Disability Insurance and Mental-Nervous Claims

Three types of Disability Claims (specifically focused on Mental-Nervous claims).

Three main types of Disability Insurance claims will be covered in this post including special emphasis on mental-nervous claims. The first type is know as a “Total Disability” claim.  This type of claim is exactly as it sounds–you are 100% disabled and unable to work, resulting in complete loss of income. A Total Disability Claim is usually very clear, and you would more than likely receive all of your promised disability benefits. The second type of disability claim is known as a “Partial Disability” (or Residual Disability).  In this situation, you might be losing income due to an illness or injury but are still able to work within a limited scope.  With a Partial Disability claim, it’s likely that you would receive a portion of your disability benefits, which would be calculated and based on loss of monthly income.  Dependent upon the definitions and riders within one’s disability contract, however, there are some scenarios in which an individual might be partially disabled but still eligible to receive their full benefits as if they are totally disabled. The third type of disability claim will be the main focus of this post and is known as a “Mental-Nervous” claim.  The majority of the insurance carriers classify out this particular segment of a claim.  Mental-Nervous claims are typically “psychiatric” in nature.  Examples would most commonly include: stress, anxiety, depression, and substance abuse.  This type of claim does not include “neurological traumas” or “Alzheimer’s disease”.  Neurological traumas and Alzheimer’s are typically covered under your traditional definitions, but we would want to check with the specifics of your disability contract to be sure. It is very common for an insurance carrier to apply a 24 month limit to any disability benefits received for a Mental-Nervous claim.  If your disability contract has this 24 month limitation, you would only receive benefits for as long as you are disabled up to a maximum of 24 months at which time the benefits would cease to be paid out any longer. (If you recover before the 24 month limit, then your disability benefit would cease at the time.) The mental-nervous disability claim is very different than a traditional disability claim that lasts up to the full benefit period.   There are a few select carriers that offer full coverage for Mental-Nervous claims (depending on your occupation and state of residency).  Even though the premiums are often higher when you opt for full Mental-Nervous coverage, it can prove well worth it to do so since roughly 10-15% of all disabled claims are filed as “mental-nervous claims”.   If this is a benefit that is important to you, then we’ll make it a priority to explore the carriers that offer full coverage in this area, instead of the 24 month limit, so we can evaluate which type of coverage best fits your desires and create a disability plan tailor made for you. As always, we’re here to help!

Chris Wimberly The Disability Doc Request Quotes Here *This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.

Future Increase Option (FIO) Rider

The Future Increase Rider, also known as the Future Increase Option (FIO)

The Future Increase Rider is commonly referred to as the “Future Increase Option” (FIO) and is an optional rider available within your Disability Insurance Plan.  The advantage of the FIO Rider is that you can start out with a smaller Disability Insurance Plan initially while having the guaranteed ability to add disability benefits to your plan in the future.  This means as your career and income grow, you can expand your benefit coverage should you choose to do so.  

Depending on the insurance carrier you are evaluating, this rider might be referenced using slightly different terminology or acronyms since individual carriers offers different versions of the rider.  

Below is a list of the many possible names of the “Future Increase Option” rider:

  • Guaranteed Insurance Option (GIO)
  • Future Purchase Option (FPO)
  • Benefit Purchase Rider (BPR)
  • Guaranteed Insurability Option (GIO)
  • Guarantee of Physical Insurability (GPI)
  • Benefit Update (BU)
  • Benefit Increase Rider (BIR)

Some of the versions of the rider are identical, but others have unique characteristics that are worth discussing.  For example, some options allow you to increase your benefits once per year; whereas other versions only give you the opportunity to increase your coverage once every three years.  Different rider versions can also apply limits to how much coverage you are allowed to increase at any given time.  

The one universal thing that all versions have in common is the guaranteed ability to increase your benefits in the future without having to undergo any additional health questioning or new medical exams.  If you have had any negative health changes from the time that you originally purchased your Disability Insurance Plan and the time that you are ready to increase your coverage, your health won’t detrimentally impact your ability to secure additional benefits. There is only one qualifying factor: At the time that you decide to obtain additional coverage, your income must qualify you for increased benefit coverage.

The Future Increase Option is commonly used as a strategy for 4th year medical students and residents or fellows. By adding a FIO Rider, you can opt for a lower benefit level that is affordable during training.  Then, when you have completed training and are entering your field of medicine, you can increase your disability benefits to protect your growing income.

If you are weighing whether or not you might want to add to your benefit level down the road, then it’s highly recommended that you explore the addition of a FIO rider.

If you are an established physician well into your career and are satisfied with the benefit coverage level afforded on your plan, then there is really no need for you to add this rider.  In fact, if you are well into your career and don’t foresee ever raising your benefit level and have this rider in place, then it would be likely recommended that you drop this rider from your plan in order to save money on future premiums.

Please work with an experienced insurance agent who can advise you and help you navigate the benefits of Future Increase Option rider and which version is most suitable for you.

As always, we’re here to help!

Chris Wimberly

The Disability Doc

Request Quotes Here

*This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.

 

How to Save Money on Disability Insurance

Methods on How to Save Money on Disability Insurance.

