Tactfully Time Your Disability Insurance

Physician's Money Digest, December15 2004, Volume 11, Issue 23

If you're wondering when is the besttime to get an income protectionpolicy, or any other form of coverage,it's at the earliest possiblemoment, when it's both financially feasibleand practical, even though there maynot be an obvious need at the moment.Health and circumstances can change,which may affect eligibility. Why then dopeople wait until it's too late? Maybe theydon't see the need or urgency, no one toldthem they should have it or that this formof protection even exists, or they havesome false belief that they will never getdisabled or that their employer will paytheir expenses/wages if they do.

Timing and Planning

What happens if someone wants thecoverage, but has already been turneddown, and not necessarily due to health?Has the best time to pick up insurancepassed? No, not if an agent knows whereto go for assistance and a probable solution.There are brokers who specialize inhard-to-place situations that can becaused by such factors as starting a newbusiness, working from within the home,working abroad, being overweight, etc.

Does the financial planner have aresponsibility to their client as far as relayingthe best time to buy? Absolutely.Should these professionals realize that disabilityinsurance is the cornerstone offinancial planning and recommend it?Definitely. Why is it, then, that disabilityinsurance isn't sold more than the meageramount reported? Is it due to lack ofproduct knowledge, or just an oversight?

Establishing Length

The individual should obtain disabilityinsurance at the earliest possibletime, even if they can't immediatelyafford the 2% to 4% out of theirincome the full amount might cost.Given the fact that most disabilities lastless than 2 to 5 years, you should recommendthat length of time as an initialbenefit period. Most carriers have anoption that will allow more coverage tobe purchased in the future, strictlybased on financial underwriting, withno evidence of medical insurability.Some insurance carriers even allow thisoption to be exercised and paid alongwith a current claim.

Coverage should be discontinued onlyif the carrier is self-insured or retiresbefore the termination date. The policydoesn't have to be dropped for other reasons.Coverage can be reconfigured tocreate a lower benefit amount or a shorterbenefit period. Either of these solutionswill lower the premium and possibly beenough to keep it in force.

is a disability specialist at Disability

Insurance Resource Center in Albuquerque,

NM. For more information, visit www.di-resourcecenter.com. He welcomes questions or comments at

800-551-6211 or info@di-resource-center.com

Larry Schneider