How To Choose The Right Individual
Disability Insurance Policy
The four main factors that determine the premium rates of a disability insurance policy are...
1. The amount of coverage
2. The definition of disability
3. The waiting period
4. The benefit period
Let’s discuss each one in detail.
For an even more detailed discussion of disability insurance you can always request my FREE REPORT:
How To Prevent Your Family From Having To Suffer Financial Hardships In Case You Suddenly Become Disabled And Can’t Work!
E-mail me at brad.j.baldwin@gmail.com for your own FREE COPY.
The Amount Of Coverage
Just as most group disability plans usually cover only up to 60% of your income, most individual disability plans also cover you for only the same amount (with a few policies cover up to 80%). As you can probably guess, the higher the amount of coverage, the higher the premiums.
What percentage of your income you want your disability policy to protect depends on your financial position.
For example, if you have an investment portfolio or passive income, like rental properties, or both, that can cover a large portion of your living expenses if you’re disabled, then you probably don’t need to buy the maximum amount offered by your insurance company.
On the other hand, if you have little or no life savings or investments, then you probably want to buy as much coverage as you can afford. (In a few moments, you’ll learn how to calculate the approximate amount of disability insurance you should buy for your individual situation.)
The Definition Of Disability
A disability policy can either be an own-occupation (own-occ) or an any-occupation (any-occ).
An own-occupation (own-occ) disability policy provides benefits if you can’t do the work you normally do, whether that’s medical, plumbing, carpentry, dentistry, nursing, and so on.
An any-occupation (any-occ) disability policy provides payments if you can’t do the work for which your education and training suit you.
An own-occ policy costs more than an any-occ policy for the same amount of coverage. This is because your insurance company has a higher chance of paying benefits to you under an own-occ policy than an any-occ policy.
Let’s face it, in some cases, even if you become disabled and can’t do your regular occupation, you may still be able to do another type of work.
For example, a surgeon who injured his or her hands might not be able to operate anymore, but he or she may be able to teach medicine at a college or to become an administrator at a hospital.
Under an own-occ policy, this person could work in such a job to receive a full salary as well as collect disability benefits at the same time, making even more income than his old one.
On the other hand, under an any-occ policy, this person is required to accept the teaching job, the hospital administration job, or another job that he or she is qualified for. In other words, unlike own-occ policies, any-occ policies don’t let you collect a full-time salary plus also full benefit payments.
Most people buy any-occ policies because they’re much less expensive than own-occ policies. Which one you buy depends on your financial position and preference.
For instance, if you can afford to pay the premiums for an own-occ policy, and also don’t want to do any other type of work except your present occupation, then this is the one to buy.
Conversely, if you can’t afford (or don’t want to pay) the premiums of an own-occ policy or if you don’t mind working in a different occupation if you can’t do your current job any more, then an any-occ policy is the one to buy.
I have a warning for you...
If you come across a policy that says something like this… “disability means total and continuous disability that will prevent the insured (policyholder) from performing any duty pertaining to any business or occupation,” avoid it at all costs. This type of policy basically denies you (and almost every policyholder) of benefits.
Remember an even more detailed discussion about disability insurance, the ins and outs of the product can be found in my FREE REPORT:
How To Prevent Your Family From Having To Suffer Financial Hardships In Case You Suddenly Become Disabled And Can’t Work!
Just send me a request for my FREE REPORT at brad.j.baldwin@gmail.com
The Waiting Period
As you’ve learned earlier, with every disability policy, you receive benefit payments only after you’ve served the waiting period. For short-term benefits, this is usually a week. And, for long-term benefits, it’s usually three months.
The longer your waiting period is, the less you pay in premiums. So, when buying a long-term disability policy, you may want to choose a six- month or one-year (or even two-year) waiting period instead of the normal three months, if your financial situation allows you to do so.
For instance, if you have enough emergency funds or savings to pay for six months of living expenses, then choose a six-month waiting period.
The Benefit Period
This is how long you’ll receive monthly benefits once your policy starts paying. The period can range from several months to life, depending on what you choose and also on what your insurance company is willing to offer you.
Unlike the waiting period, the longer the maximum benefit period, the higher the cost of the policy.
Again, which period you choose depends on your financial situation.
For example, if you have lots of assets, such as stocks, bonds, real estates, and know you’ll be able to generate enough income from them in ten years to support you and your family for the rest of your life, then you may choose a ten-year benefit period.
On the other hand, if you think you’ll need financial support for life should you become totally disabled, then you may choose a lifetime benefit period, covering you for as long as you live.
(Please note: If you’ve been working for at least twenty-years, then the money you receive from Social Security at age 65 may be enough to support you. If so, then you may consider a benefit period of up to age 65 only.)
Okay, so now you know a little bit more about Disability Insurance.
