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Posted: 1 Sep '23

Things Your Disability Insurance Broker Should Discuss with You When Helping You Select a Policy

Things Your Disability Insurance Broker Should Discuss with You When Helping You Select a Policy

When you think about disability insurance, you may have a few questions in mind. Is it worth it? How much coverage do I need? What happens if I'm out of work for an extended period? These are all fair questions. But when you're talking to your disability insurance broker, there are other things you should discuss before selecting a policy.

It might seem petty, invasive, and tiresome at first. However, the more questions you ask and the more information they have about your situation and needs, the better equipped they'll be to help find you the right disability insurance plan. Below are some main topics you should discuss with your disability insurance broker before buying a policy. Call us to learn more.

The Types of Disability Insurance Policies 

There are different types of disability insurance policies, and they all have varying features and benefits. These include short-term disability insurance, long-term disability insurance, and critical illness insurance policy. 

Short-term disability insurance is meant to cover you if you can't work due to a temporary illness, injury, or situation such as pregnancy/childbirth. Some employers offer short-term disability plans, while others don't. So you should speak to your disability insurance broker and ensure you have a plan that meets your needs.

On the other hand, long-term disability insurance replaces 60-85% of your income if you cannot work due to an illness or injury that persists for longer than six months. In some cases, employers may offer this type of coverage as part of their benefits packages; otherwise, self-employed individuals can purchase it through individual health insurance plans.

When considering disability insurance, take the following steps to get the best coverage for your needs:

  • Verify if you already have group disability coverage as part of your employer's benefits plan.
  • If you're interested in private disability insurance, compare different options before making a major decision.
  • Consider group insurance policies offered through a guild, union, professional, or alumni association.
    Remember that premiums for this type of coverage generally increase with age and may require renewal every few years.
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The Definition of General Terms

When choosing disability policies, it's important to understand the definition of general terms such as "disability," "own occupation," "any occupation," and more. The meaning of disability, for instance, can differ between insurance companies and even between different policies from the same provider. It's recommended to always check with the disability insurance broker or administrator what the terms' definitions are and how they affect your choices and needs. 

An "any occupation" disability plan, for example, will only pay the benefits if you cannot work in any job you're reasonably suited for based on your experience, education, and training. However, a regular or own occupation plan pays the benefits if you cannot perform the main duties of your previous job. In other words, you'll still get the benefits, even if you can work another job. 

Most employers offer the "any occupation" plan since they are more affordable than the "own occupation" plan. If your current occupation requires a significant pay cut to work in a different field, it's best to choose an "own occupation" disability insurance plan.

How Insurance Premiums Work

The cost of your disability insurance will depend on several factors, including the coverage amount you want, your health, age, occupation, policy duration, etc. Another aspect to consider is whether the premium payments increase over time or are guaranteed. 

When choosing a policy, it's important to understand that the cost and the premium payments can impact your financial situation. You may be required to make premium payments even while living with a disability, so you must carefully review the plan's terms to ensure you're fully aware of what you're signing up for.

That said, the amount you pay for disability insurance will largely depend on your circumstances and the type of policy you choose. You always want to work with a knowledgeable disability insurance broker or agent to determine the right coverage for your specific needs and budget.

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How the Plan's Benefits Work 

When deciding on a disability insurance policy, it's important to consider several key factors. First, it's important to understand the terms and conditions of your policy's benefits. For example, will your benefits be taxed? And will they be adjusted for inflation? Knowing how long you'll have to wait before you start receiving benefits is also important.

Another vital aspect to consider is whether your plan includes partial disability benefits. This can be a game changer if you cannot work in your usual capacity but can still perform some tasks. A partial disability benefit can provide the much-needed safety net as you recover or find an alternative job. 

Additionally, you want to know whether you can revise your coverage without having to do a medical exam. This is crucial if your health changes and you want to increase your coverage to reflect that. 

What Rules Govern the Group Plans?

Before choosing a group disability insurance plan, try to understand the implications of picking a group plan provided by an insurance company and one self-funded by the employer. A group plan from an insurance company typically offers more stability, as the insurance company assumes the risk. With the employer-funded plan, your coverage may discontinue if the company faces financial difficulties or goes out of business. 

You should also confirm whether the existing coverage will continue if you leave your job and are currently looking for new coverage. To make an informed decision, you should review the group plans policies to understand the various provisions and their implications.   

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Is the Policy Guaranteed Renewable?

If you are considering an individual insurance plan, you should pay special attention to the policy's terms and conditions, especially with the plan's renewability. A guaranteed renewable policy means that you can conveniently renew your plan anytime and that the insurance company cannot cancel your coverage as long as you continue to pay your premiums. This gives you peace of mind that your coverage will continue, even if your health changes. 

Also, you should confirm that you can renew the policy without providing additional evidence of your health. Some policy providers require a new medical exam or an updated medical report before renewing a plan. Understanding the renewability of your insurance policy is crucial for ensuring that your coverage will always be there when you need it most. 

How the Plan Manages Offsetting of Benefits

Most insurance policies have a provision for offsetting the benefits you get from a disability claim. In other words, any benefits you get from one plan can offset the income from another plan. Individuals with multiple plans can have their income from disability claims not higher than 60-85% of the regular pay. 

Before choosing a long-term disability plan, try understanding how they offset benefits. Many plans reduce the benefit amount as soon as you start receiving other sources of disability income, such as workers' compensations and social security disability benefits. Always seek further clarification to understand how the provider handles offsetting. This will help you understand the potential impact on your income in the event of a disability. 

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Seek Expert Help Today

Disability insurance is a crucial part of your overall financial plan, and it's crucial to have the best policy for your needs. The best way to do this is to work with a disability insurance broker who can guide you throughout the process, from research and decision-making to selection. Contact us today.


About the Author - David Motkoski

David Motkosk At the Helm of Vistaplan Financial Group

David is a well-respected insurance advisor with over 30 years of experience helping healthcare professionals, business owners, and their families secure their financial futures. He takes the time to make certain his clients understand the life, disability, and health insurance products they are purchasing, so they can make the right choices for their budgets, plans, and futures. CONNECT WITH ME ON LINKEDIN

Life & Disability Insurance for Alberta Health Care Professionals, Business Owners, and Their Families Since 1983