Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Good morning to all. Craig Shillig here and this is
Safe Money. I'm here every Saturday to talk with our
listeners about financial strategies we use to manage and protect
assets safely. I've been an insurance agent for over twenty
four years. During that time, I've learned a few insurance strategies,
like using annuities as safe money harbors, or using cash
(00:23):
value life insurance to supplement retirement income. Just a reminder,
you can call our office at five six three three
three two two two zero zero if you'd like to
enroll into one of my virtual Medicare community meetings. I
give those via zoom. I do two every month, or
(00:44):
you can email me at Craig at Craigshillig dot com
and that's my name, cr Aig at cr Aig schi
LLLG dot com. Today, I'd like to continue my talk
(01:05):
about maybe in Disability Awareness Month by talking about paycheck insurance.
This is going to be a two part series. I'll
talk about this today and then I'll continue my discussion
next week on the twenty fourth. So how paycheck insurance
(01:25):
policies define the word disability? When was the last time
you read the fine print of your insurance policy. The
fine print tells you some important information how the policy
defines disability, what your benefits will be, what exclusions may apply,
(01:48):
and more. The definition of disability used in the policy
determines how you qualify for paycheck insurance benefits. To be
considered disabled, I always use the word sicker hurt. Under
most policies, you must be unable to earn income and
(02:10):
you are under a doctor's care. However, many policies narrow
down this definition quite a bit. They may specify that
you must try working in another occupation if you can't
do your own occupation, or they may pay benefits if
(02:31):
you can do some but not all, of the duties
of your own occupation. Other policies aren't concerned with occupation
at all. They consider you to be sicker hurt when,
because of illness or injury, you earn less than you
did before. So again, it depends on what the contract says.
(02:55):
Own aph definition. This is called own occupation coverage. Although
the terminology used to define disability varies from policy to policy,
and own ak policy generally defines disability as the inability
to perform the material and substantial duties of one's own occupation.
(03:18):
This definition of disability is liberal because even if you
can work in another occupation, you still receive disability benefits.
Own occupation coverage is often more expensive and may be
available only to individuals who have a clean medical history
and work in a relatively risk free occupation. I would
(03:42):
say own AC coverage for disability policy is going to
fall a lot under a very specific occupation. So surgeons, litigators,
or you know, if you're an entrepren ner and maybe
you created something, this is where ONOK is really going
(04:05):
to come in. But let me use the HU definition
That comes up a lot. So you're a surgeon and
you become sick or hurt, so you can't perform surgery
in the operating room, but you still could work in
the er. Under an ONoC definition, they would still pay
benefits to you even if you were now just working
(04:28):
as an er attendee. Just something to think about. Next definition,
any occupation coverage and any occupation policy defines disability as
the inability to perform the duties of any occupation. This
definition of disability is very strict. To receive benefits, according
(04:52):
to this definition, you'll have to be unable to work
in any occupation, not just your own occupation. Generally, however,
the wording is modified to take into consideration you're earning
level education, training and experience. But in any occupation definition
you will see that a lot. In UH if you
(05:14):
have group long term or short term disability plan, it
may say you cannot perform the duties of any occupation,
or maybe they would do that after a set period
of time like six months, twelve months, or two years,
and any occupation definition means the policy will be inexpensive,
(05:36):
but it's very very hard to qualify, so it's not
really worth the money. Split definition coverage. Many disability policies
incorporate both an ONNAC definition of disability and in any
and in any occupation definition. Sometimes they'll have provisions for this.
So you're sick of hurt and can't work for say
(06:00):
twenty four months, then the definition changes to you can't
do any occupation. You purchase a policy that provides OHNOCK
coverage for say a limited period of time. After this
period ends, you meet the question will be any occupation
definition of disability to continue receiving benefits. This is sometimes
(06:23):
known as you're gonna find it on short term or
long term care occupation coverage policies presumptive total disability coverage.
