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Definitions Of Disability


Individual Disability Income (IDI)

Definitions of Disability
  • True Own-Occupation – benefits are payable if unable to perform the substantial and material duties of your specialty, regardless of your ability to engage in or earnings in another occupation or specialty.  As a physician, most carriers deem your specialty to be your occupation.
     
  • Transitional Your Occupation – benefits are payable if unable to perform the substantial and material duties of your specialty as long as your monthly benefit plus new income from a new occupation does not exceed prior income; otherwise, your benefit would be reduced down to your pre-disability income.
     
  • Own-Occupation and Not Working – benefits are payable if unable to do substantial and material duties of your specialty as long as you are not engaged in another occupation; otherwise, Residual benefits would be payable.  You have the choice of whether or not to engage in another occupation.
     
  • The difference in cost among the various definitions of disability is minimal.  Make sure you understand the differences and select the definition that best suits your individual needs.  You don’t want to be surprised at claim time.

Standard Policy Features
  • Benefit Periods – Benefits are typically payable to age 65, 67, 70 or for up to lifetime.  Because lifetime benefits are quite expensive, most individuals select an Age 70 benefit period.
     
  • Elimination “Waiting” Period – Benefits can begin after 90, 180, 365 days.  Based upon cost, most individuals select a 90-day elimination period.
     
  • Waiver of Premium – Premiums are waived after 90 days of disability.
     
  • Successive Loss – If disabled from the same cause within 12 months of a previous disability, no new elimination period is required.
     
  • Exclusions – Common exclusions include war, incarceration, active duty military for 90 days, intentional self-inflicted injury, normal pregnancy or childbirth and most policies include a 24 month benefit period for Mental/Nervous or Drug/Alcohol claims.
     
  • Specific Loss/Presumptive Disability – Benefits are payable for loss of sight, speech, hearing or use of 2 limbs, even if you continue to work.  Some carriers require the loss to be permanent or irrevocable.


Optional Policy Features
  • Residual Disability – Pays a proportionate benefit in the event the insured suffers a loss induced by an illness or injury.  The benefit is usually calculated by multiplying the % of loss of earnings by the monthly benefit.  This benefit is usually triggered by a 15-20% income loss.
     
  • Future Increase Option (FIO) – This feature allows the insured the right to purchase additional coverage in future regardless of insurability.  The amount of coverage available is a function of income and other coverage in place at the time of the increase.
     
  • COLA – An optional rider allowing the disability monthly benefit to increase annually based upon the Consumer Price Index or a predetermined percentage.  Increase is calculated on a Simple or Compounded basis.
     
  • Catastrophic Disability – This rider pays an additional benefit in the event an insured becomes Presumptively disabled or unable to perform two activities of daily living.  

Issue and Participation Limits
  • How much coverage do I qualify for?  See "How much do I qualify for?" page here.
     
  • The amount of coverage you qualify for is function of your taxable income and other coverage you may have in place including individual and Group LTD.
     
  • You can insure 60% of your taxable income up to $35,000/month.
     
  • Independent carriers typically issue $15,000/month of benefits and participate to $35,000/month.