Frequently an overlooked item with most disability insurance reviews is coverage through the employer. The detail within certificates should be taken seriously, as this will become the main source of protection with many disability insurance plans, especially if it is provided by the employer at no cost to you. With only 3 of 10 employees in the United States having access to such coverage at the workplace, there are still misunderstandings of the level of coverage this type of insurance can provide. Individuals and financial professionals should not let the perception of coverage cloud their judgment for the need to conduct thorough analysis of these programs. Here are five key areas one should start their review:

1. Definition Of Disability

This is the starting point for all disability claims. It will be the burden of proof you, the insured, will have to fulfill to qualify for benefits. This should not be taken lightly. Areas of focus include the following: Own Occupation but not engaged in other employment definition of disability is generally the best definition available in the employer sponsored disability market. Make sure to review the length of time you will be classified under this category of definition. Many employer disability plans that reduce overall premium costs, will offer 24 months protection under this Own Occupation clause.

After such time, you may have to meet a new burden of proof under Any Occupation based on education, experience, and training. If you have lots of experience and capabilities to perform many type of different jobs your Any Occupation job market can be quite larger than one might realize. It is extremely important to understand that just because you no longer are employed in your previous position, if you are cleared to work medically under the Any Occupation definition of disability, you are not allowed to stay on disability claim purely based on your income loss. It is up to you to find a new occupation and accept the reduced pay that accompanies this reduced position. If you cannot find reduced position and still are cleared medically to perform Any Occupation you will receive no benefits at all.

2. Definitions Of Covered Earnings

After you have met the material and substantial duty test under the Own Occupation or Any Occupation of Disability, your income loss must also be established to collect monthly benefits. Unless you are paid on pure salary as a W2 employee, this definition of income must be closely analyzed. To save on premium costs, many employers will only cover the bare minimum of salary they pay their employees because the premiums are calculated using the employer’s overall “covered” payroll. By avoiding overtime pay, holiday pay, shift differential pay, bonuses, and even commissions, the employer can drastically reduce their premium commitments.

Often, even if an employer wanted to cover such income, some disability insurance carriers do not have filed contracts to support such requests. This also gravely affects your assumed percentage of covered earnings. By simply relying on the summary, you may be under the false impression 60 percent of all your income is protected, when it may be far less depending on your compensation arrangement. Understanding how you are paid as an employee is just as critical as understanding how you are covered under your employer provided disability plan.

3. Pre-Existing Medical Conditions

After your have met the material and substantial duty test under Own Occupation or Any Occupation as well as suffered a minimum 20 percent or 40 percent of pre-disability covered earnings loss, the claim department will make sure your disabling injury or illness does not fall under the pre-existing limitation clause. It is important to understand, as an employee, how long you have been continuously covered under your employer’s disability program as well as any on-going medical treatments or medications you are actively taking. If you have been with your employer for 12 or 24 months and continuously insured under the disability program, your on-going medical conditions will most likely be covered. However, with the recession, many employees have had to make employment changes over the past few years. These changes can result in an employee having to re-satisfy the Pre-Existing limitation within their new employer’s disability program. Don’t get caught in the middle unexpectedly, as it could mean a denied claim when you need it most.

4. Mental, Nervous, And Connective Tissue Limitations

Employer disability insurance often comes without medical evidence of insurability. This path of least resistance, plus the overall costs, makes these products a very attractive alternative for many employees. However, insurance companies are not in the business of insuring future claims if they can prevent it. Therefore, some of the more common or difficult to diagnosis disabilities will have different terms of coverage. A full review should reveal the quality of these limits. These limitations can expose you to unsuspecting long term financial risk if your disability lasts longer than 24 months.

