Have you ever heard, “I have disability insurance through my professional association” when you approach medical and professional clients about protecting their paycheck with individual disability insurance (IDI)? For someone who knows disability insurance like we do, we know this is not a good thing for your clients.
- Many association DI plans, including the American Medical Association, do not have a definition of disability that protects the insured in his or her own occupation or specialty.
- Association plans premiums are not guaranteed. They increase currently in 5 year intervals. The rates are inexpensive when the insured is young and expensive as they age.
- The waiting period of 90 or 180 days must be total and consecutive. This means if the insured goes back to work on the 73rd day, his or her waiting period will start over from scratch.
- You can only purchase a benefit up to 12,500 a month.
- The rates typically start out low and will increase as you age.
- The rates are not guaranteed and are always subject to change.
- A carrier can choose to drop the coverage for the association if the claims experience is high.
Physicians, dentists, CPAs, engineers, and other professionals have worked very hard to insure they can work in a profession that provides a secure, high income. For this group, income protection is paramount; yet, they have chosen an income protection policy with a lot of limitations—probably because it is inexpensive, and they do not understand the details of their association DI contracts.
On the other hand, individual disability contracts do have higher premiums, but they also provide solid income protection. Good own occupation and specialty coverage will pay the insured if he or she is unable to perform one or more of the duties of his or her occupation or specialty even if he or she is working in another field. Good own occupation and specialty coverage will allow the insured to accumulate his or her waiting period and pay a benefit to the age of 65, 67, or 70 regardless of the insured’s ability to work in another field. And finally, good own specialty coverage will never increase in premium or be cancelled as long as the premium is paid.
Review the association DI contract with your client. It’s an opportunity for you to educate your clients and help them understand the difference between association coverage and individual disability coverage, so they can make an informed decision.
Request a disability quote from the disability specialists at Source Brokerage, Inc. Share the illustration with your client, noting the features of the IDI policy that provide secure stable income protection with a fixed premium throughout the life of the policy.