Good news! There are many strategies to get the benefits you absolutely need at the lowest cost possible.  Here are a few ways to save money on disability insurance:

“Multi-Life” Group Discounts (and “Unisex” Rates)

One of the best ways to get a discount on your premiums is through an Employer Discount.  This is known as a “Multi-life” Group Discount.  If you are an employee at a large hospital, medical university, or residency or fellowship program, then there is likely a multi-life discount currently available to you.  It is very common for medical students, residents, and fellows to receive these large discounts if they apply while attending the training program. If you are almost finished with training, make sure to apply before you leave the program so that you can secure this discount over the life of your policy.   Also, if a multi-life discount is not yet setup at your current employer, we can easily setup a new discount if at least three individuals at the same employer apply for a plan. Once the discount is setup, it will remain in place for you and all future employees.  Multi-life discounts are especially beneficial for females.  Generally, the market charges much higher premiums for females than males due to the fact that historically females file more disability claims than males. Multi-life discounts can compensate for this since many of the plans offer  “Unisex” rates, which result in tremendous savings.  If you are a female resident or fellow, work for the VA, a university or a large hospital, please inquire about unisex rates as it could save you almost 40% on your premiums, translating into saving tens of thousands of dollars over the life of your plan.

“Association” Discounts

Another way to get a substantial discount on your plan is through an Association Discount*.  When requesting insurance quotes, be sure to let your insurance agent know of any associations, societies, and/or academies you are currently a member of (or thinking about joining) so we can apply these discounts for you.   *An Association Discount on an “Individual” Disability plan is very different than an “Association” Disability plan purchased through a medical or dental association. Let’s be sure to discuss the BIG differences of this what this means to you.

Modifying Your Plan Design

In addition to including discounts on your plan, we could examine modifying your plan design in such a way to meet your needs, but save on premiums.   For example, we could discuss your Benefit Period.  If you have significant savings, perhaps you don’t need a disability policy designed to cover you up until age 70, but instead might only need a policy that would cover you to age 65. 

Another example would be the Elimination Period (also known as the “Waiting Period”).  While a 90 day Elimination Period is most commonly selected, if you have ample savings or a secondary source of income from a spouse, trust fund, investments, etc., we could take a look at a 180-day Elimination Period, or even 1-year Elimination Period option to save money on your premiums. This could potentially save you thousands of dollars over the life of your plan by applying this one simple plan modification.

There may also be riders on your policy that you do not actually need, and we can evaluate the ones that will actually be of benefit to you. However, one of the best approaches for keeping costs down is to apply for a plan when you are young and healthy.  This will allow you to lock in a Disability Plan at the lowest age rating possible and likely the best health possible. If you are older, the sooner you apply, the more likely you are to enjoy better rates than if you wait until your health perhaps declines and/or you fall into a higher age category.  

At The Disability Doc, we’d love to help you design a Disability Plan just for you that saves you money yet affords you the protection and benefits you need and desire.

As always, we’re here to help!

Chris Wimberly

The Disability Doc

Request Quotes Here

*This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.

When is it Best to Buy Disability Insurance

When It Is Best to Buy Disability Insurance?

When is it best to buy disability insurance? A great question indeed!  Rates for Disability Insurance Policies are based on your personal demographics as well as other factors at the time you initially purchase your policy.  

For example, your “age” and your “health” are two important factors that determine your premium.  Your rate is further based on your gender, the state you are living in, and your occupation (specialty of medicine or dentistry).  Given that most Disability Insurance Plans are purchased to last throughout the life of one’s career, you need to make certain that you are locking in the best rate possible.

On a general level, the longer you wait to purchase a Disability Plan, the more expensive your rate will be.  As previously mentioned, this is because your rate is determined by the age you are at the time you purchase your plan.  The younger you are when you apply, the lower your rate will be.  

Also, since your rate is based on your health, you’ll want to apply when you are in the best health possible, which most often coincides with your age.  If you are young, perhaps you have decided to delay purchasing coverage until you’re older and more well established; however, delaying obtaining a Disability Policy could potentially prevent you from getting a plan with the best provisions and rates should an illness or injury occur.  

If you are still a medical student, resident, or fellow, this is definitely the best time to purchase a policy since you will have access to discounts (depending on which program you are attending) that you wouldn’t have access to otherwise. Most residency and fellowship programs in the United States have existing discount programs set up that allow you to get a reduced rate for disability coverage. The only stipulation is that you apply while still in training at the program.  If you decide to wait until after you finish your training, this window of opportunity will close and the discount will no longer be available.  

What if you are no longer considered young or already have health issues?  There are still many available options in the market, and we’d be happy to help you look into them.  While you will not likely receive the same rate as a young and healthy resident, we’ve had great success in helping people of all ages and varying health history successfully obtain a disability plan that offers the coverage and protection they need.

As always, we’re here to help!

Chris Wimberly

The Disability Doc

Request Quotes Here

*This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.

The Disability Retirement Protection Rider

The Disability Retirement Protection Rider found within a Disability Insurance Plan.

Only a couple of Insurance Carriers offer the optional Disability Retirement Protection Rider, and it does raise your premium to include this rider as part of your plan

With the Disability Retirement Protection Rider, in the event you become disabled, not only would you receive your regular monthly disability benefits, but an additional monthly benefit would also be placed into a retirement account for you.  Technically, the retirement account would be a “retirement trust” that you could access beginning at age 65.  Funds would only be placed into this retirement trust during a period of disability.  

This is actually a great strategy for individuals looking to maximize their plan’s benefits.  For example, if we design your plan with a benefit period to age 65, this means, if disabled, you would stop receiving your benefits at that time.  But, if we also design your plan with a Disability Retirement Protection Rider, then you would have access to the additional benefits deposited into your “trust” beyond age 65.

The money in your “Retirement Trust”, just like any other normal retirement investment, would grow over time as interest accrues.  For the Disability Retirement Protection Rider to be an available option for you, the only caveat is that insurance carriers require that you are already contributing to some sort of retirement savings plan at the time that you apply for a disability plan.  If you are not currently contributing to a retirement account of any kind, this rider will not likely be a possibility.

Including this rider can help maximize the strength of your disability plan to give you the most comprehensive and robust coverage. 

As always, we’re here to help!

Chris Wimberly

The Disability Doc

Request Quotes Here

*This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.