DISABILITY INSURANCE BY DECISION TREE FINANCIAL
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Key Employee Protection
What is Disability Insurance?
Disability Insurance is a form of health insurance designed to provide a financial benefit to the policy owner if an insured individual suffers from a qualified injury or illness.
Disability insurance can replace an individual’s income, pay the expenses of a business and even provide for a lump-sum benefit to provide compensation to a business when a key individual is no longer able to work.
Why You Want Disability Insurance
If you want to know why you would want to invest in disability income protection, all you need to do is imagine “what would happen if a disability were to strike me?” We realize this is something nobody wants to think about but the fact is a disability can strike anybody at any time preventing them from working the way they did before.
If you are the one who is disabled, it jeopardizes you and your family’s financial future. If you are a business owner, a disability to you or a key person can destroy your businesses profitability or even end its ability to be a going concern. The threat of disability is a serious risk and because of that, there is disability insurance.
Explore the Different Forms of Disability Insurance Protection
Important Considerations When Buying Disability Coverage
The old adage goes, “you get what you pay for” and unfortunately, there are a lot of people who purchased “disability insurance” believing that their income would be protected only to have a disabling illness or injury and have their claim declined and that decline held up in court.
Being health insurance contract, the various definitions in the policy are important to know. As consumers, we are trained to find “the cheapest solution,” but when it comes to health insurance like disability, cheaper isn’t necessarily better. Here are some VERY IMPORTANT considerations that Decision Tree Financial can review with you before you purchase disability insurance coverage to protect your income:
What was the event causing a disabling injury | Accidental “Means” or “Bodily Injury?”
At disability could be the result of an accident and the insured isn’t able to work for a period of time when a disability insurance policy’s benefits can start, then it is important to understand if the definition of what caused the disability was “accidental means” or “accidental bodily injury” and here is why…
A policy that states that disability by accidental means is a “meaner” definition. From a legal standpoint, it states if an injury resulting from an act that the insured meant to do will cause a claim to be declined. Generally speaking, a policy with an “accidental means” definition is much cheaper than one with an “accidental bodily injury” definition.
If a disability insurance contract stating that the policy will cover any accidental bodily injury, even if the insured meant to do the action that caused said disability, will pay a claim.
Here is an example. You dive into a pool, like you always have done, that is only four feet deep. This time though, you go too deep and break your neck causing a permanent disability.
You meant to dive in so if the policy you bought states it covers injuries from accidental means, it isn’t covered. On the other hand, you didn’t mean to break you neck so the more expensive policy with the any accidental bodily injury definition will pay the claim.
This is an important detail to understand and one reason a cheaper policy may leave you open to uncovered risks!
What kind of work can you do | “own occupation” or “any occupation”
Many disability insurance policies require an insured to be totally disabled before a claim will be paid. In order to have a claim approved, an insured person must meet the definition of what defines a disability.
‘Own-occupation” states that the insured no longer can do his or her current occupation, while the less expensive “any occupation” means they can’t do anything their training allows them to do.
For example, a surgeon who starts showing the early signs of Parkinson’s disease will be unable to do surgery for the rest of their life if their hand is shaking involuntarily from the disease. In this case, a disability insurance policy with an “own occupation” definition will pay a claim. On the other hand, a disability insurance policy with an “any occupation” definition may not.
The fact is the surgeon who’s hand shakes a little, and can function normally in society could still say, teach at a medical school to earn a living and use their training, even if they can only earn a fraction of what they had earned before the accident as a surgeon.
As a matter of fact, with any “own occupation” definition, an insured surgeon would be able to teach at a university AND collect the disability claim from the insurance company.
Will a policy pay partial benefit for partial disability?
Many disability insurance policies state an insured must be 100% disabled for benefits to start. Other policies state that an insured individual must stay 100% unable to work to continue receiving benefits.
Some policies will pay partial disability benefits if an insured is able to go back to work but only earn a portion of what they were before their illness or injury.
For example, a professional salesperson whose income drops 70% after receiving cancer treatment will receive 70% of their benefit if their disability policy has a partial disability provision but nothing if it does not while they are bouncing back.
Does a disability policy have a residual amount benefit?
Disability policies with “residual amount benefits” are more expensive than policies that do not because this benefit pays even if an insured never becomes 100% disabled but loses some of their ability to work,
The salesman in the previous example who doesn’t get so sick they were ever 100% disabled can now collect a residual benefit from their policy if they loose a percentage of their ability to work.