DISABILITY INSURANCE “RIDERS” OR “BENEFITS”

One of the points (Regular Occupation Period Extension – ROPE) which I am going to discuss here may well be part of some “Base” contracts and you may not have to add it and pay for it separately but the others are available as optional features.

I will divide the list into two groups: (1) Essential features and (2) Optional features; yes I know that riders are options which you may choose to add – or not – as you decide. However, there are two features that are so important that they really should not be considered optional. In this blog, I will look only at the two essential ones

1.      There are only two (and in some cases only one) of these as many base contracts include Regular Occupation to Age 65 as part of the basic contract and then you do not need to concern yourself with this. The reason why this is so important is that – if you do not include it – you run a very significant risk of no longer qualifying for payment of benefits once the initial period runs out. The worst part of this problem is the very people who are most vulnerable to that risk are those who may most need this protection. If you are highly paid and/or working in an occupation without significant physical requirements, such as surgery or dentistry, you are most likely to be told “I am sorry but you no longer qualify for payment”. Also remember that it is your ability to DO the job – not your ability to OBTAIN the job which will eliminate your eligibility for benefits. Further – note that a reasonable job under this requirement is one which – based on jurisprudence – gives you 50% of what you were earning prior to disability. Can you live and support yourself and your family on half your income? As a 43 year professional in this market, I will NEVER sell a policy which provides for a change in the definition of Regular Occupation.

2.      The second essential option is generically referred to as Guaranteed Insurability. We choose to buy today whatever our needs, budget and income allow. Over time, the amount we wish may increase (It RARELY decreases but if it does, that is never a problem – you can always ask the insurer to reduce your coverage and they will NEVER refuse). Over that “time”, things may change – our health may not be as good – we might change jobs or even move to some foreign country. Those changes might make it much more difficult or expensive to purchase additional coverage. They may even make it impossible. For example, if you become an insulin-dependent diabetic, you will almost certainly be totally unable to increase your coverage. However, if you purchase Guaranteed Insurability, your ability to purchase the coverage is guaranteed. People traditionally think of this guarantee applying to health problems – but it also guarantees you against refusal (or price increases) if you move out of the country or if you take a more hazardous occupation. The only issue is “Do you qualify based on your income?” The ridiculous – but accurate – example I use will make this TOTALLY clear. You purchase this protection as a physician in Montreal. You decide to move to Iraq and become a dancer – you get AIDS. If your income would allow it (based, perhaps, on some “outside” activities), they must issue the policy – at the price a Montreal physician would pay. Also, you would be considered totally disabled if you became unable to dance.

Back next time with the true “options” – or at least the start – as this discussion will continue over several issues of the blog.