Individual Disability Insurance Questions

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Hat
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Individual Disability Insurance Questions

Post by Hat » Wed Feb 20, 2013 8:10 pm

I'm working with an independent agent to obtain disability insurance.

I completed medical underwriting with Guardian (class 5), but their premium was 5% of income. The only reason listed was severe allergic reactions.

For Principal (class 5A) and Mass Mutual (class 5A), I have initial quotes and specimen contracts but have yet to complete medical underwriting. The initial quote amounts are similar. Principal's quote includes a 10% occupation discount.

Stats:
male/non-smoker/late 30's/great health/technology field/TX

Questions:
1. How does the policy language of Principal and Mass Mutual compare? Is one generally stronger than the other?
2. Mass Mutual does not seem to offer a rider for pure own occupation. Is this correct?
3. My agent does not contract with Standard. I've read on this board that their Protector Platinum coverage is close to Guardian's. Should I get a quote directly through them?

Thanks in advance for any helpful responses.

tj
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Re: Individual Disability Insurance Questions

Post by tj » Wed Feb 20, 2013 8:13 pm

you can't get a quote "directly". If you put your infromation on Standard's site - they justl send your info to a local agent

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Hat
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Re: Individual Disability Insurance Questions

Post by Hat » Fri Feb 22, 2013 3:22 pm

tj - understood. Thanks.

Any other feedback? I thought insurance experts like BruDude, dhodson, and bluemarlin08 would be all over this. :happy

dhodson
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Re: Individual Disability Insurance Questions

Post by dhodson » Fri Feb 22, 2013 3:35 pm

keep in mind im not an agent

im a physician but i have lots of insurance experience (much of it bad unfortunately).

so while it is kind of you to call me an expert, i want to help people but i dont want people to have the wrong impression. The other two are agents. Bru likes guardian a lot. He has reasonable reasons for it but i would take a contract from princ or standard if the costs were sufficiently higher for guardian.

i would get a quote from an agent who can write standard. Id also ask about association discounts. agents dont like to look into these bc the cut comes out of their end. There isnt any known list (at least that ive found) of the actual associations for an individual policy.

When it comes to insurance products the only way to know what you could get is to get an actual offer from them and then compare.

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femur
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Re: Individual Disability Insurance Questions

Post by femur » Fri Feb 22, 2013 4:03 pm

I am also a healthy IT worker in TX and had a similar issue with Guardian. I found myself with a less than great offer due to a previous medical issue. Although Guardian coverage is better I was able to get a great policy with The Standard after working with an agent to get several quotes from some of the big DI issuers.

I would recommend working with an agent to get a quote from The Standard. You can still get the important things like own-occupation, COLA increases, etc that Guardian offers.

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Re: Individual Disability Insurance Questions

Post by bluemarlin08 » Fri Feb 22, 2013 5:26 pm

If your agent doesn't represent Standard, one of the major disability players, I would find another agent. A good agent should be able to explain all your questions and direct you to the right policy based on what you feel is important in a contract.

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Re: Individual Disability Insurance Questions

Post by BruDude » Fri Feb 22, 2013 5:35 pm

Guardian's underwriting for DI can be tough, same with Mass Mutual. In general, mutual companies with A++ financial ratings have very strict underwriting standards compared to stock companies. For an IT worker, any of the companies you mentioned will have very good coverage. Principal and Standard would both be great choices and their underwriting for the allergy condition may be more favorable than Guardian. What type of rate adjustment did Guardian give you and what riders were on the policy? 5% of income sounds really high for a class 5 occupation.

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Hat
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Re: Individual Disability Insurance Questions

Post by Hat » Sat Feb 23, 2013 2:34 pm

BruDude,
I was also disappointed in Guardian's high rate because I consistently read good things about them. COLA was the only rider. I did not see any rate adjustment.

I'll look for an independent agent who can do Standard and Principal.

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Re: Individual Disability Insurance Questions

Post by BruDude » Sat Feb 23, 2013 3:06 pm

Hat wrote:BruDude,
I was also disappointed in Guardian's high rate because I consistently read good things about them. COLA was the only rider. I did not see any rate adjustment.

I'll look for an independent agent who can do Standard and Principal.
Can you post a copy of the illustration showing the benefits and premiums? Unless there was a huge rate adjustment I can't see any way the premium could be 5% of your income with only a COLA rider. Usually something like severe allergies will result in an exclusion rider, not a rate adjustment.

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Hat
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Re: Individual Disability Insurance Questions

Post by Hat » Sat Feb 23, 2013 10:08 pm

BruDude,

Thanks for your feedback. I don't have a copy of the illustration. I'm sure COLA was the only rider and that the exact percentage of income was 4.81%, way more than the initial quote. I specifically asked the agent about excluding the allergies, but the agent said they wouldn't do it.

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Re: Individual Disability Insurance Questions

Post by BruDude » Sun Feb 24, 2013 12:53 am

Hat wrote:BruDude,

Thanks for your feedback. I don't have a copy of the illustration. I'm sure COLA was the only rider and that the exact percentage of income was 4.81%, way more than the initial quote. I specifically asked the agent about excluding the allergies, but the agent said they wouldn't do it.
Still seems really high...weird that the agent can't specify what the rate adjustment was? Also, why only the COLA rider? Residual is the most important rider to have, and FIO is also important and pretty cheap, relatively speaking.

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Hat
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Re: Individual Disability Insurance Questions

Post by Hat » Mon Feb 25, 2013 5:56 pm

BruDude,

I am salaried and spend over half of my workday at a desk. Could you explain a situation in which the residual rider would be beneficial (without a career change)?

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Re: Individual Disability Insurance Questions

Post by BruDude » Mon Feb 25, 2013 6:13 pm

Hat wrote:BruDude,

I am salaried and spend over half of my workday at a desk. Could you explain a situation in which the residual rider would be beneficial (without a career change)?
Sure. Let's say you get into a car accident, require spinal fusion surgery, and now suffer from chronic back pain controlled by painkillers for the rest of your life. Due to the chronic pain, you are unable to sit for long periods of time, and therefore are only able to work 15 hours per week instead of 40. The two most likely outcomes of this scenario are that your employer offers some type of severance/layoff and hires someone that can work full time, or they reduce your salary because you are not working full time. If your salary is reduced by ~60%, for the first 12 months, Guardian will pay you $1 for every $1 of lost income (up to the monthly benefit max) even though you are back at work and no longer totally disabled. After the first 12 months, they will pay a proportional benefit equal to the loss of income. So if you have a $10k/month benefit and lose 60% of your income, they would pay you $6k/month.

In the other scenario where you get laid off due to the disability, you now have a temporary 100% loss of income, and may only be able to find a job earning say...20% of your prior income, due to a combination of bad market conditions and limited ability to work for more than a few hours at a time. If the loss of income exceeds 75% of pre-disability earnings, they would pay the full benefit every month.

The residual/recovery benefit is payable all the way to age 65 or 67 (assuming you choose an age 65/67 benefit period), and only a 15% loss of income is required to trigger the benefit. The benefit is paid until you have recovered to the point where you are earning at least 85% of your pre-disability income.

Each company's residual rider works a bit differently, but the above examples generally apply to all of the top-tier DI companies. Guardian pays dollar-for-dollar in the first 12 months while other companies pay proportionally from day one, and some guarantee a minimum of 50% of the monthly benefit for 6 months. Some of the other companies require a loss of time or duties and 20% loss of income, while Guardian does not require loss of time or duties and only 15% loss of income, which can be a big difference for a high-income earner.

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