Friday, January 26, 2007
Thursday, January 25, 2007
Back to car insurance...Are you getting RIPPED OFF?
I was interrupted in my blogging about car insurance by that article I came across regarding Bo Jackson. So today I thought I'd do a question and answer about car insurance.
Question: Should I keep physical damage (comprehensive and collision - 'full coverage') coverage on my car?
Answer: This is really a tough question and it really depends on your situation. As a rule-of-thumb, I say if you can afford to replace the car you probably don't need physical damage coverage. However, you may want to depending on the circumstance. If you have a car worth $5000 and you don't want to fork out $5000 to replace it you may want to keep physical damage coverage. But always remember the most the insurance company will ever reimburse you for is the blue book value of the car.
Question: Why not just carry the minimum required liability limits required by law?
Answer: As my examples of a few days pointed out, $25,000 worth of liability insurance is probably not going to be enough insurance in a serious car accident. If you are found liable for damages in excess of the amount your car insurance provides, you are on the hook for the remainder. You might have to sell your home. The judge might order your wages garnished. The judge might seize your savings and a whole host of other things. Also, many companies view people that carry higher liability limits as better risks. Meaning they will place you in a better insurance market if you come to them with limits of $100,000/$300,000.
Question: Why does my insurance company look at my credit?
Answer: Many insurance companies have found through various studies that those who manage their finances better tend to manage all parts of their lives more carefully. If someone pays their bills on time it is believed they probably also take better care of their vehicle. They probably also drive more responsibly. Now whether or not you agree with that is up to you. But right now credit scoring is part of the insurance land scape.
I have a whole bunch of more questions answered in my FREE REPORT:
How To Make Sure An Automobile Accident Doesn’t Destroy Your Family’s Dreams And Future!
E-mail me at brad.j.baldwin@gmail.com for your FREE COPY.
Question: Should I keep physical damage (comprehensive and collision - 'full coverage') coverage on my car?
Answer: This is really a tough question and it really depends on your situation. As a rule-of-thumb, I say if you can afford to replace the car you probably don't need physical damage coverage. However, you may want to depending on the circumstance. If you have a car worth $5000 and you don't want to fork out $5000 to replace it you may want to keep physical damage coverage. But always remember the most the insurance company will ever reimburse you for is the blue book value of the car.
Question: Why not just carry the minimum required liability limits required by law?
Answer: As my examples of a few days pointed out, $25,000 worth of liability insurance is probably not going to be enough insurance in a serious car accident. If you are found liable for damages in excess of the amount your car insurance provides, you are on the hook for the remainder. You might have to sell your home. The judge might order your wages garnished. The judge might seize your savings and a whole host of other things. Also, many companies view people that carry higher liability limits as better risks. Meaning they will place you in a better insurance market if you come to them with limits of $100,000/$300,000.
Question: Why does my insurance company look at my credit?
Answer: Many insurance companies have found through various studies that those who manage their finances better tend to manage all parts of their lives more carefully. If someone pays their bills on time it is believed they probably also take better care of their vehicle. They probably also drive more responsibly. Now whether or not you agree with that is up to you. But right now credit scoring is part of the insurance land scape.
I have a whole bunch of more questions answered in my FREE REPORT:
How To Make Sure An Automobile Accident Doesn’t Destroy Your Family’s Dreams And Future!
E-mail me at brad.j.baldwin@gmail.com for your FREE COPY.
Tuesday, January 23, 2007
Some more about Disability Income
You really have to ask yourself, "How long can I survive without a paycheck?" That question is key. Short of the independently wealthy, everyone needs disability income insurance.
How many times have you seen posters for fund raisers for someone diagnosed with cancer? Or how many times have you seen posters for someone that was in a serious car wreck?
At age 40 you are about 4 times more likely to become disabled for 90 or more days than you are of dying. Do you have life insurance?
I've put together a detailed FREE REPORT titled
WILL AN INCOMPLETE HEART ATTACK RUIN FINANCIALLY AND CAUSE YOUR FAMILY TO BECOME DESTITUTE?
You can e-mail me right now for your FREE REPORT.
brad.j.baldwin@gmail.com
Please put Disability income in the subject line.
This report will detail the why, the how, the how much, of disability income insurance. It will also give you the 'insider secrets' of how to buy disability income insurance. If there is one type of insurance where price should be a secondary concern, it is DI insurance. Each company has its own definition of disability. Take this example: Would you rather buy a policy that said you were disabled if you couldn't continue working in your occupation or one that says you are disabled if you can't work in any occupation?
Here are some statistics for you:
According to statistics, in the United States…
Þ More people lose their homes through disability than through death and fire!
Þ For people who are under the age of thirty-five, 1 out of 3 will be disabled for about six months, and 1 out of 4 will be disabled for one year or longer… before they turn sixty-five!