Be aware of limitations such as Mental Nervous and Substance Abuse. Many times these are placed under a combined lifetime 24-month payment limitation. It is also important to note, as a new employee, you may still be under the pre-existing limitation taking anti-depressant or anxiety medication. This now becomes an uncovered condition before it becomes a limitation. According to the Council of Disability Awareness, in 2010, nine percent of new disability claims were Mental Nervous in nature. Work and financial and home-life stress can adversely influence your ability to focus and function while on the job; the more mentally intensive your position is, the greater the risk of adverse consequences. Such things like depression, anxiety, and stress can have on your work performance.

Another common limitation is Self-Reported or Musculoskeletal/Connective Tissue disorders. These types of disorders made up 27.5 percent of new disability claims in 2010 according to the Council of Disability Awareness. These include conditions such as Arthritis, Herniated or Degenerated Disc, Back Pain, Spine/Joint Disorders, Cartilage Sprain, and Tendonitis just to name a few. Employer provided disability insurance often places these under a 24-month lifetime limitation as well. Depending on the physical nature and requirements on your occupation, these limits could greatly reduce your expected benefits when disability lasts for an extended period of time.

5. Other Income Offsets Or Reductions

Employer disability insurance will often not offset for Individual Disability insurance, but other income such as No-fault auto settlements, Workers Compensation, Social Security Disability Insurance Payments, and even Disability Retirement Benefits found in pension or deferred compensation programs are fair game. What is also overlooked is the ability of the employer disability insurer to estimate these amounts while you are in the approval or appeal process and reduce your monthly benefits even before they have been received.

For example, Social Security Disability can take two to three years for approval and appeals often result in a lump sum payment of back benefits. This will trigger overpayment provisions in the employer provided disability certificate and require you to pay the insurer back. You will already be adjusting to a life of reduced income of 60 percent or less in benefits; an unexpected claim repayment can be extremely difficult to fulfill and often leads to more financial strain. Lump sum payments from other sources may also be used to reduce your on-going payments until the overpayment has been recouped, bringing your minimum payment to $100.00 per month. Employer disability carriers will also require you to pursue all levels of additional compensation as well as make every possible appeal available. If you fail to comply, the group insurance carrier reserves the right to deny your claim for non-compliance.
Annual Review Strongly Encouraged By Professionals

It cannot be stressed enough how important it is to understand these various limitations and offsets to employer sponsored disability coverage. A thorough review should be conducted annually at each benefit enrollment period. Employers are under great financial stress with increasing medical costs and reduced profits due to economic changes, which leads many employers to change insurance providers every few years. Make sure you are keeping current with your terms of coverage before you learn the hard way when the claim check is smaller than you expected.

Working with many physicians, residents, and medical students has provided me the knowledge of the very competitive and often aggressive disability marketplace.

Too often, I come across physicians who have selected coverage with captive insurance representatives not knowing the impacts to their ability to increase their coverage as their career progresses.

Maximize Future Insurability Options

Protecting a physician’s unique skills, talents, and specialty generating income are often the main focus for many of my physician clients. Many residents and medical students are encouraged to purchase individual disability insurance as soon as possible. Those in the medical field have very limited time to commit to medical examinations. When a physician is finally able to set aside an hour to complete a paramedical examination, everything better work out for the best! This is why when working with new physicians, residents, and medical students we encourage they split their disability insurance coverage between multiple insurance companies to maximize future insurability options, avoid future exams, or worse, exclusions or denials.

Avoid Future Medical Exams for Qualification

We choose between the most reputable insurance carriers serving the specialty medical market to assure the best definitions of coverage. Those carriers currently include Berkshire, MetLife, Standard, Principal, and Union Central. Many of these insurance carriers offer future increase riders, without medical evidence, with different activation rules and different issue and participation limits. By splitting coverage with two companies, a physician can take advantage of each company’s contract activation rules when it is most advantageous for them personally. As the physician’s income grows, coverage increases while the physician avoids future medical exams for qualification. Using companies with higher participation limits or even unlimited participation limits really allows our clients to keep up with the increasing issue and participation limit changes.

