HEALTH/BENEFITS
New Types Of Policies Close The DI Coverage Gap Despite enrolling in DI coverage, many professionals are still underinsured. By Martin Levy
M
ost people insure their material possessions — their homes and their cars. But many people don’t recognize what is probably the most valuable asset — their ability to earn an income. If a person becomes sick or injured and can’t work, will that person be able to pay bills and maintain the same or a similar standard of living? What are the odds of becoming disabled? That’s an odd question. It depends on what you read and what someone considers a disability. But understanding the comprehensive nature of a client’s particular occupation — what must happen in order for them to fully be able to earn a living — may diminish their interest in the odds in favor of simply recognizing the power of protecting themselves. Let’s say it’s a much larger concern for higher earners. 34
InsuranceNewsNet Magazine » May 2022
Young professionals, and in particular law students, were taught early in their adult lives that their most valuable asset was their ability to earn a living. When choosing to go to school, they committed to an investment in their careers, took on significant debt, or committed to certain employment relationships to assure they would be able to fulfill their financial obligations. They became comfortable with a particular lifestyle, perhaps have families, acquire assets and commit to education obligations. Thus, they began to earn. Most were taught to seek and purchase disability insurance as a means of protecting their incomes from disruption. That was likely true then, and it still is today. However, much has changed in the business of protecting clients through disability insurance. Here is a brief overview of the DI scene, looking backward and forward.
Individual Disability Insurance
Years ago, professionals had many choices with respect to the purchase of a disability policy. There were many from which
to choose and contracts were broad in nature, and specific in their definitions to qualify for benefits, and had a host of consumer-centric riders that enhanced the policies. Riders included such things as a cost-of-living adjustment that kept benefits growing, a return-of-premium benefit that may have refunded some or all of the premiums, and even a nondisabling injury benefit that paid cash. They almost always included either a residual or a proportionate income rider, or both. More significantly, individual DI policies had an “Own-OCC,” or “own occupation,” definition of disability. A typical noncancelable individual DI policy defined total disability as follows: “Solely due to sickness or injury, you are unable to perform the material duties of your regular occupation — even if you are able to work in another occupation!” Your occupation meant “the occupation or occupations (if more than one) in which you are gainfully employed for the majority of your time, at the time you become sick or disabled.” Carriers further refined the definition of your occupation to a single specialty.