Þ A 42-year old is 4 times more likely to become seriously disabled than to die before age 65!
Þ The average length of all disabilities lasting longer than three months is 2 years!
Þ Each year, while 1 in 18 cars are involved in serious accidents, 1 in 117 people die, and 1 in 219 homes catch fire, 1 in 14 people become disabled!
Listen, if you’re like most people, then, after you’ve become disabled due to an accident or illness, your income will probably stop, won’t it?
The sad thing is, even if your income stops, you’ll still have to pay the mortgage, car payment, food, and other expenses every month.
The six choices you have if you should lose your income because of disability are...
1. Live off your life savings.
2. Live off your spouse’s income.
3. Sell some of your assets to generate cash.
4. Borrow money from a bank.
5. Ask your parents, relatives, or friends for support.
6. Apply for Social Security disability benefits.
In my FREE REPORT I'll tell you why you don't want to rely on any of those options (not even SocialSecurity disability benefits).
How many times have you seen posters for fund raisers for someone diagnosed with cancer? Or how many times have you seen posters for someone that was in a serious car wreck?
At age 40 you are about 4 times more likely to become disabled for 90 or more days than you are of dying. Do you have life insurance?
I've put together a detailed FREE REPORT titled
WILL AN INCOMPLETE HEART ATTACK RUIN FINANCIALLY AND CAUSE YOUR FAMILY TO BECOME DESTITUTE?
You can e-mail me right now for your FREE REPORT.
brad.j.baldwin@gmail.com
Please put Disability income in the subject line.
This report will detail the why, the how, the how much, of disability income insurance. It will also give you the 'insider secrets' of how to buy disability income insurance. If there is one type of insurance where price should be a secondary concern, it is DI insurance. Each company has its own definition of disability. Take this example: Would you rather buy a policy that said you were disabled if you couldn't continue working in your occupation or one that says you are disabled if you can't work in any occupation?
Here are some statistics for you:
According to statistics, in the United States…
Þ More people lose their homes through disability than through death and fire!
Þ For people who are under the age of thirty-five, 1 out of 3 will be disabled for about six months, and 1 out of 4 will be disabled for one year or longer… before they turn sixty-five!
Þ A 42-year old is 4 times more likely to become seriously disabled than to die before age 65!
Þ The average length of all disabilities lasting longer than three months is 2 years!
Þ Each year, while 1 in 18 cars are involved in serious accidents, 1 in 117 people die, and 1 in 219 homes catch fire, 1 in 14 people become disabled!
Listen, if you’re like most people, then, after you’ve become disabled due to an accident or illness, your income will probably stop, won’t it?
The sad thing is, even if your income stops, you’ll still have to pay the mortgage, car payment, food, and other expenses every month.
The six choices you have if you should lose your income because of disability are...
1. Live off your life savings.
2. Live off your spouse’s income.
3. Sell some of your assets to generate cash.
4. Borrow money from a bank.
5. Ask your parents, relatives, or friends for support.
6. Apply for Social Security disability benefits.
In my FREE REPORT I'll tell you why you don't want to rely on any of those options (not even Social
Monday, January 22, 2007
Incomplete heart attack....
I didn't have any time to write much today but I did find a great little article about Bo Jackson. He played football and baseball professionally in the late 80's and early 90's. An injury during a playoff game in 1991 ended both his promising baseball and football careers. Luckily for Bo he had insurance just in case.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070122/FREE/70119014/1017/TOC
Have you thought about what would happen if? We all know people who suffer 'incomplete heart attacks' attacks and can't work for months. Are you next? How long could you survive without a paycheck?
Think about it.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070122/FREE/70119014/1017/TOC
Have you thought about what would happen if? We all know people who suffer 'incomplete heart attacks' attacks and can't work for months. Are you next? How long could you survive without a paycheck?
Think about it.
Friday, January 19, 2007
Car insurance basics
Today I want to discuss car insurance.
I think most of us would agree car insurance is something we wish we could do without. Who really likes paying any insurance premiums?
Now everyone knows that car insurance is required by law. The State of Montana in its wisdom has decided it is a crime to not carry liability insurance if you drive a car.
Seems like a no-brainer. If you want to drive on our streets you must provide protection for those you might injure in the risky hobby of driving.
I think we all understand that not everyone buys car insurance. For all the tickets the State issues I'd say at least 10% of the drivers do not have car insurance. Kind of scary if you think about it.
Now those that do carry insurance, the state law says you have to carry $25,000 worth of bodily-injury-liability insurance per person and $50,000 total bodily-injury-liability insurance per accident. You also have to have $10,000 worth of property-damage-liability insurance. Think about that. While $25,000 may seem like a lot of money, is it really when it comes to the expenses that might need to be reimbursed in a car accident?
Let's take a look at an example.
