Disability Insurance


Insurance: [ Business Disability ]   [ Individual Disability ]

There are basically two very different definitions of disability used in disability insurance policies. The first definition is one that defines a disability as one that prevents you from performing the major duties of your occupation. One reputable  disability insurance company summarizes their definition of disability as: “Pays benefits if you are unable to perform the material and substantial duties of your own occupation due to sickness or injury…even if you are able to do some other kind of work.”.

The other, and less favorable, definition of disability states that you are disabled if you can't work at any gainful occupation. This kind of policy may also have a residual benefit that says if your income goes down they'll pay a partial benefit.

Business Disability Insurance:

If you were sick or hurt, and could not work, would you have a source of income to pay your business expenses?

Could you afford to keep your business open?

Could you afford to close your business?

The Dual Expenses of Disability

As a successful business owner you know that if you become sick or injured and can't work, you may very well be forced to close down your business. The resulting strain on both your personal and business finances could be devastating. After all, your income is divided between two budgets.

When sickness or injury strikes, a personal disability income protection plan can help provide you and your family with the necessities of day to day living. But your overhead expenses would continue to mount up. How could you afford to keep your business running?

A Tax Advantage, too

The Internal Revenue Service has ruled (Rev.Rul.55-26, 1955-2 CB 11) that premiums paid for an overhead expense disability policy are tax deductible as a business expense. While benefits received at claim would be treated as income, such income is used to pay the deductible expenses that this coverage covers.

Individual Disability Insurance

Not all individual disability insurance policies are created equal.  While cost will certainly factor into your decision, we will always recommend a reputable disability insurance policy.  The plan should allow for tailoring to your individual needs and objectives. It is our opinion that all personal disability insurance policies should contain the following elements:

disability insurance company must not terminate or increase premiums Professionals and executives should be covered in “their occupation” and physicians should be covered further in their specialty as their occupation. Very few insurance companies do this. Ask us about this important point.
disability insurance requirements must not be too strict The insurance company must not be able to terminate your coverage or increase your premiums.
disability insurance provisions Some provisions must be made when you return to work but still suffer a loss of income. This is called partial or residual coverage.
income protection benefit levels The benefit levels purchased should be maximized to replace as much as possible of your lost earnings.

Individual Disability Insurance Meets the Need

A reputable individual disability insurance policy can provide all this and more. It can be coordinated with other existing and potential sources of disability insurance at the time it is purchased so that your entire situation is taken into account. It  permits you to make choices about the type of coverage, amount and timing of benefits, and optional features available. It offers long-term protection and a known benefit for a level premium. In short, individual disability insurance puts you in control and leaves nothing to chance.