Lock-In Good Health and Lower Premiums

Physicians also win by locking in good health and lower premium rates to give them the maximize premium discounts. By purchasing disability insurance at a younger age, our clients assure greater policy language to be activated later, even if they have poor health. Maintaining affordable insurance budgets as you progress through your medical career can free up excess income for retirement and lifestyle spending. Younger clients tend to experience less medical complications during their initial paramedical examination, thus the disability insurance policies you select are less likely to include exclusions or limitations. As our client’s pay increases throughout their career, they can be confident the new amounts of coverage they activate are subject to the original policy language they authorized when they were younger.

Multiple Claim Review

Another advantage of multiple disability insurance contracts is multiple claim review. Having multiple claim departments evaluating our client’s claims has made it harder for one insurance company to deny their claim while the others have approved. This is not a guarantee and every claim is unique, but the pressure of approval and payment of another insurance company has proven to be our client’s best resource if a claim department issues a denial. Selecting from and purchasing physician specific carriers and historical physician focused claim departments can also reduce the chances of claim dispute around your particular medical specialty.

To learn more about how this strategy can be incorporated into your disability planning please contact Mitchell D. Nelson, President of MyDisabilityPlans.com at 952-641-5206.

1. How does the policy define “specialties” and “material duties”?

When a claim arises, some long-term disability policies may perceive medical specialists more broadly as “medical doctors” and define them as such; whereas other policies may only recognize a few of the more than 140 specialties and sub-specialties listed in the American Board of Medical Specialties. Furthermore, some policies simply list the “generic activities of typical physicians” instead of protecting the specific procedures your clients actually perform in their practices.

2. How will the policy calculate required earnings loss?

Certain long-term disability policies include all earnings received while disabled – including receivables and partnership earnings. If this is the case with your client’s policy, these partnership earnings, any return-to-work earnings and salary continuation may disqualify or delay a physician from receiving LTDI benefits.

3. How does the policy value my time?

There are many physicians that work around the clock, putting in 60+ hours per week. Regardless of how many hours a physician worked prior to disability, some LTDI plans consider a client who can work at least 40 hours a week to not be disabled. In addition, these policies may include language that can “force” disabled physicians to return to part-time work, may require them to be retained or may penalize them if they do not work the number of hours the insurance company thinks they are capable of working.

4. Does the policy use a partial disability formula that can reduce monthly benefit to as little as $100?

Some policies use a 50% offset formula for partial disability that is favorable to rank-and-file employees, but severely under serves highly paid medical specialists. If a specialist physician were to return to work part-time, he or she may only receive a minimum of $100 a month.

5. Who will handle long-term disability claims?

There are very few long-term disability carriers that have a claims unit dedicated to managing only physician LTDI claims. Most physicians prefer that a physician-focused claim expert handle their complex and unique disability claims, especially if they are working in a specialty or sub-specialty line of work.

For more information about Physician Disability Insurance plans or policy language, Please contact Mitchell D. Nelson, President of MyDisabilityPlans.com at 952-641-5206.

Start My Disability Plan

Submit your details and a disability planning consultant will prepare questions that will help better understand your unique situation.

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planning consultant?Email us or call 1(855) 693-4752

Harry Waizer’s life changed forever on September 11, 2001. He began his morning like any other, boarding a commuter train near his home outside of New York City to arrive at his office at One World Trade Center at 8:40 a.m. When the building was hit, Harry was in an elevator on his way to his office on the 104th floor. Despite third-degree burns over much of his body from blazing jet fuel, Harry walked down 78 floors to the lobby where he was rushed to a burn center.

For the next two months, Harry fought for his life. He staved off numerous infections and pneumonia, and even spent time in a coma. Then he spent three months in a burn center undergoing rehabilitative therapy. Finally, he returned home to his wife and three children, ages 11 to 14.

When disaster struck, Harry was financially prepared. Within 30 days, he was collecting benefits from several long-term disability policies that helped, along with some money from his employer, to replace his entire working income.

