Because there are so many moving parts in a disability insurance policy, you can work with riders, definitions of disability, type of policy, in order to lower the cost of disability insurance:
– Guaranteed Renewable policy, VS. Non Cancellable and Guaranteed Renewable.
– Modified definition of “own occupation” protection, versus a TRUE Own-occ.
– 3% fixed COLA (inflation, or cost of living adjustment rider) VS. 6% or 10% compound COLA
– non smoker rates, VS. tobacco rates (if you quit, you qualify for non tobacco rates 12 months after quitting smoking).
– business owner upgrade – will increase your occupation class (and lower premiums) if you have been a successful self employed or business owner for 2 years or longer, and can provide tax returns showing a profit.
– manual duties can increase the cost of disability insurance, so delegating those to other employees will translate in lower insurance rates. Supervising employees will normally get you one occupation class above other employees in the same business that have manual duties in their job description, saving from 5% to 25% on premiums (depending on occupation).
– Split the benefit into: Base benefit + Social Security Offset benefit rider
– lower the monthly benefit amount to the minimum necessary – use the M.U.G. approach: protect the amount needed for Mortgage, Utilities and Groceries; Cover your MUG!
– increase the waiting period before benefits are payable. 90 days or longer waiting period (or elimination period) is typical for a disability insurance policy, to make it affordable. You can use savings, sick pay, etc – to cover your lost income for the first few weeks during a disability. Or, use a short-term disability policy to cover the gap, before the long-term disability benefits start.
– shorten the benefit period on the policy to 2 years, or 5 years benefit period. Statistically, a long-term disability is expected to last from 2 to 5 years depending on your age. Calculate your PDQ at DisabilityCanHappen.org
– eliminate some riders, but be aware that your disability policy may only pay if you are totally disabled, if you remove riders such as: residual or partial disability benefit rider.
With so many options and riders, you should consult a disability insurance expert to help you sort out through your choices. Call 877-LIFE-GUY or email PaycheckProtection@LifeGuy.com