Learn about Individual Non-Cancelable Disability Insurance
The following videos help to explain what to look for in a disability insurance policy. We find that most people have not really taken the time to review their existing group disability insurance or individual/association disability insurance coverage that may have been in place for years. Once a sickness or injury occurs that prevents someone from working in their occupation, or even causes them to be partially disabled, it really is too late to do a review to ensure that the proper coverage is in place. Take the time to review your disability insurance today.
Who Needs It?
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Today, I would like to spend a few minutes talking about disability income insurance. Simply put, if you have a job, then you most likely need disability income insurance. Your income is the foundation of the life you’ve created. Without income, our everyday lives and our plans for the future are affected. What you need to consider is, What would the life you’ve built look like, if you are too sick or injured to work and earn an income.
When you think disability, do you think about one being caused by an accident or an illness? If you guessed accident, you are in for surprise. According the counsel for disability awareness, illness is like cancer, arthritis, heart attacks and mental and nervous disorders or some of the major causes of long term disabilities. If the unexpected happened to you and you became too sick or injured to work, ask yourself
How many moths would your savings last?
Does your partner or spouse make enough to maintain your financial obligations?
And what about your long term plans and dreams?
Would those have to be put on hold?
When you lose the ability to earn a living, other sources of income become critical to maintaining your lifestyle. But are they enough?
And will they be there when you need them?
Individual disability income protection is one of the most reliable and flexible sources of income replacement. You can do a quick calculation of what just it takes to maintain your lifestyle today. You can use the income protection analysis worksheet included in the email you received. Or you can use the quick expense summary on the right side of this slide. Then chat with your Guardian representative about what features in a disability income protection policy might safeguard the life you worked so hard to achieve for yourself and your family. The time to assess your risk and take action is before a disability strikes.
I hope that what you’ve heard today has helped you understand more about how and why your income needs protection. Your Guardian representative will be glad to help you develop a coverage plan for your specific circumstances. We appreciate you are joining us today and look forward to helping you safeguard your income.
How to evaluate a disability insurance policy?
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Your income is the foundation of the life you have created. Without income, our everyday lives, our plans for the future are affected. So, it makes sense to pay close attention when selecting a policy to make sure that you get strong protection.
Today, I would like to spend a few minutes talking with you about things to look for when evaluating a disability income policy. I want to help you understand how disability income policies work and how they differ from company to company.
There are six key questions you should ask when evaluating a disability income policy. The first starts with assessing your specific circumstances.
How much income replacement would you need?
For a quick estimate, use the expense summary shown on the left of the screen. To get underneath and better handle on that figure you can use the income protection analysis work sheet that was attached to the email that brought you to this presentation.
Once you’ve looked at how much coverage you need, you want to ask how much coverage you would qualify for. The monthly benefit amount you would receive is based on your financial and occupational information. And you should know that most policies offer the opportunity to purchase more coverage as your income grows. Reputable carries will offer you that chance without the need to provide further evidence of good health.
The next thing, you’ll want to think about is what determines whether or not you are disabled?
The core of any disability income policy is its definition of total disability. This definition outlines what constitutes being totally disabled. The definition is included in every carrier’s disability income policy. However, it doesn’t always being the same thing. Some policies pay benefits if you are unable to perform the duties of your own occupation even if you are at work in another occupation. Others pay only if you are unable to perform the duties of your own occupation and you are not working in any other occupation. Still others pay only if you cannot work in any occupation for which you are reasonably qualified. The work you do, you financial circumstances and other factors need to be taken into account in determining which of these definitions of disability you would like to select for your policy.
Most policies also offer benefits for what is residual disability. These are the benefits payable if your disability isn’t total but just result in your inability to perform some aspects of your job. Residual disability benefits are typically payable in an amount that is proportionate to the loss of income suffered due to sickness or injury. Carriers may have different thresholds for the amount of income that needs to be lost before disability income insurance could begin to pay.
You’ll also want to look at the elimination period or waiting period. This is the length of time that must elapse following the answer of disability before benefits become payable. Another key thing to consider is how long benefits will be payable? A policy’s benefit period refers to the maximum length of time your policy will pay benefits once you become eligible. Standard choices include 2, 5 or 10 years or to age 65 or to age 67.
