has a small computer consulting business (just her and one part time employee work there). At this time, she is earning $100,000 per year. Three years later, Leslie suffers a nervous breakdown and was determined to be totally disabled under the terms of her policy. As a result of her disability, she misses 5 months of work.
Upon her return, she is only able to earn 50 percent of her pre-disability income for six months. Afterwards, she is earning 100% of her pre-disability income.
The following year, Leslie lands some big accounts and her income doubles. Without her FIO, it is highly unlikely that she could purchase disability insurance due to her total disability. Fortunately, she can exercise her FIO as she was able to prove that her income warranted it. As a result, she now has $10,000 of disability insurance. Furthermore, she is fully covered and the illness or injury that was the cause of her total disability is also fully covered.
If she has a relapse or is disabled from any cause (not excluded under the terms of the policy) within five years from the period of her disability, she will not even have to satisfy a new elimination period for her base policy, as she probably would if she had other disability insurance plans. Assuming total disability, she would get $5,000 per month for 3 months and then the new FIO policy amount of $5,000 would begin, for a total of $10,000 per month, as long as she was totally disabled.
If she resumed work later and suffered at least 20% income loss due to her prior disability, she could receive residual disability insurance benefits as well.
This disability insurance policy will likely pay her more benefits than other disability insurance plans.
The Future Increase Option Rider is available to occupation classes 6,5,4,4P and 3 subject to limitations.
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Automatic Increase Rider
Many individuals receive regular increases in income over the years. Before a disability strikes, the Automatic Increase Rider allows to automatically increase your monthly benefits by 4 percent per year compounded for five years at attained age premiums. No applications, exams or blood tests are required. Increases are offered despite any changes in your health or occupation and you may refuse an increase without forfeiting any scheduled remaining increases. Before reaching the age of 60 you may apply to extend the Automatic Increase Rider for additional 5-year periods.
Richard has a ProVider Plus policy with and $8000 per month benefit with the Automatic Increase Rider.
Regardless of Richard's health, income and/or occupation, he will be able to increases monthly benefit to over $9700 by exercising his Automatic Increase Rider, this is equivalent to a 21.6 % increase in five years.
The Automatic Increase Rider is available to occupation classes 6,5,4,4P and 3 and provides a way to insure your increasing income before you become disabled.
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Group Disability Insurance Replacement Rider
This rider is for individuals that have a group long-term disability or LTD policy along with their ProVider Plus policy that few other disability insurance plans may offer. LTD can severely limit the amount of disability insurance you can purchase due to participation limits. Furthermore, you can lose your group LTD plan for several reasons: your employment terminates, or your employer ends the group LTD plan and doesn't replace it. There is no evidence of good health requirement in order for you to exercise the group replacement option, but you can only use it once over the life of the policy. The rider is renewable to age 60 or until the day you exercise it. In order to exercise the replacement option you must provide details of your income, employment and other insurance in force or for which you are eligible.
Sharon, 37, has a $5,000 LTD policy and, as a result, can only buy $2,000 of additional disability insurance. She decided to add the Group Disability Insurance Replacement Rider for $5,000 to her $2,000 ProVider Plus policy. Sharon loses her job due to downsizing. However, she finds a new position at a company that matches her pay, but does not offer LTD. As a result, she is able to replace her LTD with an increased benefit of $5,000 in her ProVider Plus disability insurance policy.
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Cost of Living Adjustment Rider
In 1984, the price of a first class postage stamp was 20 cents. In 2004, it was 37 cents, or nearly double.
During an extended disability, fixed dollar benefits can mean a loss of your purchasing power due to inflation. ProVider Plus can offer a Cost of Living Adjustment Rider (COLA)* that can help protect the purchasing power of your benefits.
The increases are tied to the Consumer Price Index (CPI-U) up to a maximum of 3% or 6 , whichever you choose. These COLA benefits begin after 12 months of disability and are annual adjustments to the monthly benefit and continue to age 65. Some other companies also offer compounded rates, but they may also impose a cap to increases before age 65. Others offer only simple rather than compound rates. ProVider Plus has no cap on increases.
* Not necessarily protection against increases in the cost of living.
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COLA increases remain upon recovery with ProVider Plus. Other disability insurance plans will generally revert back to the original $5,000 benefit or allow you to buy up the indexed benefit with additional premiums. ProVider Plus gives you the higher indexed benefit at no additional charge.
Jeffrey has a $5,000 monthly benefit and a 6% COLA Rider and becomes totally disabled. His benefits will enjoy annual increases as high as 6%, depending on the Consumer Price Index (CPI-U). Under the ProVider Plus COLA rider, annual adjustments to the monthly benefit begin after 12 months of disability and continue to age 65. The increases are tied to the CPI-U up to a maximum compounded annual rate of 3% or 6%, whichever you choose. Assuming he is disabled for 5 years, his benefits could grow to as much as $6,312 per month. If he recovers, his benefit will remain at $6,312 per month with no increases in premiums. If he had opted for different disability insurance plans, he would most likely have to pay for the increase in benefit had he wished to keep it because other companies typically revert to the original benefit or allow you to buy up to the indexed benefit by paying additional premiums.
This rider may not necessarily fully protect against increases in the cost of living. It is available to occupation classes 6, 5, 4, 4P and 3.
* Whenever we mention disability insurance plans, we are referring to disability insurance policies.
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There are more features and riders to the ProVider Plus policy that distinguish it from other disability insurance plans. The following are links you may find helpful.
ProVider Plus Brochure (Note: this file is 5 MB in size)
ProVider Plus Specimen Policy
Sample Quotes
The following are sample quotes that show occupation class 4, 5 and 6. Some of the benefits vary and these sample quotes are here to provide you with examples of pricing and to offer more information on the ProVider Plus series as well.
ProVider Plus sample quote Jane Public (PDF)
ProVider Plus sample quote John Client (PDF)
ProVider Plus sample quote John Public (PDF)
If you don't have Adobe PDF reader, you can download it here:
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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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