May is Disability Insurance Awareness Month. To mark the occasion, Advisor Today is please to bring you this article by the DI Geek, himself, Corey Anderson. Opinions expressed are those of the author.

Multiple carriers are throwing everything, including the kitchen sink, at writing multilife guaranteed standard issue/individual disability insurance that is provided with the stroke of a pen and with employers writing the check to protect insured employees. Typically, these policies cover employees in upper-level white-collar occupations but that isn’t always the case. Think more executive carve out and a lot less underwriting. I worry that some of these carriers have gone all in and we might end up in a spot where these policies were given away without proper controls. You can write clients in any range of benefits from a few thousand dollars up to $20.000+ a month without medical questions. Ouch! That could come back to bite some carriers.  

Traditional underwriting has never been more interesting in my 25-year career. In the early 2000s we couldn’t get clients more than $10,000 a month if they were a doctor, or we couldn’t write anyone with a traditional carrier if they were on an antidepressant or antianxiety medications. Now, those doctors can get coverage of over $30,000 in the traditional space and most carriers write people on those medications with an exclusion on the policy. Other limitations included 50% premium loads and five-year benefits for clients that were compliant with their C-pap for sleep apnea; now, many carriers insure these clients with no policy modifications. How about the ever-popular questions about marijuana?  These days many carriers are fine with it if insureds use it recreationally fewer than 10 times a month, but that varies carrier to carrier.  One large carrier in the individual space still won’t write anyone on antidepressant or antianxiety medications or anyone who uses marijuana even once or twice a year. 

Pricing has never been better in probably 98% of occupations than it is today. I have seen so many price decreases with carriers over the years it is almost like they are racing to zero. Many factors go into disability insurance pricing, including age, health status, occupation, professional acumen, and income.  Many people don’t realize that occupation is important. Just in the insurance agent space there are three different occupation classes at many carriers. A person may start out at one but can move into an improved class as their income increases, they gain experience, and they add designations.  

I am blown away by how many people buy disability insurance and then set it and forget about it.  We do regular reviews over the years to help clients remove exclusions and ratings. We can also help them if they have improving health-related issues or if they improve their occupation class by getting a promotion, increase in pay, or new certificate or diploma.  Also, most people’s income goes up over time, so we make sure we keep their paycheck insurance up to date with their income.    

For me two of the neatest features have been around for some time but are often overlooked. The first is the catastrophic rider. I personally thought this rider was a joke when it came out, but I have been eating crow ever since. My clients love it and add it to their policies about 70% of the time.  This rider provides additional monthly benefit if you need assistance with: 

• Two activities of daily living (ADLs), such as bathing, dressing, toileting, transferring in and out of a bed or chair, eating, and continence
• Cognitive impairment (stroke or Alzheimer’s, etc.)
• Presumptive disabilities (irrecoverable loss of sight, hearing, speech, or use of two limbs)  

Clients love the catastrophic rider because if you add the base policy and this you can usually get around 100% replacement of income. 

The second rider that has been around a long time and grown in popularity is the family-care rider that provides up to six months of benefits without the insured having to be sick or hurt.  If their parent, spouse, or child needs help with two ADL’s they can take six months off from work and get paid six-months benefits. Another option is to work half time with 50% loss of income and get half benefit for a year etc.  What a neat feature. I have tried to get other carriers to offer it but only one carrier has it currently. 

There has never been a better time to protect your clients’ income and yours. Get out and ask the questions. Anyone working because they need the financial benefit needs to protect their income. It’s as simple as that.