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 If you are a highly paid professional, there
are great differences among the types of disability
plans available for income protection. The following are
key points to focus on when looking for a disability
income insurance policy:
1. Own
Occupation Definition of Disability for Income
Protection: There are basically two very different
definitions of disability used in disability insurance
policies. The first definition is one that defines a
disability as one that prevents you from performing the
major duties of your occupation. One top-rated
disability insurance company summarizes their definition
of disability as: ?Pays benefits if you are unable to
perform the material and substantial duties of your own
occupation due to sickness or injury?even if you are
able to do some other kind of work.?.
The other,
and less favorable, definition of disability states that
you are disabled if you can?t work at any gainful
occupation. This kind of policy may also have a residual
benefit that says if your income goes down they?ll pay a
partial benefit. The most important feature for a
professional or executive is the own-occupation
definition. For more information on the Own-Occupation
definition, click Request
Info and we will get back to you ASAP.
2. A policy with the right definition of
residual (partial) benefits and return to work benefits:
What does that mean?
The following example may
help: A physician is disabled, then recovers and returns
to work after three years of disability. There is not
much of a practice left and there is no cash flow but
there are some patients starting to come back. There are
personal and business expenses to fund. Over the next
six months the business picks up but there is still low
cash flow. After one year the cash flow returns to 60%.
During all this time the physician is working full time.
Let?s see how this claim could be handled by two
different insurance companies.
Company A says
that if you?re back at work full time after three months
no matter your income that since you are at work full
time you will no longer receive benefits. (Time and
duties method).
Company B says: you?re not back
to full cash flow and pays the proportionate amount of
your loss. Both of these companies might have ?own
occupation? definitions for total disability but one is
much less favorable for you after recovery. (Income
definition of recovery and residual
benefit.)
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