A few select policies of the option to extend benefits for life. Should you remain continuously totally disabled? You will off course want to ask whether or not a particular policy could be changed, canceled or even have the premium increased. Renewability provisions are among the most critical features of any disability income policy. Because they define your rights for keeping your coverage in force.
Policies can be non-cancelable and guaranteed renewable or guaranteed renewable only. Polices that are both non-cancelable and guaranteed renewable offer the strongest premium and coverage guarantees available. Which means as long as your premiums are paid on time your policy cannot be canceled. Premiums cannot be increased and policy’s provision cannot be changed. Policies that are only guaranteed renewable cannot be canceled but premiums can be increased. Another element to compare is whether or not your disability benefits from a given policy would keep pace with inflation.
Most policies offer riders or optional modifications to the coverage to help your benefits keep pace with inflation. A cost of living adjustment rider would adjust benefits each year, while you remain disabled and eligible for benefits. Colder riders can be vital to maintaining your standard of living during extended disability. So, now that you know what to look for in a policy. You can assess your risks and make a plan to mitigate that risk.
Once you have done a quick assessment of what it takes to maintain your current lifestyle, give your Guardian representative a call. He or She can help you develop a plan to safeguard the income that is so fundamental to the life you achieved for yourself and your family. The time to assess your risk and take action is before a disability strikes. I hope that what you have heard today has helped you understand more but how do I evaluate a disability income insurance policy. It’s particularly important that you look at a policy in its entirety to make sure that you will get the protection you need. Your guardian representative will be glad to help you develop a coverage plan for your specific circumstances. We appreciate you are joining use today and look forward to helping you safeguard your income.
Income protection in the workplace
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Attracting, retaining and rewarding employees as the common challenge for businesses, employers are contending for the talent that will help their business thrive regardless of the economic environment. Our customized income protection program can help you provide benefits your top talent will value while helping you control costs.
Supplemental income protection worth thinking in conjunction with group long term disability coverage to protect more of an employee’s income from the impact that a disabling injury or illness could have on their lifestyle and financial future. Supplemental income protection is an important benefit for many employees. But it is most valuable for highly compensated employees and those whose income includes bonus and incentive compensation. Often the key employees you rely on to grow your business.
Before we look at the advantages of the innovated DI or program, let’s see why income protection is more important. Income is important because we use the money we earn in every aspect of our lives. Paying the mortgage, buying groceries, saving for retirement and more. If your pay checks suddenly stopped, how would that impact you?
A disabling long term illness or injury puts your income at risk and can be financially devastating. The causes of disability are more common than many people think. According to a client’s review conducted by the counsel for disability awareness, common causes of long term disabilities include Neck and back pain; joint and tendon disorders; foot, ankle and hand disorders, cancer, physical injuries, heart and circulatory disorders, strokes, mental disorders. The economic downturn has raised American workers’ awareness of the financial risk and made planning for an income-limiting disability more important than ever.
82% of employees are concerned about how they would pay their living expenses if they were disabled, yet most are not financially prepared for disability. Seven in ten could not cover their normal living expenses for more than six months. Employees are more aware of the risks and income protection is important to them. For some employees, Group Long-Term Disability(LTD) are great foundation, but may not provide sufficient coverage due to the one size fix all strategy of Group LTD, your most highly compensated employees do not have the income protection they need. That’s because, Group LTD plans typically repay only 60% of base salary and typically cap benefits at a monthly maximum amount. Group plans typically exclude incentive and bonus compensation leaving key employees without adequate coverage for their income. Let me show you, say a key employee is making a total of $150000 a year earning $100000 as base salary and $50000 in bonus. With the 60% Group LTD plan, this employee would be eligible for only 60% of their growth income or $60000. Because this plan doesn’t include coverage for bonus and incentive income as a result this disabled key or highly compensated employee will only receive 40% of their pre-disability growth income. Keep in mind that this is before taxes and their take could be substantially less. At a maximum, if there is a cap, even more of their income could be exposed. DI at work helps fill the gap by covering up to 75% of total growth insurable income. In this example, this means an additional $52500 and income coverage. Bringing their disabled growth income to $112,500. This additional coverage could make a considerable difference and the employee’s ability to pay bills, support their family and save for retirement. Not only that guardian DI at work program help cover more of your employees income it is also an important protection that employees may not be able to access on their own. Guaranteed Standard Issue (GSI) coverage available only available at the work site. It is one of the most desirable ways to purchase individual disability income insurance. Coverage is offered at a discount that can mean a significant saving of the cost that purchased independently. Because the insurer is dealing with the pool of employees and the risk is dread, there is typically less rigorous medical and dividing requirements. With DI at work, coverage is generally applied for by answering only 3 simple questions. Are you currently disabled and/or collecting disability benefits? Have you been continuously at work full time working a minimum of 30 hours/week for the last 6 months? Are you a US citizen? Often no medical exams are involved. DI at work is an important protection for your employees. But what does it mean for you? DI at work is a highly flexible benefit program. You can offer it at no cost to the business by sponsoring the program and enabling employees purchase coverage on their own. Or you can select groups of employees and pay for their coverage. This is typically refers to as an executive Carve-Out program and it is highly effective in helping attract and retain top talent. You can also choose a combination of employer paid and employee paid coverage. You can offer this coverage as a primary disability income protection program or a supplemental protection for income and retirement plan contributions. Employers who pay for coverage can deduct the cost of premiums for taxes as a business expense. The guardian scheme of experience professionals provides a turnkey implementation program that makes it easy for you to offer this important coverage.