No matter how your insurance company defines total disability, most
companies automatically consider certain catastrophic ailments to be then in fact,
(06:44):
totally disabling. If you are disabled by one of these ailments,
you don't have to meet the conditions normally required in
order to be considered totally disabled. Not only do you
receive immedia benefits, but you also canntinue to receive benefits
even if you're able to return to work. These ailments,
(07:05):
which may be caused by injury or illness, are the
loss of sight in both eyes, the loss of hearing
in both ears, the loss of your speech, the loss
or use of both of your hands, both of your feet,
or if you were to lose one hand in one foot,
So we're talking about a pretty catastrophic incident. Residual disability
(07:35):
coverage disability policies can pay benefits in the event that
you cannot work at all, so you're totally sicker hurt.
You can work sometime but not all the time, known
as residual disability or both. Residual disability or income replacement
policies pay benefits according to the amount of income you
(07:57):
have lost due to disability. These policies pay benefits even
if you're not totally disabled and can work part time.
Your benefit will be based on the percentage of income
you earn working part time in relation to what you
use to earn working full time. In some policies, to
(08:20):
qualify for a residual disability coverage, you must first qualify
for a period of total sickness or illness. This is
the least desirable method. You can purchase a total disability
policy with residual coverage as a writer or an income
replacement policy, as residual coverage is known when that is
(08:44):
the only way benefits are paid. As a standalone policy,
the income replacement policy will generally cost less than the
total disability policy with the residual rider, and the reason
that is is because the definitions are going to be
different so partial disability coverage this, in my opinion, is
(09:06):
probably one of the most important pieces of a paycheck
insurance policy. Partial disability coverage is usually offered as a
writer to a total disability policy, although it sometimes can
be included in base coverage. It's similar to, but not
the same as, residual disability coverage. Both types of coverage
(09:26):
pay benefits if you can perform some, but not all,
the duties of your occupation. However, unlike residual disability, a
partial disability definition does not consider a loss of income. Rather,
you're paid an amount equal to fifty percent or less
of the benefit that you would earn if you were
(09:46):
totally disabled. In addition, the benefit period is much shorter
than that for residual disability disability a few months usually
maximum out to a year of most Does your policy
cover illness, injuries, or both? Most policies offer coverage for
(10:08):
both injuries and illnesses. Some policies, however, offer accident only
protection and don't cover illnesses. Because work related disabilities are
covered by Workmen's comp insurance, most policies will reduce their
benefits by any amount of benefits paid by Workmen's comp
(10:29):
as well as any benefits received from Social Security or
any other government programs. Sickness is usually usually defined in
disability policies as illness or disease that manifests itself while
the policy is enforced. This definition covers mental as well
(10:49):
as physical illness, but most policies limit payments for mental
illness and drug or alcohol related disabilities to twenty four
months of benefits. Some policies have exclusions for disabilities caused
by pregnancy, war, and self inflicted injuries, as well as
(11:09):
other exclusions, and all of the exclusions will be detailed
in the policy at the time of issue. So let's
talk about disability income insurance. For self employed Your ability
to earn income is your most valuable asset. It allows
you to buy and maintain assets such as your house,
(11:31):
your car, your jewelry. People routinely ensure these types of
property against loss, Yet a lot of us neglect to
buy insurance for the one cash source that makes it
possible to maintain a particular lifestyle, it's your ability to
earn an income. The cold reality is that at any age,
(11:54):
you have a greater chance of suffering a long term
disability during your working years then you do die in
as a self employed person, suffering in illness or injury
without disability income insurance could mean disaster for both your
business and your family. Why is disability income insurance so important.
(12:18):
Disability income insurance pays cash benefits in the event you
are unable to work due to illness or accident, disability
income insurance protects your ability to earn an income, and
it allows you to tailor the cost and policy terms
to fit your own budget and specific needs. Disability income
(12:42):
insurance is designed to provide for the essentials of daily life.
As a result, paycheck insurance does not replace your entire paycheck.
