[This is part 2 in a guest post series by Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF). If you missed part 1, go back and read it first. Larry and I have no financial relationship.]
Protector Platinum and ProVider Plus Available in Most States
Standard’s “new” (Protector Platinum) policy series is now approved in all states with the exception of California, Florida and Vermont. However, female physicians seeking policies with a unisex rate and permanent premium discount can still take advantage of this pricing by purchasing their “old” (Protector+) policy series as a member of an association (medical or otherwise) in which an endorsement of Standard’s policy exists. Standard’s policies in these few states also do not contain a limitation for claims outside of the United States.
Berkshire’s “new” 2011 ProVider Plus policy series has been approved in all states with the exception of California, Florida and Vermont. However, if you live in those three states you can get Berkshire's “old” 2008 ProVider Plus policy which gives you a much bigger discount if you want a graded premium (starts lower and finishes higher, rather than a level premium each year.) The new policy series gives a 10% discount to those medical specialties (Anesthesiology, Emergency Medicine, Pain Management) where a Mental and/or Substance Related Disorders Limitation is required as part of their policies.
Berkshire's Cheaper Policy
Berkshire came out with a less expensive policy now available in all states but California, Florida, and Vermont called ProVider Plus Limited. This was introduced to compete with Principal in price for those who didn't want all the bells and whistles associated with the ProVider Plus series, although it is still cheaper for females to buy the Principal policy using a unisex rate. This less expensive policy has a built in limitation for mental and nervous conditions and a residual benefit rider that is less likely to pay out. Instead of just the 20% loss of income, you must also have a loss of time and duties in order to get residual benefits. You also lose the dollar for dollar reimbursement for the first 12 months of a residual disability claim available with the more expensive product. The Cost Of Living Adjustment (COLA) Rider is CPI tied to a maximum of 3% per year. The future purchase option rider is also less attractive and requires the purchase of either the Basic Residual Disability Rider or the COLA Rider. This policy series is a reasonable option for those who would rather save a few bucks than have the “bells and whistles” that Guardian policies are known for.
Lump Sum Disability Benefit Rider (Berkshire)
Berkshire now makes a Lump Sum Disability Benefit Rider available as part of their ProVider Plus policy series. This was created as an alternative to the Graded Lifetime Indemnity for Total Disability Rider (see Lifetime Benefits in Comparing Disability Insurance Policies – Part 2 of 2), which was recently subject to a substantial price increase.
Essentially, if you have collected benefits for at least one year, a benefit equal to 35% of all total and residual disability benefits paid over the lifetime of your policy will be paid to you in a lump sum at the expiration date of the policy or the end of the benefit period if you are disabled. An added plus is that you do not need to be disabled at age 65 or 67 in order to qualify to receive benefits under the rider.
One negative to this rider is that in order to be eligible to collect these benefits, the rider must be in force as of the expiration date. Therefore, even if you want to cancel your coverage, you cannot or you forfeit any lump sum benefits that would normally be payable. This is very similar to the problem that, in my opinion, exists with Return of Premium Term Life Insurance. [Ed. Note: This is a good example of an insurance benefit designed to be sold, not bought. I'd skip this rider and just buy a bigger policy if you think you'll need more money in the event of a long-term disability.]
Compassionate Disability Benefit (Standard)
Standard’s Protector Platinum policy includes a Compassionate Disability Benefit (at no additional cost) that will pay a benefit to the insured if he or she is not disabled but is working at least 20% fewer hours in order to care for a loved one while he or she has a serious health condition and causes the insured to suffer a loss of income of at least 20% compared to their pre-disability income.
A loved one means your parent, child (including an adopted child and stepchild), spouse, domestic partner or child of your domestic partner. You may claim the Compassionate Disability Benefit up to two times while the policy is in force and the maximum Standard will pay for all claims and all loved ones is a total amount equal to six times the basic monthly benefit of the policy.
Of course, for a Compassionate Disability Benefit to be payable, the injury of sickness causing the serious health condition must first occur after the policy effective date and before the termination date.
Unusual Benefits Available from Ameritas
Ameritas’ DInamic Foundation policy includes several unusual benefits at no additional cost. The first is a nondisabling injuries benefit that will pay for expenses if an insured suffers an injury that requires treatment by a physician, or the repair to natural teeth prescribed by a dentist. It will pay the lesser of the expenses incurred, 50% of the monthly benefit of the policy or $3,000. I have had several claims for this and it really works well for those with high deductible health insurance – even if they have a Health Savings Account (HSA). This benefit is even paid if your health insurance covered all of the expenses and you didn’t even have to pay any expenses out of your own pocket. [Ed. Note- Seems like you're paying for double health insurance coverage to me, but the price is right….]
The second benefit is a Good Health Benefit that will reduce the elimination period of your policy by two days for every consecutive year that you complete without receiving disability benefits under the policy. Additionally, the Good Health Benefit is not affected by any Nondisabling Injury Benefits received. However, once monthly disability benefits are received, the Good Health Benefit is reset to zero.
The third benefit is a COBRA Premium benefit (at no additional cost). If an insured receiving monthly disability benefits under the policy becomes unemployed as a result of the disability, and is paying premiums (either individual or family) to continue medical coverage under COBRA, the disability policy will cover the COBRA premiums. Benefits will begin with the first premium due after the insured satisfies the elimination period of the policy and will not exceed $1,000 per month. The maximum benefit period is 18 months and Ameritas will not pay more than 100% of the COBRA premium expense incurred monthly.
The more things change, the more they stay the same. The game of leapfrog continues in the disability insurance marketplace providing physicians and other medical professionals with ample opportunity to protect their most valuable asset – their ability to earn an income. As stated previously, product availability, provisions and features may vary from state to state.
Lawrence B. Keller, CLU, ChFC, CFP® is the founder of Physician Financial Services, a New York- based firm specializing in income protection and wealth accumulation strategies for physicians. He can be reached at (516) 677-6211 or by email to [email protected] with comments or questions.