DI at work enables employees to protect more of their income and makes it possible for them to help maintain their family and lifestyle if they become too sick or injured to work. Coverage is individually owned, so it’s a benefit they maintain and can take with them. Coverage is tailored to the individual employee’s needs based on their incomes and circumstances. This valuable coverage is offered at a discount employees would not be eligible for, if purchasing the policy on their own. And the simplified application process available with our guaranteed standard issue coverage avoids the medical screening applicants with typically face when applying for a disability income coverage. Our implementation process focuses on educating employees on the benefits you provide. And our state of the art online enrollment makes purchasing easy.
Guardian state of the art enrollment process makes it easy for you to offer this valuable benefit. The educational platform helps your employees understand the benefits you offer so they can make informed purchasing decisions. Many employers tell us how much they value this. The online enrollment system includes web security best practices and true e-signature. Information is customized to individual employees including the amount of group LTD coverage they may qualify for. Enrollment is an easy 3 step enrollment process. Let’s take minute to see how it works.
Optional paper enrollment is also available. So, you can choose the method that best which your company needs. The Guardian Life Insurance Company of America is one of the largest mutual life insurance companies in the United States, providing high quality affordable insurance and financial products to individuals and businesses nationwide. Guardian has been in business for 150 years and enjoys strong rating from leading rating organizations including AMBEST, Standard Impose, Moody’s and Fitch. Guardian offers an industry leading product portfolio and is the leading provider of individual disability income insurance offer through their wholly owned stocks Berkshire Life Insurance Company of America. The DI at work program combines unique product features with the state-of-the-art enrollment system you won’t find from any other carrier. Guardian’s team of experienced professionals provides an unsurpassed enrollment experience and first class service for enrollment to claim.
Let us customize our program to fit your needs. Tell me a little bit about your employees, your objectives and your group LTD program.
Need for Disability Insurance – Also contains slides and audio about the Guardian Lump Sum Rider
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Today I would like to talk about making sure you protect your plans and life style for both the short and long term. I am going to talk about disability income protection. And the first question that comes to mind is who needs disability income insurance. The simple answer is if you have a job then you mostly likely need disability insurance. When we think about safeguarding our lifestyle most of us immediately think about protecting our savings or our assets in safe investments is our portfolio balanced so forth. Building that golden nest egg is indeed a key part of planning for the future. However it’s important to you and I to protect the source of that nest egg and current life style. The goose responsible for producing that nest egg is your income. Your earnings are the foundation to the life you have created. Without income our everyday lives and the plans for the future are affected. So it’s worth asking yourself what was the life you built would look like if you were too sick or injured to work or earn an income.
In the event of a disability you need to start asking yourself questions like how long would my savings last? If I have a partner or spouse would that income be enough for all of our financial obligations? How would I handle all of those monthly expenses like food, utilities, loan payments and so forth?
And it is important to know that a period of disability doesn’t just have a big impact on your life in a day and a day out It can also have a big ramifications on your long term plans. If you experienced a serious disability how would your plans and dreams have to change.
Would you need to forgo for college funding, postpone retirement or possibly downsize your home?