Most policies will replace fifty to seventy percent of your salary,
although typically the benefit will be received tax free. They
(13:04):
will pay benefits under any and all circumstances. Policies contain
a specific definition of disabled that must be met in
order to qualify for benefit payments. What makes paycheck insurance
so critical for self employed people. As a self employed individual,
(13:26):
you don't have a large company providing you with long
and short term salary, continuation plans, group medical and disability plans,
and other benefits. Your business may consist of you alone,
or you and a few employees. If you've become sick
or hurt, there may be nobody else to carry on
(13:47):
your business while you're unable to work. As a result,
there is no income for the business or for you. Unfortunately,
just because you have becomes sick or disabled and cannot work,
your personal and business application obligations do not stop you
(14:08):
are personally reliable for all of the debts of your
business because as a sole proprietor, there's no legal distinction
between personal and business assets, so you could lose everything
you own if you're unable to pay your debts. Adequate
paycheck insurance coverage can provide you with enough cash flow
to prevent financial ruin for both you and your business.
(14:33):
Another type of paycheck insurance, known as business overhead expense insurance,
is also very important because you're self Because you're self employed,
you probably generate most of your business income. This type
of insurance provides funds to pay the normal business operating
expenses of your business when you suffer a sickness or
(14:58):
injury in a unable to work. This allows you to
keep the business open until you recover, replace yourself with
another person to generate income, or give you adequate time
to make sound decisions to sell the business if necessary. Finally,
you could use paycheck insurance to fund a buy sell agreement.
(15:22):
A buy seller agreement is a binding agreement between you,
as the business owner, and a second party. You agree
to sell your business interest, and the second party agrees
to buy it on a specific triggering event. For example,
your sickness or injury could be a triggering event. When
(15:45):
you become sick or hurt, the purchaser will use the
proceeds from the paycheck insurance policy to buy your share
the business from you. Incidentally, a case like that would
be due if there's two of you who work together.
Do you want to work with your partner's spouse because
(16:07):
that comes up a lot. Keep that in mind. Let's
talk about long term versus short term disability income insurance.
It's hard to imagine becoming disabled, and it's harder to
still imagine a disability lasting longer than a couple of weeks.
(16:27):
But a serious disability can last years or even a lifetime.
That's why you should pay attention to whether a disability
income insurance policy offers long term or short term disability
benefits and understand the differences between the two. How do
long term and short term disability policies differ by definition?
(16:51):
Long term and short term disability policies have different purposes.
Short term disability income insurance is designed to pay your
benefits soon and for a shorter period or duration of
time than a long term disability income insurance policy. Under
the terms of your disability income insurance policy, you'll have
(17:12):
to wait for a certain period of time known as
you're deductible, after you become sicker hurt, before you can
begin receiving monthly benefits. Some policies, typically short term policies
even offer two waiting periods, a shorter one for accidents,
(17:33):
a longer one for sicknesses. Waiting periods under a short
term policy generally range from They can be short as
zero to fourteen days, depending on the terms of the policy.
Waiting periods under a long term policies are longer, ranging
from usually one month to up to seven and twenty days,
(17:56):
although a ninety day wait. Although a ninety day waiting
period it is probably most common if you suffer a
sickness or an injury, you'll receive benefits until you recover
or reach a certain maximum By definition. Short term disability
policies may pay benefits for up to two years, although
many policies pay benefits for only three months, six months,
(18:21):
or up to twelve months. But long term disability policies
pay benefits for a far longer period of time, maybe
a couple of years. Some can go out to age
sixty five or sixty seven, and there's some older policies
out there still today that will pay for a lifetime
Should I buy long term or short term disability income insurance?
(18:45):
If you can't afford to purchase both, it generally makes
more sense to purchase long term disability coverage. Most disabilities
last only a short time, and you may be able
to financially survive as short term disability even without insurance. However,
a long term sickness or injury can seriously threaten your
(19:06):
finances if you do not have adequate insurance. Consider these
factors as well the other kinds of protection you have.
If you suffer as disability, you may be eligible for
benefits from government sponsored disability insurance programs such as SSDI
or a worker's comp If your disability was work related,
(19:29):
your employer may also provide coverage, Although employers offer short
term coverage more frequently than they offer long term coverage.