Harry also owned several whole life insurance policies as well as a term life policy that was converted to a whole life policy once the disability occurred. Each of his policies carried a disability waiver of premium provision, which means that his insurance company now pays all of Harry’s premiums and will continue to do so until he’s able to return to work. These premiums amount to more than $25,000 a year being contributed to his policies, which will help with future college costs for his children and supplement his retirement income. “Having this insurance gave me an ease and comfort I would not have otherwise had,” Harry says.

Source: LIFE Foundation – RealLifeStories

Harrys Disability Experience

Having this insurance gave me an ease and comfort I would not have otherwise had,” Harry says.

Start My Disability Plan

Submit your details and a disability planning consultant will prepare questions that will help better understand your unique situation.

Want to talk to a disability
planning consultant?Email us or call 1(855) 693-4752

Michael Stees was a young designer with a small Chicago graphic design firm when he first met Linda Gordon, ChFC, a Financial Representative with Principal Life Insurance Company. Linda was calling on the owner of the company when Michael approached her about his own insurance needs.

“I suggested that, as a young single person, what Michael needed most was disability income insurance,” said Linda. After a full financial analysis, Michael purchased a policy that allowed him to upgrade the coverage every three years without any medical requirements.

Linda and Michael didn’t speak as frequently after he moved to California to take a job with a publishing company until one day Linda received a phone call from Michael’s partner, Steven Rush, informing her that Michael had been diagnosed with AIDS and was severely ill. “I immediately contacted Michael to assure him the policy he purchased seven years ago would now kick into gear,” said Linda.

“My disability income insurance was my safety net, and it caught me,” said Michael. “The benefits helped cover my health premiums, allowing me to receive cutting-edge treatments that literally saved my life. The insurance also allowed me to recuperate without worrying about money for rent or food.

Michael, who never thought he’d work again, is now working part time, and his disability policy provides partial coverage to supplement his income. “Thanks to Linda’s recommendation,” said Michael, “I’m once again living a full, happy and productive life.”

Source: LIFE Foundation – RealLifeStories

Michaels Disability Experience

Thanks to Linda’s recommendation,” said Michael, “I’m once again living a full, happy and productive life.

Start My Disability Plan

Submit your details and a disability planning consultant will prepare questions that will help better understand your unique situation.

Want to talk to a disability
planning consultant?Email us or call 1(855) 693-4752

For José A. Perez, his battle against Amyotropic Lateral Sclerosis (ALS), better known as Lou Gehrig’s Disease, is a mission of hope. Confined to a wheelchair and severely disabled, José’s message is one of optimism. “A cure is out there,” says José. “We need only to continue the fight.” José has certainly done his part, founding The University of Miami ALS Foundation and raising thousands of dollars each year for research.

But José’s accomplishments and optimism would have been made more difficult if not for the friendship of Ramón E. Mas Canosa, his financial advisor. Ramón first enrolled José in an employer 401(k) plan in 1988. Based on Ramón’s recommendations, José also purchased both term life and disability insurance policies from Equitable Life Assurance Society, as protection for his family.

In 1991, it became clear just how important this advice was. José was diagnosed with a serious muscle disorder. The doctors suspected ALS, and José needed surgery. He was comforted by the fact that Ramón had carefully tended to his affairs, and his insurance was in order. As his agent, Ramón knew he was doing all he could. As his friend, however, he was overwhelmed with concern for José.

In April 1994, with José’s condition deteriorating, the doctors confirmed he had ALS. Unable to work, Ramón made sure José received full disability payments and helped manage this income. Through it all, José’s optimism and attitude stayed strong. “He is the most amazing individual I have ever known,” says Ramón. “José has changed my life forever.”

And Ramón has changed José’s life also. José’s disability insurance benefits have allowed him to maintain his standard of living, afford in-home health care and live with dignity and hope without being a burden on his family. “Ramón’s work as an insurance professional has made all the difference in the world to me financially,” says José. “But his role as my friend has brightened my life and given me the strength to persevere.”