A disabling illness or injury can have serious consequences for your life and future. When most people think about the causes of disabilities they often think freak accidents. In fact well accidents are one cause of some disabilities. Illnesses such as back problems, cancer, heart disease and mental illnesses actually are the cause of the majority of disabilities. One of the most effective ways to protect yourself in your income is with disability income insurance.
Let’s take a quick look at how disability income insurance or DI actually works. Let’s take the example of a male professional earning a $175,000 a year. He is in a serious car accident. We are going to assume for the purposes of this illustration that the individual has purchased a provider plus disability income policy from virtual life Guardian Company. As a result of the injuries he suffered in his accident he is unable to work. Disability insurance policies have a waiting period or elimination period before benefits begin. This is the time that must elapse between when disability begins and when benefits under the policy first become payable.
In this example our disabled individual’s policy included at 90day elimination period. His total period of disability lasts four years. He is totally disabled during the elimination period and for two years afterwards he receives monthly disability benefits of $8150. As his condition improves he is able to return to work part time. Eventually his income returns to 85% of his pre-disability income and the disability benefits cease. He remains healthy to age 65 which is when his policy expires. During his period of disability, his disability benefits from when he was totally disabled as well as when he was residually disabled total $303,180. During that time the individual uses the vast maturity of his disability benefits to pay for everyday expenses food, auto, student loan payments, mortgage, rent and so forth. He is focused on getting through the day and getting better. He ends up suspending his contributions to his 401K account as well as the college savings account for his children. Now this is where we see the effects of disability on long term plans and dreams. It’s easier for us to see the affects of the disability on everyday expenses. But a period of disability can significantly impact the long term as well. The individual in our example bought an additional form of protection when buying his disability income policy. He chose what we call “extended benefits” which is the form of protection for the longer term. He chose to add a lump sum disability benefit rider to help protect him against the long term effects of disability. The rider is an optional offering that can be added to the policy. The lump sum rider is the unique pattern pending option that offers some of the strongest protection available in the market place today. It provides for a benefit equal to 35% of all of the total and residual benefits paid after the life time of your policy. One key thing worth noting is that you don’t have to be disabled at the end of your policy to qualify thus if eligible you would receive the lump sum benefit whether you are sick or healthy when the policy expires. So let’s go back to our example for a min and see how this rider would come into play. You were called at this individual received disability benefits totaling $303,180 back when you had those 4 years of disability. Then let’s assume, he stays healthy until his policy expires at age 65 and he decides to retire at that time. At the policy expiration he qualifies for additional benefits under the lump sum ride. He’d receive a onetime payment of $106,110. So his total benefits would now be $303,000 he got back at the disability plus $106,000. So he would get total benefits of $409,000. He can now take that lump sum that $106,000 and use it to offset the opportunities he missed out on in saving for his long term plans as a result of his disability. He may have to take out the loan, he may have less money in his retirement account than he wanted to have, he can leave the money for heirs and so forth. This benefit gives him a lot of flexibility and control. He will decide how he wants to use that money to get his longer term plans back on track. You may want to do a rough calculation of just what it takes to maintain your life style. You can use the quick assessment on this slide or there is the income protection analysis work sheet in the attachments to this presentation. Then chat with your guardian representative about what features in a disability income protection policy might safeguard the life you work so hard to achieve and make sure you ask about how you can protect yourself for both the everyday and longer term affects of a disability.
What To Look For In A Disability Insurance Company
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If you are looking at disability income insurance you want to make sure that the policy comes from the company that would be there if you need them. With so much contraction and confusion in the insurance industry with companies buying companies firms struggling financially companies that have taken torque money and so forth. It’s important to understand the financial strength of a company. What this means to you? And how do you make sure that you have the right choice of the careers from a fiduciary responsibility standpoint. Whether you are the broker taking on this fiduciary responsibility on behalf of the client or an employer making this important decision on behalf of your employees or perhaps simply making this decision to protect yourself or your family the issue is the same. The more financially secure the company, the more comfortable you will be with your decision. So the question is how financially strong is the company I am going to put the business with. For the next few minutes I want to share with you the industry accepted indicators that make up a financially strong company. I will explain why having strong indicators makes the value of your disability insurance policy inherently richer. These are indicators and benchmarks that the insurance industry regulators and expert third parties agree. Speak to the financial well being of a company.