Don't buy a policy that duplicates coverage you already have elsewhere.
The type of coverage you can afford to buy. Short
term coverage is typically less expensive than long term coverage
because benefits are paid for a shorter period of time.
(19:53):
How do I buy a shorter long term disability income
insurance policy. You can buy a paycheck insurance policy see
through a private company that sells individual policies, or you
can purchase group disability insurance through an association to which
you belong or through your employer. Employers may also offer
(20:13):
you a certain amount of disability insurance add no cost
to you as part of your employee benefits package. So
let's talk about beyond the basics. Disability income insurance writers
writers are a policy add on that enable you to
customize an individual disability policy to fit your needs. By
(20:34):
using writers, companies do not require every policy owner to
pay for every optional feature, whether they want it or not.
Some benefits and features normally sold as writers will be
included as base coverage in some policies, but often they
must be purchased in addition to the policy and will
(20:55):
substantially increase the policy's cost. You must purchase writers when
you buy the policy. They typically cannot be added onto
the contract after the policy is issued. I'll give you
some details of some optional benefits and features that can
(21:17):
be purchased as writers and add ons to a paycheck
insurance policy. So one of the important ones in my opinion.
Future increase option writer. This is one of the most
common writers and one that may be particularly important to
young policy applicants, especially if you're under the age of forty.
(21:39):
A future increase option writer protects your future insurability by
guaranteeing you the right to purchase additional amounts of vissability
insurance at specified dates in the future. The premium for
any additional coverage purchase in the future will be based
on your age at the time of purchase and the
income you're earning. Future purchases are generally limited to half
(22:03):
the original benefit amount, and you will be required to
prove that your earned income warrants additional coverage. This writer
generally cannot be added after you reach age forty five,
although some insurers will let you go up to age fifty.
The future increase option may also be called a guaranteed
(22:23):
insurreability option or sometimes a guaranteed purchase option. Another one
is referred to as KOLA. It's called a cost of
living writer, and basically what this does this helps fight
against inflation after you If at the time you're on
(22:45):
claim and you're receiving benefits, this writer will then increase
benefits to offset for inflation, and he usually goes against
what's the general CPI is. In every policy you will
have a set percentage of what your benefit would be. Now,
some companies will cap the increase add no more than
(23:08):
one or two times your original benefit. But again, this
helps you stay ahead of inflation because everybody knows today
that one hundred dollars today will not buy you one
hundred dollars of goods and services, and say let's go
fifteen or twenty years in the future. So this helps
you keep pace with inflation. Some other writers that are
(23:34):
out there, there's a Social Security writer, but usually that
writer is only going to fall into account if you
are totally disabled. I don't like that writer all that much.
But the problem is, in some cases it's all or nothing.
If you don't qualify for SSDI insurance, the Social Security
(23:56):
writer is not going to do much for you. And
then sometimes there's an offset if you were to qualify
for SSDI benefits. But please understand, qualifying for SSDI is
very difficult. The current definition is you must be unable
to work due to sickness or injury and you cannot
(24:18):
do any occupation and you may have a diagnosis of
death within the next twelve months. So again, qualifying for
SSDI is very, very hard. Please keep that in mind,
don't forget. I give monthly virtual meetings regarding Medicare for
(24:39):
two different companies every month. In one meeting, I will
cover Medicare supplement plans with a standalone drug plan. That
meeting is sponsored by well Mark. United Healthcare is a sponsor.
For my other virtual meeting, I focus on Medicare Advantage
plans also known as Medicare Parts C, and I cover
the benefits of that platform. You can call my office
(25:02):
at five six three three three two two two zero
zero for the zoom meeting codes and additional dates and times.