Source: LIFE Foundation – RealLifeStories

José's Disability Experience

José’s disability insurance benefits have allowed him to maintain his standard of living, afford in-home health care and live with dignity and hope without being a burden on his family.

Start My Disability Plan

Submit your details and a disability planning consultant will prepare questions that will help better understand your unique situation.

Want to talk to a disability
planning consultant?Email us or call 1(855) 693-4752

When Rick Matthews was a young man in Southern California he never thought about the need for life or disability insurance protection. “For a while, I didn’t have a stitch of insurance on me,” he said. But the sudden death of a close friend got his attention. “It takes something like that for a hardhead like me,” he said.

That was some 30 years ago. In the meantime, Rick married, started a concrete contracting business, and raised two sons. Early on, he met insurance agent Ron Forney and decided to buy some coverage.

“When you work for yourself, you’re not under anybody’s wing but your own,” said Rick. Ron started him with a $100,000 life insurance policy and sold him some disability coverage. By the late 1980s, Rick had increased his disability coverage to reflect the growing financial needs of his family and business.

But when an economic downturn hit Rick’s business in the early 1990s, he almost decided to drop his disability coverage. “It came pretty close,” Rick recalled. “Ron called me on the last day of the grace period, pretty much at the last hour. I thought, hell, we’ll try another year.” Rick has never regretted the decision.

About a year ago, Rick had double bypass surgery and had both legs amputated below the knee due to circulatory complications brought on by his heart condition. When Ron visited him at the hospital, Rick grabbed his hand and said, “Thanks for making me keep that disability policy. You said I might need it some day.” Both men broke down in tears.

At 55, Rick is learning to walk again, and says he’s doing well. He and his family were paid a lump-sum benefit from The Principal Financial Group and will continue to receive monthly disability payments of $4,700 until Rick turns 65. The disability provision in his life insurance policy waived any future premiums. Rick and his family have been able to maintain their lifestyle, and his boys, 31 and 29, now run the business. As Rick put it, “I answer a few questions and lead them through the trees.”

His philosophy has come full circle. “You realize that life is just a whisper, and then you’re gone,” he said. “I’m not one to give advice, but insurance sure worked well for me. Without it, I would’ve been in a pickle.”

Source: LIFE Foundation – RealLifeStories

Rick's Disability Experience

You realize that life is just a whisper, and then you’re gone,” he said. “I’m not one to give advice, but insurance sure worked well for me. Without it, I would’ve been in a pickle.

Start My Disability Plan

Submit your details and a disability planning consultant will prepare questions that will help better understand your unique situation.

Want to talk to a disability
planning consultant?Email us or call 1(855) 693-4752

Working closely with Jimmy Jacobs, CLU, ChFC, a financial advisor with AXA Advisors, Dr. Chang established a financial plan that covered all the bases: life, health and disability income insurance to guard against life¹s uncertainties, and annuities and a Keogh retirement plan to provide for a comfortable lifestyle down the road.

Then in January of 1998, at age 54, Dr. Chang was diagnosed with liver cancer. He immediately called Jimmy, who assured Dr. Chang that his wife, Shin, and his two sons would be alright.

Health insurance covered Dr. Chang’s cancer treatments, which ultimately cost more than $250,000, while his disability income insurance and partial withdrawals from his Keogh account provided replacement income during his incapacity. Every dollar counted.

One year later, Dr. Chang died. Jimmy informed Shin that the disability policy included a provision that would pay another six months of benefits. With these payments and the life insurance proceeds, Shin was able to keep their home and invest in education for herself and her boys. Today, Shin is taking English classes, Wayne is in his last year of medical residency and Howard just graduated from law school.

Without my husband’s planning, Shin said, we would not be in the position we are today.

Source: LIFE Foundation – RealLifeStories