Say you are driving west down Highway 2 and need to turn south on 87. Something distracts you as you are about to turn to your left. So you turn without really watching for oncoming traffic. Boom! A car smashes into the side of your own vehicle. Clearly you are at fault as you turned into oncoming traffic.
Think about the repercussions of that. Maybe it is a single driver driving a Hummer. If the driver is wearing a seat belt, he might not be hurt (we'll forget about the property damage you just caused to a $60,000 Hummer for now). But imagine it is mini van full of children coming to town to go to Walmart. Hopefully everyone is wearing a seat belt so the injuries aren't so bad. But rushing 3 kids and an adult to the emergency room isn't going to be cheap. How much do you think the ambulance rides alone will cost. Add in the cost of the emergency room visit and you can see how your $50,000 worth of insurance could be gone quickly.
Let's switch gears now and say the oncoming vehicle is a Chevy Corvette being driven by a surgeon. Say he is hurt badly enough he won't be able to operate on any patients for at least 9 months. Now you are liable not only for expensive medical bills you are also responsible to provide this doctor with an income while he is recuperating. How long would your $25,000 worth of insurance last? Once your liability limit runs out, the rest of the money comes out of your own pocket.
Luckily for us, the insurance companies do sell much higher limits of liability insurance. I'm convinced we all need those limits because we just don't know what might happen on the road.
I hope this gives you a little bit more to think about. I'll have more to say in my next post.
I think most of us would agree car insurance is something we wish we could do without. Who really likes paying any insurance premiums?
Now everyone knows that car insurance is required by law. The State of Montana in its wisdom has decided it is a crime to not carry liability insurance if you drive a car.
Seems like a no-brainer. If you want to drive on our streets you must provide protection for those you might injure in the risky hobby of driving.
I think we all understand that not everyone buys car insurance. For all the tickets the State issues I'd say at least 10% of the drivers do not have car insurance. Kind of scary if you think about it.
Now those that do carry insurance, the state law says you have to carry $25,000 worth of bodily-injury-liability insurance per person and $50,000 total bodily-injury-liability insurance per accident. You also have to have $10,000 worth of property-damage-liability insurance. Think about that. While $25,000 may seem like a lot of money, is it really when it comes to the expenses that might need to be reimbursed in a car accident?
Let's take a look at an example.
Say you are driving west down Highway 2 and need to turn south on 87. Something distracts you as you are about to turn to your left. So you turn without really watching for oncoming traffic. Boom! A car smashes into the side of your own vehicle. Clearly you are at fault as you turned into oncoming traffic.
Think about the repercussions of that. Maybe it is a single driver driving a Hummer. If the driver is wearing a seat belt, he might not be hurt (we'll forget about the property damage you just caused to a $60,000 Hummer for now). But imagine it is mini van full of children coming to town to go to Walmart. Hopefully everyone is wearing a seat belt so the injuries aren't so bad. But rushing 3 kids and an adult to the emergency room isn't going to be cheap. How much do you think the ambulance rides alone will cost. Add in the cost of the emergency room visit and you can see how your $50,000 worth of insurance could be gone quickly.
Let's switch gears now and say the oncoming vehicle is a Chevy Corvette being driven by a surgeon. Say he is hurt badly enough he won't be able to operate on any patients for at least 9 months. Now you are liable not only for expensive medical bills you are also responsible to provide this doctor with an income while he is recuperating. How long would your $25,000 worth of insurance last? Once your liability limit runs out, the rest of the money comes out of your own pocket.
Luckily for us, the insurance companies do sell much higher limits of liability insurance. I'm convinced we all need those limits because we just don't know what might happen on the road.
I hope this gives you a little bit more to think about. I'll have more to say in my next post.
Tuesday, January 16, 2007
First Post
I've decided to start a blog today about insurance because I think there is a lot of misinformation out there. This will be my little entry into cyberspace.
As an insurance agent I see a lot of bad info. In our office we come across lots of people that really don't understand their insurance. Whether it is car insurance, life insurance, or workers comp, most people just don't get it. They aren't a part of 'the club'.
Maybe with a little help from me you will become an educated consumer. And everyone knows an educated consumer is the best type of consumer.
I'll start off tomorrow's post writing about the most common insurance policy, the auto insurance policy. While it seems like a car insurance policy should be a simple subject, it isn't.
Keep reading and I'll keep writing.
As an insurance agent I see a lot of bad info. In our office we come across lots of people that really don't understand their insurance. Whether it is car insurance, life insurance, or workers comp, most people just don't get it. They aren't a part of 'the club'.
Maybe with a little help from me you will become an educated consumer. And everyone knows an educated consumer is the best type of consumer.
I'll start off tomorrow's post writing about the most common insurance policy, the auto insurance policy. While it seems like a car insurance policy should be a simple subject, it isn't.
Keep reading and I'll keep writing.
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