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Some Advice from a Doctor, Insurance Agent and Financial Advisor
Dr. David Edward Marcinko MBA CMP™
www.CertifiedMedicalPlanner.org
[Publisher-in-Chief]
Policies Are Harder to Get, More Expensive, and Offer Less Protection Than Before
Due principally to large claims from anesthesiologists, surgeons, emergency room physicians, and trial attorneys, disability insurance underwriting is becoming stricter. Among the effects on policyholders: revised definitions of disability; restriction of benefits to two years on so-called “soft tissue” disabilities and mental and nervous disorders; and downgrading of professionals to the general white-collar category. The result is higher premiums.
Buy a Good Individual Policy
Based upon the fact that disability is the only insurance product on the market that is non-cancelable (premiums and policy features are locked in until age 65), my advice is to buy a good quality individual policy as early as possible and hang on to it. Group benefits should be added later. Also, many group plans only include straight salary in compensation. Incentive compensation, which makes up a large portion of an executive’s compensation, is not considered. Under the Revenue Reconciliation Act of 1993, employee disability benefits can only cover up to $150,000 in compensation. Finally, don’t forget that if the employer pays the premiums, benefits are taxable. This can substantially reduce an executive’s disability income.
Pay More for Non-Cancelable Coverage
I also may recommend paying a 15–20% higher premium to obtain non-cancelable coverage, if available, as compared to guaranteed renewable coverage. In both cases, coverage cannot be canceled. However, in the latter case, premiums can be increased on a class basis. Also, investigate the partial-disability benefits as well as the residual benefits after returning to work.
Note: “Your Disability Is Your Opportunity,” by Jaberta C. Evans, Dow Jones Investment Advisor, December 1996, pp. 76–80, Dow Jones Financial Publishing Corp., [908] 389-8700.)
Conclusion
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Filed under: "Ask-an-Advisor", "Doctors Only", CMP Program, Insurance Matters, Op-Editorials | Tagged: CMP, david marcinko, Disability Insurance Physicians, www.certifiedmedicalplanner.com | 8 Comments »
