Monday, May 11, 2020

Interesting DI Option

Since May is DIAM (Disability Insurance Awareness Month), it seems like a good idea to post about a case I'm currently working on. This happens to be a young lady who drives a food service delivery truck (like the ones that supply Speedways or 7-11's, for example). She's in her mid-40's and makes a decent wage, but has no employer-sponsored disability insurance, so she reached out to me to see if we could help.

Individual Disability Insurance (DI) plans are one of the two most complicated insurance products in our portfolio (the other being its cousin, Long Term Care insurance). Plans and pricing are based on a number of factors: age and sex, tobacco use (she smokes), occupation and salary, and a few others. The occupation part can limit what plans and options are available. In this case, her Occupation Class is 1A, so she's eligible for a maximum benefit period of 2 years (which is far better than the 0 years she currently has). One other factor is the Elimination Period; that is, how long she's willing to wait from the date she's disabled until she begins receiving checks. This can range from a month to several years; the longer the wait (ie "deductible") the lower the premium.

My experience has long been that the EP "sweet spot" is generally 90 days (3 months). Much shorter than this is usually "spendy," while there's increasingly diminishing returns on going longer. Of course, there's also the fact that you're going without a paycheck for 3 months...

One of my go-to carriers for these plans is Assurity Life, and I usually just call them up and give them the case particulars (I always do a pre-screen with the client beforehand), and ask them for recommendations. We discuss those and put together an individualized plan.

In this case, my client doesn't have a lot of extra options from which to choose, but one is something I hadn't been aware of: the 'retro injury rider.' And just what is this magical beast?

Well, it's pretty darned cool:

If my client is injured, she still has to wait the 90 days for benefits to kick in, but this rider then generates a lump sum check for the 3 months of benefits she forewent. So, nice lump sum and monthly benefit checks. And in her case, the rider costs less than $10 a month (for a $3,400/month benefit).


So: helping out a client, and learning something new.

Doesn't get much better than that.
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