Disability Insurance Specialist
The best time to get a disability insurance income protection policy (or any other form of coverage) is to get it immediately just prior to a disability! Seriously, even though that is not an inaccurate answer, the best time to get coverage is at the earliest possible moment when it is both financially feasible and practical (even though there may not be an obvious need at the moment). The only result of procrastination is that health can change, circumstances can change etc., all of which can affect eligibility. Why then do bread winners wait until it is too late?
Some reasons might be, are that prospects and even agents or advisors don’t see the need or the urgency (for their clients or even themselves!). Another reason might be that no one has told them they should have an income protection policy that this form of protection even existed or they thought they were uninsurable. They could also have some false belief, that they will never get disabled and even if they did, that their employer, or someone else will pay their expenses/wages. Incidentally, for everyone’s information, one does not have to be a ‘paraplegic’ in order to collect the monthly benefit…definitions for total disability vary, but the best one out of several variations will say,” unable to do the (material) duties of YOUR OCCUPATION”, even though you ARE working elsewhere”, regardless of how much you earn! To learn How to Select the Ideal Disability policy, just visit the author’s web site.
To dispel some of these aforementioned false beliefs, refer to the accompanying charts, which will statistically point out that bad things happen that can jeopardize earning an income, even at a young age!
What happens if some one wants the income protection coverage, but has already been turned down for any number of reasons and not necessarily due to health? Is the” best” time gone? No, not if an agent knows where to go for assistance and a probable solution. There are brokers who specialize in hard to place situations which can be caused by approximately 10 or so major reasons e.g., health , occupation, new business, working from within the home, working abroad, overweight etc, just to name a few.
Does the financial planner or agent have a responsibility to their client as far as the “best time” is concerned? You betcha! Should these professionals have realized that Disability Insurance is the cornerstone of financial planning and have recommended it? You betcha! Why is it then, that Disability Insurance isn’t sold or presented more than the meager amount reported? Is it due to lack of product knowledge, just an oversight, or…?
In any event, returning to the “best time”…that an individual should apply for this valuable form of coverage is of course at the earliest possible moment and the sooner the better, even though they can’t immediately afford the cost (2-4% of income, depending on; age/sex/occupation/benefit period/benefit amount/options). Given the fact that most disabilities usually last less than 2-5 years, if cost is a major factor, what’s wrong with recommending that period of time as an initial benefit period? As a result, the cost will then be substantially lower. There are also other solutions for lowering the cost without reducing the benefit period, such as reducing the benefit amount etc. Remember a half of loaf of bread is better than none, besides, most carriers provide an option that will allow more coverage to be purchased in the future in order to replace the reduced amount, or to cover higher income, strictly based on financial underwriting (no evidence of medical insurability required!).This future increase option, has some other benefits to the insured as well such as locking in the occupation classification.
The last reason to apply for coverage at the earliest possible moment, has to do with the ratio between premium and potential benefits .Refer to the following chart that clearly points out that the lowest cost per $100/month of benefit, is at the younger ages and for the longest benefit period.
Lastly, when the coverage should be discontinued? Only when that person is either self insured or has retired before the coverage terminates (which is usually at age 65. However, if the policy holder is still working, coverage can be kept to at least to 75 and with some carriers longer. If money becomes the issue for discontinuing, even then the policy really doesn’t have to be dropped! Coverage can be reconfigured, to create a lower benefit amount, or to a shorter benefit period. Either of these two solutions will lower the premium and possibly lower it enough to keep the policy in force.