NAILBA Perspectives Winter 2019 | Page 29

When Is the Best Time To Get Disability Insurance Or, To Discontinue It? LARRY SCHNEIDER Disability Income Insurance Specialist T he best time to get a disability insurance income protection policy – or any other form of coverage – is to get it immediately just prior to a disability! Seriously, even though that is not an inaccurate answer, the best time to get coverage is at the earliest possible moment when it is both financially feasible and practical, even though there may not be an obvious need now. The only result from procrastination can be that health can change, circumstances can change etc., all of which can affect eligibility. Why then do too many bread winners wait until it is too late? Statistics will point out, that one out of every four workers will get disabled for a period before they reach age 65. Some reasons might be that prospects and even agents or advisors don’t see the need or the urgency – for their clients or even themselves – for this form of protection. Another reason might be that no one has told them they should have an income protection policy or that this form of protection even existed, or that they thought they were uninsurable. They could also have some false belief, that they will never get disabled and even if they did, that their employer, or someone else will pay their expenses/wages. Incidentally, and for everyone’s information, one does not have to become a ‘paraplegic’ in order to collect the monthly benefit. Definitions for total disability which will then trigger the payout do vary, but the best one out of several variations will say, “unable to do the material duties of YOUR OCCUPATION.” Even though you ARE working elsewhere and regardless of how much you earn. What happens if someone wants the income protection coverage, but has already been turned down for any number of reasons and not necessarily due to health? Is the” best” time gone? No, not if an agent knows where to go for assistance and a probable solution. There are brokers who specialize in hard to place situations which can be caused by approximately 10 or more major reasons, e.g., health, occupation, new business, working from within the home, working abroad, overweight etc., just to name a few. In any event, returning to the ‘best time’ that an individual should apply for this valuable form of coverage is of course at the earliest possible moment and the sooner the better, even though they can’t immediately afford the cost (2-4% of income, depending on age/ sex/occupation/benefit period/ benefit amount/options). Given the fact that most disabilities usually last less than 2-5 years, if cost is a major factor, what’s wrong with having that period as an initial benefit period and as a result, the cost will then be substantially lower. There are also other solutions for lowering the cost without reducing the benefit period, such as reducing the benefit amount etc. Remember a half of loaf of bread is better than none, besides, most carriers provide an option that will allow more coverage to be purchased in the future in order to replace the reduced amount, or to cover higher income, strictly based on financial underwriting (no evidence of medical insurability required!). This future increase option has some other benefits to the insured as well such as locking in the occupation classification. WHEN SHOULD COVERAGE BE DISCONTINUED? Only when that person either becomes self-insured or has retired before the coverage terminates which is usually at age 65. However, if the policy holder is still working, coverage can be kept to at least to 75 and with some carriers longer. If money becomes the issue for discontinuing, even then the policy really doesn’t have to be dropped! Coverage can be reconfigured, to create a lower benefit amount, or to a shorter benefit period. Either of these two solutions will lower the premium and possibly lower it enough to keep the policy in force. www.nailba.org 29