You're also welcome to email me at Craig at Craigshilig
dot com and that's my name c R A I
G at c R A I G S C H
(25:22):
I L L I G dot com and I can
send you the virtual zoomlink meeting codes. This is Craig
Schillig with Safe Money
Good morning to all. Craig Shillig here and this is
Safe Money. I'm here every Saturday to talk with our
listeners about financial strategies we use to manage and protect
assets safely. I've been an insurance agent for over twenty
four years. During that time, I've learned a few insurance strategies,
like using annuities as safe money harbors, or using cash
(00:23):
value life insurance to supplement retirement income. Just a reminder,
you can call our office at five six three three
three two two two zero zero if you'd like to
enroll into one of my virtual Medicare community meetings. I
give those via zoom. I do two every month, or
(00:44):
you can email me at Craig at Craigshillig dot com
and that's my name, cr Aig at cr Aig schi
LLLG dot com. Today, I'd like to continue my talk
(01:05):
about maybe in Disability Awareness Month by talking about paycheck insurance.
This is going to be a two part series. I'll
talk about this today and then I'll continue my discussion
next week on the twenty fourth. So how paycheck insurance
(01:25):
policies define the word disability? When was the last time
you read the fine print of your insurance policy. The
fine print tells you some important information how the policy
defines disability, what your benefits will be, what exclusions may apply,
(01:48):
and more. The definition of disability used in the policy
determines how you qualify for paycheck insurance benefits. To be
considered disabled, I always use the word sicker hurt. Under
most policies, you must be unable to earn income and
(02:10):
you are under a doctor's care. However, many policies narrow
down this definition quite a bit. They may specify that
you must try working in another occupation if you can't
do your own occupation, or they may pay benefits if
(02:31):
you can do some but not all, of the duties
of your own occupation. Other policies aren't concerned with occupation
at all. They consider you to be sicker hurt when,
because of illness or injury, you earn less than you
did before. So again, it depends on what the contract says.
(02:55):
Own aph definition. This is called own occupation coverage. Although
the terminology used to define disability varies from policy to policy,
and own ak policy generally defines disability as the inability
to perform the material and substantial duties of one's own occupation.
(03:18):
This definition of disability is liberal because even if you
can work in another occupation, you still receive disability benefits.
Own occupation coverage is often more expensive and may be
available only to individuals who have a clean medical history
and work in a relatively risk free occupation. I would
(03:42):
say own AC coverage for disability policy is going to
fall a lot under a very specific occupation. So surgeons, litigators,
or you know, if you're an entrepren ner and maybe
you created something, this is where ONOK is really going
(04:05):
to come in. But let me use the HU definition
That comes up a lot. So you're a surgeon and
you become sick or hurt, so you can't perform surgery
in the operating room, but you still could work in
the er. Under an ONoC definition, they would still pay
benefits to you even if you were now just working
(04:28):
as an er attendee. Just something to think about. Next definition,
any occupation coverage and any occupation policy defines disability as
the inability to perform the duties of any occupation. This
definition of disability is very strict. To receive benefits, according
(04:52):
to this definition, you'll have to be unable to work
in any occupation, not just your own occupation. Generally, however,
the wording is modified to take into consideration you're earning
level education, training and experience. But in any occupation definition
you will see that a lot. In UH if you
(05:14):
have group long term or short term disability plan, it
may say you cannot perform the duties of any occupation,
or maybe they would do that after a set period
of time like six months, twelve months, or two years,
and any occupation definition means the policy will be inexpensive,
(05:36):
but it's very very hard to qualify, so it's not
really worth the money. Split definition coverage. Many disability policies
incorporate both an ONNAC definition of disability and in any
and in any occupation definition. Sometimes they'll have provisions for this.
So you're sick of hurt and can't work for say
(06:00):
twenty four months, then the definition changes to you can't
do any occupation. You purchase a policy that provides OHNOCK
coverage for say a limited period of time. After this
period ends, you meet the question will be any occupation
definition of disability to continue receiving benefits. This is sometimes
(06:23):
known as you're gonna find it on short term or
long term care occupation coverage policies presumptive total disability coverage.
