Research shows that three in 10 families have gone through a disability at least once in the past 10 years. Fifty-five percent of those people also admitted to the experience having a financial impact on their household.
The numbers are pretty clear: Millions of people suffer from a disability in their household, and millions are thrown when it comes to the cost of it all.
In our years of practice, we’ve found that most health care professionals who own a private disability policy don’t thoroughly understand what they have. And although we believe that everyone should have disability insurance, policies shouldn’t be generalized. We’ve all got different needs and different skill sets, and that should translate into your coverage.
If you’re not sure how to make your policy exactly as comprehensive as you need it to be, we’re going to let you in on a resource that can help you do exactly that.
Riders are what allow you to personalize your disability coverage, adding the insulation you need to make sure you cover all your bases.
What are insurance riders?
When you think of riders, imagine them as building blocks for your policy. They are the details laying out the particular benefits you can receive in the event of different outcomes. These policy components are what will help you tailor your plan to your individual needs.
While riders aid in establishing a policy, you should keep in mind that some options can actually restrict or limit your coverage. But don’t worry, we can help you identify the restrictions and modify them if necessary so you and your family have full protection.
To give some context, one of the most important examples of a rider is own occupation (specialty-specific) insurance. We like to think of this type of coverage as the backbone of a policy, especially for physicians.
Own occupation insurance offers a benefit if the policyholder is unable to perform the job they received education and training for. As a result, they are entirely disabled and eligible to receive the full benefit or be “on-claim,” regardless of whether they find work in another profession. In other words, you would be protecting your income even if you can no longer earn it.
Since transparency is one of our biggest priorities, we need to mention that this added protection often comes at an added price. But that’s why we help personalize policies, so you can clearly see and choose what suits you best.
Why is it essential to buy customized disability insurance?
Most people assume that “it” won’t happen to them. That they won’t get an unexpected injury. That they won’t develop an illness that puts them out of work for months at a time. That they won’t find themselves in the exact scenario that millions of people do every year.
Picture this: A perfectly healthy, young woman is exiting her dermatology residency and moving on to work at a private practice. She’s making a great salary, as most dermatologists do, and thriving in her career.
Along the way, she is increasing her disability benefit to keep pace with her new earnings because she opted for an increase option rider on her policy. This rider, which goes by multiple names, is the ability to increase your monthly benefit as your income ascends and/or you change jobs and have a different group benefit without additional medical underwriting.
Then, it happens. She’s diagnosed with multiple sclerosis.
Although it was devastating news one hopes never to hear, she would at least receive support financially thanks to the policy she acquired early on when undiagnosed and healthy.
Because she decided to keep up with her disability insurance, she could increase her policy, prior to having to exit due to complications of MS, simply because her income was rising and she had the right rider in place.
There are several types of riders for disability insurance that could make a critical situation more manageable with the coverage they provide. Here are some examples:
A partial or residual benefit kicks in if you have to go part-time, not by choice. Multiple sclerosis, other autoimmune diseases, early degenerative diseases, or post-concussive states would be examples of such a scenario. Those are situations where it’s not about you just waking up one day and not being able to do your job. These are situations where a treating physician will say you can do your job, but maybe the hours, the caseload, etc. are unsustainable. You would lose income, and this rider will help bridge the gap.
There is a catastrophic benefit, which is exactly what it sounds like. In the event that you are unable to perform two or more of your activities of daily living without assistance, or you are severely cognitively impaired, you may qualify for an additional benefit. Here, we’re talking about things like strokes, traumatic brain injuries, etc. This is not offered in every state, so your ability to add this type of rider to your policy may depend on where you live.
Many people also opt for a cost of living adjustment, or COLA, which is supposed to be inflationary protection that kicks in when you go on claim. So if you’re sick or injured, as you hit your anniversary your benefit will go up based on the policy’s language.
There are different definitions for each of these riders, depending on your particular policy. Some have a straight percentage, some may give you a range, some have simple interest components, and others have compounded interest components.
At the end of the day, please make sure you know what your policy entails and include riders for what may be useful to you in the long run.
At PearsonRavitz, we highly recommend reading and learning the exact terms of riders and policies before you buy them. We understand how complicated the language can get, but that’s why we’re here. We can help you understand the key terms of your policy and advocate for a better, more fitting one.
What riders should you buy?
If you check out our new Insurance 101 section on the website, you can familiarize yourself with the key disability insurance terms and riders. There are seven to be aware of, including the few we covered today:
- Specialty Specific
- Non-Cancellable, Guaranteed Renewable
- Benefit Adjustment Opportunities
- Benefit & Elimination Period
- Residual or Partial Disability
- Cost of Living Adjustment (or the COLA rider)
- Catastrophic Injury Rider
While there are a variety of riders out there, none of them are one-size-fits-all. The riders that might be ideal for a cardiothoracic surgeon may not make the most sense for someone who practices internal medicine.
Simply put, what will work for you depends on you.
We’re here to help you secure the best possible coverage, and we work with all six of the traditional carriers (Mass Mutual, Ameritas, Guardian, Principal, The Standard, and Ohio National).
Reach out to our team, and we can get started! Let’s work together to protect your most valuable financial asset – your income – and life’s most important people, your family.