Video and Transcript 12: Standard Policy Provisions
Now come to what we refer to as standard policy provisions or basic components to any disability policy. Beginning with the waiting day period, all long-term disability claims have a date when a disability occurs and the time that needs to pass before the claimant may begin to receive benefits. Typically agents and brokers proposing 90-day waiting period which means that you need to wait 90 days before you are eligible for benefits. There are shorter periods like 60 days but then you are looking at a substantially higher premium. To self-insure the potential loss of income over a period of 90 days, we professionally recommend you keep a reserve in your savings account that will support all of your expenses during the first 90 days. The next standard provision referred to is the benefit period which dictates the length of time, you are scheduled to receive your monthly benefits for a long-term disability, benefits are proposed retirement age being age 65 or 67 according to your preference. Finally, we come to the monthly premium where we are asked are there discounts available? And may premiums be structured to allow residents greater flexibility and affordability? The answer is yes across the board. Discounts are available and premiums may be advantageous structured. Discounts in general are not as easily available once you become an attending. However, the discounts you see listed on the spreadsheet are currently available to all residents and fellows. They differ in percentage and whether they are based on male or female gender or simply based on a unisex rate. At this point, we need to take some time to address the female physician. Previously, we displayed the statistically higher claims experience among female physicians. Consequently, females are charged a higher premium for their policies unless they can be offered a unisex discount. A unisex discount can lower the premium rate for females by as much as 40%. For any female physician being presented a true own occupation policy with the four key components, we strongly advise you to take advantage of a unisex discount if possible. It will allow you to purchase more affordable protection, the savings over time from the discount being permanent in your policy cannot be ignored. Unfortunately, due to escalating claims for females in general, the unisex discount is quickly disappearing industry-wide. Our advice to female physicians is to seek out this coverage and this discount with some urgency before the unisex discount is no longer an option. Remember, once you purchase your policy with the non-cancelable guaranteed renewable feature, you have locked in the premium and the discount for the entire policy period.
In terms of premium structure you have a choice of several options, level, graded or step rated. A level premium is a premium that does not increase for the entire benefit period. It is higher than the step rated or graded premium initially but in the long run, it becomes less expensive. A step rated premium structure is a lower premium for a period of years typically five and then it’s step rates to a higher premium in year five which will then remain level for the rest of the policy period. The graded premium structure is a lower premium which increases every single year until you decide to level it out meaning that it will switch to a level premium and will remain so for the rest of the policy period. When looking at a graded premium, it is very important to view the graded versus level chart and to look at what the premium will be once you level it off at that attained age. So for example, if you’re 30 years old and you expect to level your premium of 35 then you want to see what the cost will be at the attained age of 35. Once you have completed the analysis with the premium for each carrier, you are ready to begin to determine which carrier best suits you at the most affordable price. Completing the third step, you may complete the step for yourself by requesting proposals from each carrier or by a broker that represents each carrier. In addition, this spreadsheet may be very useful to your financial advisor or broker.
If you would like us to complete the personalized analysis for you, please email us at email@example.com, call our toll free number to schedule a consultation or visit our website and complete the contact us on our website. Once we hear from you, it would be an honor for us to contact you to prepare your analysis and schedule your consultation. We currently have a guaranteed offer of true own occupation coverage with the four key components and a unisex discount in one of the largest teaching systems in New Jersey. We know there are similar offers in other hospital systems. One of the services we provide during our personalized consultation is the investigation of whether a program exists at your facility. We would inform you if a program exists whether it offers guaranteed coverage, what discounts may be available. We believe in full disclosure and if it would be more beneficial for you to participate in that program directly, we would advise you to do so. This coverage is too important, too vital for the sanctity of your family household for us to consider advising you in any other manner. In any event, we hope that we have helped you by providing you this education at your convenience. You deserve the best protection and we hope that we have helped you to get it. On behalf of Christopher and myself and our staff at Reynolds Benefits, we wish you all the best. Thank you so much.
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