No matter how your insurance company defines total disability, most
companies automatically consider certain catastrophic ailments to be then in fact,
(06:44):
totally disabling. If you are disabled by one of these ailments,
you don't have to meet the conditions normally required in
order to be considered totally disabled. Not only do you
receive immedia benefits, but you also canntinue to receive benefits
even if you're able to return to work. These ailments,
(07:05):
which may be caused by injury or illness, are the
loss of sight in both eyes, the loss of hearing
in both ears, the loss of your speech, the loss
or use of both of your hands, both of your feet,
or if you were to lose one hand in one foot,
So we're talking about a pretty catastrophic incident. Residual disability
(07:35):
coverage disability policies can pay benefits in the event that
you cannot work at all, so you're totally sicker hurt.
You can work sometime but not all the time, known
as residual disability or both. Residual disability or income replacement
policies pay benefits according to the amount of income you
(07:57):
have lost due to disability. These policies pay benefits even
if you're not totally disabled and can work part time.
Your benefit will be based on the percentage of income
you earn working part time in relation to what you
use to earn working full time. In some policies, to
(08:20):
qualify for a residual disability coverage, you must first qualify
for a period of total sickness or illness. This is
the least desirable method. You can purchase a total disability
policy with residual coverage as a writer or an income
replacement policy, as residual coverage is known when that is
(08:44):
the only way benefits are paid. As a standalone policy,
the income replacement policy will generally cost less than the
total disability policy with the residual rider, and the reason
that is is because the definitions are going to be
different so partial disability coverage this, in my opinion, is
(09:06):
probably one of the most important pieces of a paycheck
insurance policy. Partial disability coverage is usually offered as a
writer to a total disability policy, although it sometimes can
be included in base coverage. It's similar to, but not
the same as, residual disability coverage. Both types of coverage
(09:26):
pay benefits if you can perform some, but not all,
the duties of your occupation. However, unlike residual disability, a
partial disability definition does not consider a loss of income. Rather,
you're paid an amount equal to fifty percent or less
of the benefit that you would earn if you were
(09:46):
totally disabled. In addition, the benefit period is much shorter
than that for residual disability disability a few months usually
maximum out to a year of most Does your policy
cover illness, injuries, or both? Most policies offer coverage for
(10:08):
both injuries and illnesses. Some policies, however, offer accident only
protection and don't cover illnesses. Because work related disabilities are
covered by Workmen's comp insurance, most policies will reduce their
benefits by any amount of benefits paid by Workmen's comp
(10:29):
as well as any benefits received from Social Security or
any other government programs. Sickness is usually usually defined in
disability policies as illness or disease that manifests itself while
the policy is enforced. This definition covers mental as well
(10:49):
as physical illness, but most policies limit payments for mental
illness and drug or alcohol related disabilities to twenty four
months of benefits. Some policies have exclusions for disabilities caused
by pregnancy, war, and self inflicted injuries, as well as
(11:09):
other exclusions, and all of the exclusions will be detailed
in the policy at the time of issue. So let's
talk about disability income insurance. For self employed Your ability
to earn income is your most valuable asset. It allows
you to buy and maintain assets such as your house,
(11:31):
your car, your jewelry. People routinely ensure these types of
property against loss, Yet a lot of us neglect to
buy insurance for the one cash source that makes it
possible to maintain a particular lifestyle, it's your ability to
earn an income. The cold reality is that at any age,
(11:54):
you have a greater chance of suffering a long term
disability during your working years then you do die in
as a self employed person, suffering in illness or injury
without disability income insurance could mean disaster for both your
business and your family. Why is disability income insurance so important.
(12:18):
Disability income insurance pays cash benefits in the event you
are unable to work due to illness or accident, disability
income insurance protects your ability to earn an income, and
it allows you to tailor the cost and policy terms
to fit your own budget and specific needs. Disability income
(12:42):
insurance is designed to provide for the essentials of daily life.
As a result, paycheck insurance does not replace your entire paycheck.
