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Protect Your Income with Disability Insurance

Learn about the need for disability income protection, the reality of disability statistics, and the solution of comprehensive disability insurance products. Presented by Benjamin K. Perez of Disability Resource Group, Inc.

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Protect Your Income with Disability Insurance

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  1. Session One: INDIVIDUAL DISABILITY INCOME PROTECTION Presented by: Benjamin K. Perez Disability Resource Group, Inc. 800.945.9719 www.drgdi.com

  2. The Three Major Points of Discussion: • The Need • The Reality • The Solution

  3. The Need • How long can you survive without an income? • Where will the money come from? • How long will that money hold out? • What will be sacrificed by using that money?

  4. What will happen to your Dreams and Prioritieswithout an income? • Personal • & • Business Assets • Business Ownership • Retirement / Investments Auto & Home Life Health Property INCOME Foundation Disability Insurance

  5. Healthy Normal Income Savings Normal Expenses When disability strikes, your financial picture changes Disability Debt Savings Depleted!

  6. What is your most important asset? Income Home Automobile Retirement

  7. Protect Your Most Valuable Asset Average Income to Age 65

  8. Disabled? Me? Never! No one ever thinks they are going to become “disabled,” which in their minds means:

  9. The Reality • 30% of all people 35 to 65 will suffer a disability for at least 90 days and one in seven will be disabled for five years.* • There is a disability caused by a motor vehicle crash every 30 seconds.** • One out of every two Mortgage foreclosures is due to a disability.*** * Health Association of America; The New York Times, 02.02 **National Safety Council Accident Facts, 02.02 *** National Safety Council Report On Injuries, 01.01

  10. The Good News and Bad News Bad News Diseases that used to cause death are now leaving people disabled. Good News People are living longer.

  11. Disability Death Disability On the Rise 100% 80% 60% 40% 70% 55% 44% 20% 36% 36% Death 0% Disability -27% -29% -32% -20% -48% Heart Diseases Diabetes -73% -40% All Four Cerebrovascular -60% -80% Hypertension -100% Source: National Center for Health Statistics - 1999

  12. The Solution Income $ Disability Income Savings $ Expenses X Disability

  13. COMPLETE PORTFOLIO OF DISABILITY PRODUCTS AND SERVICES

  14. COMPLETE DISABILITY PRODUCT PORTFOLIO • Individual Coverage • Business Overhead Expense • Buy-Sell

  15. Residual/Recovery Benefits Retirement Completion Catastrophic Benefit Return of Premium To Age 67, 70, Lifetime Benefits COMPLETE DISABILITY PRODUCT PORTFOLIOCONT.

  16. Mortgage/Loan Protection Long Term Care Purchase Options Home Based Business Newly Self-Employed Government Employees COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

  17. Impaired Risk High Limit Professional Athletes/Entertainers Blue Collar Police and Armed Forces COMPLETE DISABILITY PRODUCT PORTFOLIOCONT.

  18. Young Professional Limits Qualified Sick Pay Group Supplement / Conversion Executive Carve Out Key Person COMPLETE DISABILITY PRODUCT PORTFOLIOCONT.

  19. Spousal /Multi – Life Discount Association Programs Work Site Marketing Plans Simplified Underwriting Guaranteed Standard Issue COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

  20. Defining Disability What does “Totally Disabled” mean ? What does “True Own Occupation” mean? What does “Partially Disabled” mean? What is “Transitional Own Occupation” ?

  21. Basic Definitions • Unable to perform the material and substantial duties of your occupation. • Unable to perform the material and substantial duties of your occupation and not working in any other. • Unable to perform the material and substantial duties of any occupation based on education, training and experience.

  22. To Age 65 True Own Occ 5A- 4A* To Age 65 Own Occ & Not Engaged Transitional Own Occupation 5A - 3A** 5A - 3A 60MonthsOwn Occ Reasonable Occupation 60 Months Own Occ & Not Engaged 5A - 3A Reasonable Occupation 24 Months Own Occ 5A -B Reasonable Occupation 24 Months Own Occ & Not Engaged Cognitively Impaired or Unable To Do 2 of 5 “Activities of Daily Living” 5A -2A Various Definitions Available *N/A to 4A physicians > 50. **N/A to 3A medical personnel/dentists > 50.

