Disability Insurance Tips for Professionals and Executives
by Keith A. Rhodus on Dec 21, 2017
High earning professionals and executives need the ultimate in disability income protection without which they can jeopardize their financial future. It’s not enough just to buy a policy; It’s important to know that it will pay the benefits they expect when it’s needed the most. Each of these tips provides a vital piece of the disability insurance puzzle for professionals and executives.
Seek Value over Price.
- You should expect to pay up to 4 percent of your salary to secure a solid disability insurance plan that meets your needs.
- “You get what you pay for” is not something you want to hear when protecting your most valuable asset. Paying the least expensive premium will be the least of your concerns when you actually need the benefits.
- Disability insurance is not a commodity; it is a contract that specifies when and if benefits will be paid.
- There are many more important components of a disability policy beyond price that should be carefully considered such as the exact definition of disability.
Review the company ratings
- Your disability company could be your primary income source for a long time, so it’s important that its financial integrity be unquestioned.
- The financial strength of disability insurance companies are assessed and ranked by third part rating services. We limit our selection of companies to those rated no lower than A+ by AM Best.
Scrutinize the definition of disability
- For professionals and executives, a policy that pays a benefit when they are unable to perform the specific duties of their own occupation are much more preferable than one that pays only if they can’t perform the duties of any occupation.
Protect your purchasing power
- Over a 20 year period your purchasing power could be reduced by half due to inflation. A monthly benefit of $5,000 would amount to $1.2 million over 20 years without adjustments for inflation. With inflation adjustments of 3 percent a year, the total benefit amount would be $1,641,000.
The 90-day waiting period is usually the most cost effective.
- The 90-day waiting period is typically the best option for keeping your premium low while maximizing your coverage. To go from a 90-day waiting period to 60 days could almost double your premium. Conversely, by extending the waiting period to 180days you would only realize a 5 percent reduction in premium.
For high earning professionals and executives, their most valuable asset is their ability to earn an income; so protecting it is vital to ensuring their financial security. Over the years, disability income insurance has become a specialty insurance product, so it would be important to work with an insurance professional experienced in developing disability insurance plans for professionals and executives.
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