Most policies will replace fifty to seventy percent of your salary,
although typically the benefit will be received tax free. They
(13:04):
will pay benefits under any and all circumstances. Policies contain
a specific definition of disabled that must be met in
order to qualify for benefit payments. What makes paycheck insurance
so critical for self employed people. As a self employed individual,
(13:26):
you don't have a large company providing you with long
and short term salary, continuation plans, group medical and disability plans,
and other benefits. Your business may consist of you alone,
or you and a few employees. If you've become sick
or hurt, there may be nobody else to carry on
(13:47):
your business while you're unable to work. As a result,
there is no income for the business or for you. Unfortunately,
just because you have becomes sick or disabled and cannot work,
your personal and business application obligations do not stop you
(14:08):
are personally reliable for all of the debts of your
business because as a sole proprietor, there's no legal distinction
between personal and business assets, so you could lose everything
you own if you're unable to pay your debts. Adequate
paycheck insurance coverage can provide you with enough cash flow
to prevent financial ruin for both you and your business.
(14:33):
Another type of paycheck insurance, known as business overhead expense insurance,
is also very important because you're self Because you're self employed,
you probably generate most of your business income. This type
of insurance provides funds to pay the normal business operating
expenses of your business when you suffer a sickness or
(14:58):
injury in a unable to work. This allows you to
keep the business open until you recover, replace yourself with
another person to generate income, or give you adequate time
to make sound decisions to sell the business if necessary. Finally,
you could use paycheck insurance to fund a buy sell agreement.
(15:22):
A buy seller agreement is a binding agreement between you,
as the business owner, and a second party. You agree
to sell your business interest, and the second party agrees
to buy it on a specific triggering event. For example,
your sickness or injury could be a triggering event. When
(15:45):
you become sick or hurt, the purchaser will use the
proceeds from the paycheck insurance policy to buy your share
the business from you. Incidentally, a case like that would
be due if there's two of you who work together.
Do you want to work with your partner's spouse because
(16:07):
that comes up a lot. Keep that in mind. Let's
talk about long term versus short term disability income insurance.
It's hard to imagine becoming disabled, and it's harder to
still imagine a disability lasting longer than a couple of weeks.
(16:27):
But a serious disability can last years or even a lifetime.
That's why you should pay attention to whether a disability
income insurance policy offers long term or short term disability
benefits and understand the differences between the two. How do
long term and short term disability policies differ by definition?
(16:51):
Long term and short term disability policies have different purposes.
Short term disability income insurance is designed to pay your
benefits soon and for a shorter period or duration of
time than a long term disability income insurance policy. Under
the terms of your disability income insurance policy, you'll have
(17:12):
to wait for a certain period of time known as
you're deductible, after you become sicker hurt, before you can
begin receiving monthly benefits. Some policies, typically short term policies
even offer two waiting periods, a shorter one for accidents,
(17:33):
a longer one for sicknesses. Waiting periods under a short
term policy generally range from They can be short as
zero to fourteen days, depending on the terms of the policy.
Waiting periods under a long term policies are longer, ranging
from usually one month to up to seven and twenty days,
(17:56):
although a ninety day wait. Although a ninety day waiting
period it is probably most common if you suffer a
sickness or an injury, you'll receive benefits until you recover
or reach a certain maximum By definition. Short term disability
policies may pay benefits for up to two years, although
many policies pay benefits for only three months, six months,
(18:21):
or up to twelve months. But long term disability policies
pay benefits for a far longer period of time, maybe
a couple of years. Some can go out to age
sixty five or sixty seven, and there's some older policies
out there still today that will pay for a lifetime
Should I buy long term or short term disability income insurance?
(18:45):
If you can't afford to purchase both, it generally makes
more sense to purchase long term disability coverage. Most disabilities
last only a short time, and you may be able
to financially survive as short term disability even without insurance. However,
a long term sickness or injury can seriously threaten your
(19:06):
finances if you do not have adequate insurance. Consider these
factors as well the other kinds of protection you have.
If you suffer as disability, you may be eligible for
benefits from government sponsored disability insurance programs such as SSDI
or a worker's comp If your disability was work related,
(19:29):
your employer may also provide coverage, Although employers offer short
term coverage more frequently than they offer long term coverage.