  23. Modifiers • 2 year, 5 year, or To Age 65 True Own Occ Rider • Transitional Your Occ Rider • Residual or Extended Partial Riders • 2 year, 5 year, or To Age 65 Your Occupation Period

  24. Defining Partial Disability • The inability to perform some but not all of the material and substantial duties of your occupation. • The inability to perform the material and substantial duties of your occupation, yet working in another with a 20% loss of income.

  25. Residual or Partial Riders • If you return to work in your own, or a new occupation and experience a minimum 20% loss of income due to your disability, or if you return to work on a part-time basis, after a disability, a minimum 20% of your benefit can be paid.

  26. The Importance of the Residual Rider • Can change the definition of Disability • Can provide Recovery Benefits • Allows you to return to work while still receiving benefits • Especially important for self-employed and fee-for-service employees.

  27. Defining the Disability Contract “Non Cancelable” vs. “Guaranteed Renewable”

  28. Two Types of Contracts Non Cancelable: • Premiums are guaranteed level for the life of the contract unless benefits are increased. • Coverage is never cancelled as long as premiums are paid.

  29. Two Types of Contracts Guaranteed Renewable: • Coverage is never cancelled as long as premiums are paid. • Company reserves the right to increase premiums should they experience unfavorable claims with entire occupational class in state of issue.

  30. Issue and Participation Limits • 60% of Income – Not Necessarily a Rule! • Max issue up to $15,000 per month • Max participation to $25,000 per month • Limits per Occ Class • $10,000 issue limit for Medical Professions • Lower limits for certain states • Taxable vs. Non-Taxable • High Limit Carriers

  31. Issue and Participation Limits $100,000 income = $5,000 non taxable benefit (60% of income) $100,000 income = $6,250 taxable benefit (75% of income) $100,000 income: $5,000 taxable group benefits + $1,950 in non taxable benefit = $6,950 total (83.5% of income)

  32. The Underwriting Process • Life Insurance: General Mortality • Long Term Care: Ability to Perform the Activities of Dailey Living • Health Insurance: General Morbidity

  33. The Three Areas of DisabilityUnderwriting • Occupation • Compensation • Medical Complications (Past, Recent, Current, or Potential)

  34. Other Underwriting Factors • Gender Females are 20% more expensive to insure • Age Some benefits may be denied due to age • State of Residence Availability and benefits can vary from state to state

  35. The Importance of Field Underwriting • Ask about Medical History • Get details of any Medical Complications and Medications taken • Ask for Height and Weight • Get an exact description of actual duties • Ask for details on how they are compensated • Get as much information as possible before taking an application.

  36. Individual/BOE Proposal Request Form • Client Name: M F • Date of Birth: • Tobacco Use: Y / N • State Lives: Works: • Occupation: • Title: • Duties: • Annual Salary: Bonus: Commissions: Unearned: • SELF-EMPLOYED, OR BUSINESS OWNER? Y / N • NET INCOME: (AFTER EXPENSES) $ • WORKS FROM HOME? Y / N # Of Years As Owner? • If less than 1 full Year: Former Position: Former Salary: • C- Corp S-Corp Partnership LLC • # of Full Time Employees:

  37. Page 2 Health Problems (Past 5 yrs.), Taking Medications, Height / Weight?

  38. Automatic Declines • Recent Diagnosis of Depression or Anxiety • Hepatitis C • Juvenile Diabetes • Most cases of Rheumatoid Arthritis • Obesity

  39. Medications to watch for: • Prozac, Zoloft, Welbutrin, Paxil, Celexa • Interferon • Coumadin • Neurontin • Methotrexate or Rheumatrex

  40. Disability Income Protection • The Need, the Reality, the Solution • Full Portfolio of Disability Products • Two Types of Contracts • Various Definitions Available • Issue and Participation Limits • Occupation, Compensation, and Medical Complications

  41. Benjamin K. Perez800.945.9719 Ext. 303bkp@drgdi.com

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