Let’s start here. In its simplest form, a disability income policy is a promise. A promise to pay a benefit when you most needed. And the promise is only good when the company that can honor it. Remember the policy you choose today is expected to perform well into the future that means that the long term financial liability of the insurance company offering that policy should be a major concern. So what is the best measure strengths.
There are actually three undeniable indicators of the company’s financial strength.
First is Ratings and Comdex. Then there is Capitalization Ratio. And then there is Company’s Surplus Growth. Not just surplus but growth.
-Let’s start by looking at the ratings. The first way to evaluate a company before you buy is to see with the company industry rating agencies say about a company current financial strength. They can help tell a scale of sovereignty and claims pay ability. These agencies operate like industry watch dogs reviewing a company’s books to evaluate its strength. Periodically they will publish a new position on a company.
They can reaffirm their view of the company’s strength, express concern over aspects of company’s business or even down grade their view of a company.
Because these four primary ratings firms use different alphanumeric for their ratings the creation of the Comdex rating was devised. This Comdex rating puts the ratings of these four firms into a formulaic equation. It tells you in a simple numeric fashion the aggregated rating of the career.
Currently 295 companies have a Comdex rating. In order to receive a rating a career must have received the ratings from at least the 2 out of the 4 major rating agencies. Experts who write about the industry tell you that the Comdex of 95 or higher is considered extremely safe. 90 is safe and 85 is reasonably safe. Each rating agency publishes detailed reports behind their ratings. If you would like to see one speaks with your guardian representative. Here is a quick snapshot of ratings and Comdex for Berkshire Life and Guardian. We have received and continued to receive among the highest ratings from these third party ratings agencies. During a time when the other companies were downgraded guardian was reaffirmed by standard and poor by AM Best and Fitch. Compare our ratings to the industry benchmarks where Comdex of 95 or higher is considered extremely safe 90 is safe and 85 is reasonably safe. What that means to you is that you have a choice is not a responsibility in choosing an insurance company for your disability protection based on your tolerance for company’s strength and safety.
For example the difference between choosing a company with a Comdex of 94 Vs one of 98 is the difference between choosing extremely safe vs. safe. Both Berkshire life and guardian would be described as extremely safe.
Now let’s shift gears to the second important financial indicator the capitalization ratio. This is the leading indicator of a company’s ability to pay claims. In essence this safety question is what matters in evaluating a company’s ability to protect itself from unforeseen economic events.
Simply put the higher the capitalization ratio the better and the more confident that you can feel that the company that issuing the policy has the financial endurance to handle the market volatility and that the company is in the position to honor the promise of the policy to protect and insure when it’s needed most. Both Berkshire Life and Guardian have the strongest story to tell with their capitalization ratio. Their strong rating make the guardian able to get through the most recent economic down turn without government bailout such as stark money.
What we have been talking about is designed to help you understand how disability income policy is worked and how they differ from company to company. It’s important that you think about a policy in its entirety. Taking a look at the policy holistically can help you to determine whether or not the coverage can provide sufficient value and financial assistance during a period of disability. There are number of great questions on the screen. They are good ones to discuss with your insurance professional.
You want to ask how much income replacement you will need and how much you may qualify for. You want to understand what would determine whether or not you are disabled and when benefits would begin and how long would be payable.
It’s important to ask whether your policy could be changed, cancelled, or whether or not premiums can be raised. And of course you want to understand whether or not your benefits would keep pace with inflation.
When you look at disability income protection you want to make sure that you get coverage that stays more during a disability and well recovery. Berkshire Life Provider Plus policy offers some of the strongest coverage available. With things like its definition of total disability and its renewability provisions or residual disability benefit rider comes into play when you are able to work but reduced earnings. Plus we offer many other riders to tailor coverage to the unique need.
In summary when choosing a disability income policy step 1 is choosing the right company to issue that policy. Based on what I have shared with you today choosing the right company means choosing a power house of strengths and stability. With Berkshire Life and Guardian that’s exactly what you get. You’re getting the best in class, third party ratings and rankings and according to industry experts an extremely safe choice. You are getting strong capitalization positioning and growth of surplus.
Step 2 in choosing a policy is looking at it holistically. Looking at it at its entirety. Make sure that overall is the best mix of features and benefits for your specific circumstances. What this means to you is that you can rest assured when you chose Berkshire Life and Guardian choosing a company with a strong track record.
Please feel free to send us any questions that you have. You can also request quotes for coverage. Just let us know how we can help.