Don't buy a policy that duplicates coverage you already have elsewhere.
The type of coverage you can afford to buy. Short
term coverage is typically less expensive than long term coverage
because benefits are paid for a shorter period of time.
(19:53):
How do I buy a shorter long term disability income
insurance policy. You can buy a paycheck insurance policy see
through a private company that sells individual policies, or you
can purchase group disability insurance through an association to which
you belong or through your employer. Employers may also offer
(20:13):
you a certain amount of disability insurance add no cost
to you as part of your employee benefits package. So
let's talk about beyond the basics. Disability income insurance writers
writers are a policy add on that enable you to
customize an individual disability policy to fit your needs. By
(20:34):
using writers, companies do not require every policy owner to
pay for every optional feature, whether they want it or not.
Some benefits and features normally sold as writers will be
included as base coverage in some policies, but often they
must be purchased in addition to the policy and will
(20:55):
substantially increase the policy's cost. You must purchase writers when
you buy the policy. They typically cannot be added onto
the contract after the policy is issued. I'll give you
some details of some optional benefits and features that can
(21:17):
be purchased as writers and add ons to a paycheck
insurance policy. So one of the important ones in my opinion.
Future increase option writer. This is one of the most
common writers and one that may be particularly important to
young policy applicants, especially if you're under the age of forty.
(21:39):
A future increase option writer protects your future insurability by
guaranteeing you the right to purchase additional amounts of vissability
insurance at specified dates in the future. The premium for
any additional coverage purchase in the future will be based
on your age at the time of purchase and the
income you're earning. Future purchases are generally limited to half
(22:03):
the original benefit amount, and you will be required to
prove that your earned income warrants additional coverage. This writer
generally cannot be added after you reach age forty five,
although some insurers will let you go up to age fifty.
The future increase option may also be called a guaranteed
(22:23):
insurreability option or sometimes a guaranteed purchase option. Another one
is referred to as KOLA. It's called a cost of
living writer, and basically what this does this helps fight
against inflation after you If at the time you're on
(22:45):
claim and you're receiving benefits, this writer will then increase
benefits to offset for inflation, and he usually goes against
what's the general CPI is. In every policy you will
have a set percentage of what your benefit would be. Now,
some companies will cap the increase add no more than
(23:08):
one or two times your original benefit. But again, this
helps you stay ahead of inflation because everybody knows today
that one hundred dollars today will not buy you one
hundred dollars of goods and services, and say let's go
fifteen or twenty years in the future. So this helps
you keep pace with inflation. Some other writers that are
(23:34):
out there, there's a Social Security writer, but usually that
writer is only going to fall into account if you
are totally disabled. I don't like that writer all that much.
But the problem is, in some cases it's all or nothing.
If you don't qualify for SSDI insurance, the Social Security
(23:56):
writer is not going to do much for you. And
then sometimes there's an offset if you were to qualify
for SSDI benefits. But please understand, qualifying for SSDI is
very difficult. The current definition is you must be unable
to work due to sickness or injury and you cannot
(24:18):
do any occupation and you may have a diagnosis of
death within the next twelve months. So again, qualifying for
SSDI is very, very hard. Please keep that in mind,
don't forget. I give monthly virtual meetings regarding Medicare for
(24:39):
two different companies every month. In one meeting, I will
cover Medicare supplement plans with a standalone drug plan. That
meeting is sponsored by well Mark. United Healthcare is a sponsor.
For my other virtual meeting, I focus on Medicare Advantage
plans also known as Medicare Parts C, and I cover
the benefits of that platform. You can call my office
(25:02):
at five six three three three two two two zero
zero for the zoom meeting codes and additional dates and times.
You're also welcome to email me at Craig at Craigshilig
dot com and that's my name c R A I
G at c R A I G S C H
(25:22):
I L L I G dot com and I can
send you the virtual zoomlink meeting codes. This is Craig
Schillig with Safe Money
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