Grey collar folks are generally defined as those that fall in-between traditional white collar (accountants, engineers) and blue collar (mechanics, truck drivers). In this case, my client (we'll call him Steve) owns and operates a drywall contracting company, and splits his time about 75/25 between being on the job and manning the office.
Disability Insurance (DI) is designed to replace income lost from a serious illness or injury, and one of the key components in computing a premium is assigning an occupational rate class. A typical white collar class might be 3A or 4A, while a typical blue collar might be 1A. The higher the class, the lower the rate, so obtaining a favorable rate class is desirable.
In Steve's case, he might be a 3A but for the amount of time on the jobsite. For that reason, Assurity Life (which is the carrier we'll likely be using here) classifies him as 1A., but then bumps him up to 2A because he owns the business.
A very nice compromise, resulting in both substantial savings and additional benefits options.
When Steve called me about buying DI, I also asked if he knew about Business Overhead (BOE) insurance. Turns out, he didn't, and so I explained that, while DI puts food on his table and keeps a roof over his family's heads, BOE coverage helps pay the office bills (rent, lights, phones, etc). He immediately expressed an interest in that coverage, as well.
But here's the rub: for Business Overhead Expense plans, Assurity still considers him a 1A category, and ineligible for coverage.
What to do?
Well, as usual when I hit a brick wall, I called on the fine folks at Petersen International, who did, in fact, have a market for this coverage (in normal-speak, that means they could write such a plan). Which was the good news. The not-so-good news is the coverage, which has a 3 month waiting period before benefits are paid and a 1 year benefit period, clocks in at roughly $3,000 a year premium. . At $5,000 a month benefit, there's a total of $60,000 of potential claims, but that premium (which does include some helpful riders) tops $250 a month.
/gulp
Unlike "regular" DI plans, BOE premiums are (generally) tax deductible to the company, which helps lower the plan's net cost. Still, it's a big chunk, especially when one isn't used to paying for such coverage.
Will be interesting to see if he pulls that trigger.
Disability Insurance (DI) is designed to replace income lost from a serious illness or injury, and one of the key components in computing a premium is assigning an occupational rate class. A typical white collar class might be 3A or 4A, while a typical blue collar might be 1A. The higher the class, the lower the rate, so obtaining a favorable rate class is desirable.
In Steve's case, he might be a 3A but for the amount of time on the jobsite. For that reason, Assurity Life (which is the carrier we'll likely be using here) classifies him as 1A., but then bumps him up to 2A because he owns the business.
A very nice compromise, resulting in both substantial savings and additional benefits options.
When Steve called me about buying DI, I also asked if he knew about Business Overhead (BOE) insurance. Turns out, he didn't, and so I explained that, while DI puts food on his table and keeps a roof over his family's heads, BOE coverage helps pay the office bills (rent, lights, phones, etc). He immediately expressed an interest in that coverage, as well.
But here's the rub: for Business Overhead Expense plans, Assurity still considers him a 1A category, and ineligible for coverage.
What to do?
Well, as usual when I hit a brick wall, I called on the fine folks at Petersen International, who did, in fact, have a market for this coverage (in normal-speak, that means they could write such a plan). Which was the good news. The not-so-good news is the coverage, which has a 3 month waiting period before benefits are paid and a 1 year benefit period, clocks in at roughly $3,000 a year premium. . At $5,000 a month benefit, there's a total of $60,000 of potential claims, but that premium (which does include some helpful riders) tops $250 a month.
/gulp
Unlike "regular" DI plans, BOE premiums are (generally) tax deductible to the company, which helps lower the plan's net cost. Still, it's a big chunk, especially when one isn't used to paying for such coverage.
Will be interesting to see if he pulls that trigger.
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