Any experience with DisabilityPro?

[DGH]

I have a disability policy with Principal, but frequently get offers in the mail from DisabilityPro, which offers "own-speciality protection. I pay about $3200 annually for an $8K monthly benefit (6 month waiting period), whereas DisabilityPro for my age range looks to be about $1300 annually with the same benefit and waiting period.

 

Does anyone use DisabilityPro or has anyone here reviewed it carefully? The rates seem too good to be true. I searched the forums here and haven't seen it mentioned specifically.

Thanks

[DK Unger]

DisabilityPro is a marketing name for the AMA sponsored group disability insurance policy underwritten by The United States Life Insurance Company. Your intuition is correct, just as with other group/association policies, the lower rates reflect the less comprehensive coverage provided. Here are the main limitations:

1. Residual disability benefits are only payable after a covered total disability. This eliminates virtually all claims due to illnesses which start off as residual disability claims (15-20% loss of income in your specialty). Also, there is no recovery benefit provision which allows benefits to continue beyond recovery should you still suffer a 15-20% loss of income.


2. The waiting/elimination period is only satisfied if you are not working at all. It also requires the waiting period to be satisfied in consecutive days. This again limits the types of claims payable.


3. It does not offer a "true" own occupation definition of total disability. If you work in another occupation, your benefit will be potentially reduced/eliminated by the income you generate.


4. The benefits, policy, and rates are not guaranteed. The rates go up in age intervals and the entire premium schedule can be changed based on claims experience. The benefits can be modified and the policy can be terminated under certain scenarios.


5. The option to increase the monthly benefit in the future without medical underwriting is limited to a one time option which must be exercised within the first 3 years of your policy start date or before your age 40 birthday, whichever comes first.

If you would like lower premium rates and are okay with non-guaranteed rates, I recommend a Guaranteed Renewable only individual policy. These policies still offer more guarantees than group/association policies but are subject to potential rate increases (if the State insurance authority approves).

 

 

 

[DGH]

Thanks for the thorough response, Mr Unger. I haven't so much as waded through the language of my Principal policy, but your post was a helpful synopsis for things to look for.

[DK Unger]

Besides Standard and out of the "Big 5" Ameritas also offers a Guaranteed Renewable only policy. The typical premium load for a Non-Cancelable policy is 20-30%. It's definitely worth taking a look at the premium savings between a Non-Cancelable policy and a Guaranteed Renewable only one. The real risk with a Guaranteed Renewable only policy is that the rate increase outpaces the premium savings (adjusted for a conservative interest rate) and the insured is unable to qualify for a newly underwritten version of a similar policy through another carrier. Last time I checked, Standard and Ameritas both have never raised rates on their Guaranteed Renewable only policies. Yes, this goes against conventional wisdom but something to think about when evaluating all options.

[redpatokasea]

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