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Catastrophic disability benefit rider

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  • Avatar jaja123 
    Participant
    Status: Physician
    Posts: 18
    Joined: 02/04/2019

    I’m planning to opt out of COLA and the catastrophic disability rider (Guardian). I do not plan to get more coverage in place of this move. Any thoughts as to whether this is a good idea or anyone feel that paying an extra $30+ a month for the catastrophic disability rider is worth it.

    Thanks

     

    #225352 Reply
    Avatar Steven Podnos MD CFP 
    Participant
    Status: Physician, Financial Advisor
    Posts: 140
    Joined: 09/21/2017

    Assuming you don’t have enough assets to avoid disability insurance (DI), skipping the catastrophic rider is probably a mistake.  It is usually an inexpensive marked addition in benefits at a low price.  My guess is that your $360 a year in premium buys thousands of dollars of extra coverage in the event of a serious disability.  As the purpose of DI is to cover lifestyle expenses, excess health care and long term care expenses and even saving for when benefits end-having inexpensive extra benefits for the worst disabilities makes excellent sense.

     

    As to COLA-if you are young-it is probably a good idea.  If you are in your mid 40’s or later, then you can better afford the risk of inflation .

    #225371 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 420
    Joined: 01/14/2016

    I’m planning to opt out of COLA and the catastrophic disability rider (Guardian). I do not plan to get more coverage in place of this move. Any thoughts as to whether this is a good idea or anyone feel that paying an extra $30+ a month for the catastrophic disability rider is worth it.

    Thanks

     

    Click to expand…

    I am not a fan of either of those riders so I agree with your decision.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #225407 Reply
    Avatar jaja123 
    Participant
    Status: Physician
    Posts: 18
    Joined: 02/04/2019

    Thanks! Any particular reason you are not a fan of the catastrophic rider?

    #226203 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 420
    Joined: 01/14/2016

    Thanks! Any particular reason you are not a fan of the catastrophic rider?

    Click to expand…

    You have to lose 2 of your 6 ADL’s which means most of the time you are probably in some sort of facility thus a very extreme disability.  The chance of that are very low, in fact in my 26 years running this company we have never had anyone so severely disabled prior to age 65 when these contracts run out to have triggered that benefit.  Not saying it does not happen but we have not seen it. The other way you can tell there is virtually no risk to the carrier is they only charge about 1/12 the cost for CAT benefit as they do regular benefits, that alone tells you there is a very low probability of claim capacity.  On the other hand it only costs about $2.50 per month per $1,000 of benefit on a contract so if if makes one feel better to have it then certainly put it on, there are probably worse ways to spend money, you can always drop it later if you choose.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #226208 Reply
    Avatar jaja123 
    Participant
    Status: Physician
    Posts: 18
    Joined: 02/04/2019

    Stroke, MI, Metastatic cancer, for example are not that uncommon <65. I’d imagine that many people could quality for the catastrophic benefit. Are they very strict with their definitions of catastrophic disability? Have you had clients lose 2 ADLs and still just not qualify for whatever reason?

    Thanks

    #226211 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 420
    Joined: 01/14/2016

    Stroke, MI, Metastatic cancer, for example are not that uncommon <65. I’d imagine that many people could quality for the catastrophic benefit. Are they very strict with their definitions of catastrophic disability? Have you had clients lose 2 ADLs and still just not qualify for whatever reason?

    Thanks

    Click to expand…

    I fully get it, things do happen that can be devastating so certainly there is a risk and if one finds value in that risk/reward/premium ratio then they certainly should get that rider.  Are they strict, of course they are strict, they can’t sell a product that has a 400 to 1 benefit to premium ratio product and pay unwarranted claims.  Sure we have had clients lose 2 ADL but a few passed away prior to the 90 or 180 day waiting period had been completed and the rest regained their ADL capacity prior to the waiting period being concluded.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #226221 Reply
    Avatar jaja123 
    Participant
    Status: Physician
    Posts: 18
    Joined: 02/04/2019

    Interesting. Anyone else’s thoughts?

    #229549 Reply

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