New Online Disability Planning Tool
The Council for Disability Awareness has released a new disability planning tool called the Personal Disability Quotient (PDQ). To help people realize the risk of disability, the council created a disability estimator designed to determine the percentage chance a person has of an illness or injury forcing them to miss work. The PDQ also helps users see how much income they could potentially lose due to disability.
Why is the Renewability Provision important?
The renewability provision is one of the key features of any individual disability income policy because it defines your rights when it comes to keeping your disability income protection in force. In general, a disability contract may be guaranteed renewable only or both non-cancellable and guaranteed renewable. We always recommend non-cancellable and guaranteed renewable polices because the insurance company cannot change any policy provisions and it cannot increase the premiums. This type of policy provides the greatest degree of protection and therefore is the best for you to own.
What is the definition of “Total Disability”?
The definition of “total disability” means that due to sickness or injury you are not able to perform the material and major duties of your occupation. Your occupation means the regular occupation (or occupations, if you have more than one) in which you are engaged at the time you become disabled. The best policies state that “You will be totally disabled, even if you are at work in some other capacity, so long as you are not able to work in your occupation.”
What are Residual Disability Benefits?
Very often a disability is not always “total.” You may suffer a partial (or residual) disability that limits your ability to work and results in decreased income or an initial total disability. With most good policies, if you are residually disabled the policy pays: benefits proportionate to income loss and for the first six months’ benefits are at least 50% of the total disability benefit.
What are some other disability policy benefits?
Waiver of elimination period means there is no new elimination period for subsequent disabilities from any cause, if your original disability lasted more than six months and you received benefits from the company. However, the second period of disability must occur within five years of the first disability period.
Presumptive Disability Benefit considers the individual totally disabled if sickness or injury results in the total and complete loss of: the sight of both eyes; the hearing of both ears; the power of speech; the use of two arms, two legs, or one arm and one leg, in their entirety. The company will also waive any unexpired part of the elimination period from the date of such a loss.
Capital Sum Benefit is paid in addition to any other benefits payable due to sickness or injury, you lose the entire sight of one eye with no possibility of recovery; or suffer the complete loss of a hand or foot severed through or above the wrist or ankle; and you survive it for 30 days. The Capital Sum equals 12 times your monthly benefit, so on a policy with a $5,000 monthly benefit, we would pay $60,000 for such a loss. No more than two such losses are payable during your lifetime.
What are “Optional” policy benefits?
Cost of Living Adjustment (COLA) Rider helps the policy owner keep up with inflation. It is an important benefit that increases the benefit amount which is tied to the Consumer Price index (CPI-U) up to a maximum compounded annual rate of 3% or 6%, whichever you choose.
Future Increase Option (FIO) Rider offers the individual the opportunity each year until the age of 55 to purchase additional coverage without providing evidence of medical insurability. The amount of the Future Increase Option added to the base policy can be twice the base benefit plus other individual in force coverage. Until you reach age 45 you can exercise the entire FIO amount on your option date if your income justifies it. Once you become 45, up to one-third of the FIO amount is available in any one year.
Automatic Increase Rider (AIR) is a convenient way to keep your coverage in line with your needs before you are disabled. It provides a 4% automatic increase in your monthly benefits each year for five years at attained age premiums. Increases are offered despite any changes in your health or occupation and you may refuse an increase without forfeiting any scheduled remaining increases.