Ohio National for Disability Insurance?

[wcireader]

leveragerx wrote:

I don’t think your question conflicts with WCI’s advice from the post you linked – he’s right in that it is less important to have the older you get.

Here’s a quick analysis to help you think about 3% vs 6%. Yellow cells can be changed to fit your situation, the rest are formulas. Send a message if it doesn’t make sense.

https://www.dropbox.com/s/8lto6xa6td3lbym/3%25%20vs%206%25%20COLA%20Analysis.xlsx?dl=0

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Thanks so much!

That spreadsheet is super nifty, and I was able to plug in my exact values.

I guess you are thinking about it very differently than I am.

I realize that the AVERAGE disability claim is for 3 years.

However, my thinking is still about the CATASTROPHIC claim. For me, the "additional cost for 6% COLA" is $9,244.76. That's a lot of money, but only ~3.4% of my pre-tax income for ONE year. I realize that the chance of CATASTROPHIC disability is likely low. On the other hand, that is the MAIN reason that I am purchasing this policy, honestly. As such, it seems like ~3.4% of pre-tax income for ONE year is a low price to pay for inflation adjustment that keeps up with the CPI-U in case of catastrophe.

Otherwise, insurance is, with the probabilities, naturally going to be money-losing, as I am sure they are charging based on probabilities so that they come out ahead, no?

[wcireader]

Rex wrote:

That would go hand and hand with my younger comment

Still I’d seriously consider a 2nd policy before paying toomuch for inflation protection and doubly so before any retirement benefits disability package.

Disability is the only product that inflation protection doesn’t happen from the get go. Really they have nickel and dimed inflation protection by splitting it into two with future increase options and post injury inflation adjustment. Notice they didn’t try this garbage with ltci.

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Thank you so much for your advice!

Btw, did a little more Googling/reading, and the below (bold italics added for emphasis) may explain why the original agent may not able to sell me the policy. My read of the below is that it is not sold by agents in New York state nor for physicians residing in California.

https://www.ohionational.com/portal/site/client/2017_news/?guid=50bfe3851c099510VgnVCM100000090411acRCRD

"January 12, 2017
AMA Insurance Launches New Individual Disability Income Insurance Program for Physicians

Chicago -- AMA Insurance Agency, Inc., a subsidiary of the American Medical Association (AMA), today introduced a new disability insurance program designed to meet the unique income-protection needs of physicians. The individual disability income insurance product offered through the AMA Insurance program is underwritten by The Ohio National Life Assurance Company, Inc. (ONLAC), a subsidiary of Ohio National Financial Services.*

 

...

*Product, product features and rider availability vary by state. DI not available in CA. Issuer not licensed to conduct business in NY.

..."

[wcireader]

P.s. For those looking at Ohio National disability policies, an interesting comment thread from WCI's 3/2017 post on disability insurance:

https://www.whitecoatinvestor.com/what-you-need-to-know-about-disability-insurance/#comment-449999

[wcireader]

leveragerx and Noah,

Thank you, both, for your thoughts.

As far as I am aware, I am already maximizing my coverage for my income (I will double check with agent B as I have not specifically asked him, although I assume that is what he did as he was trying to compete with the other policy in which I did maximize my coverage). Thus, increasing my policy by 25% is not, at this time, an option.

Going from the 3% simple COLA to the 2-6% CPI-U linked compounded COLA adds ~9.2% to the price of my policy.

My health (as far as I know) is good, so I don't expect a long disability period.

With that said, my thoughts about insurance are usually to cover catastrophe.

Further, from https://www.whitecoatinvestor.com/disability-insurance-part-4-the-riders/ (bold added for emphasis, as I am just finishing residency and about to start my first job as an attending physician):

Cost of Living Rider

...

... This rider presents a tough decision. I suggest if you’re buying the policy within the last 10-15 years of your career that you skip it. If you’re buying it during residency or the first few years out of residency, I suggest you get it. If you’re somewhere in between, consider buying a larger policy instead if you can justify it with your income.

Is there a good reason to no longer follow WCI's advice about this, or is this something about which reasonable people tend to disagree?

Thanks!

[Noah]

Also because many COLA riders add about 20-25% to the cost of the policy I found that unless you are maxing out your policy then it's best to just get 25% (or equivalent) increased initial benefit amount since if you do get disabled then you get that extra money, and with the average disability lasting around 3 years, you'll come out far ahead. Worst case scenario you can invest the extra 25% you receive to keep up with inflation that way if it looks like it's going to be a long term situation.

[wcireader]

Rex wrote:

Keep in mind that inflation protection doesn’t kick in until after you become disabled.

Younger people should value it more.

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Got it. Thanks so much for the helpful comment that inflation protection only kicks in after one becomes disabled.

[wcireader]

leveragerx wrote:

Ohio National revamped their disability insurance policy (ContinuonII) within the last year and a half which is why agents are talking about it and showing it more. It has a strong own-occupation definition of disability with medical specialty language in it and is often very competitively priced (even after accounting for discounts on other policies). We recently wrote a post comparing the language of Ohio National to a few of the other policies and shows the actual language (https://www.leveragerx.com/own-occupation-disability-insurance).

I can’t speak to claims history but this is a great site to see how each insurance company has handled claims in the past http://www.diattorney.com/disability-insurance-companies/

Lastly, the policy is not available in all states and therefore not all agents can sell it (depending on where they are located). Make sure that isn’t factoring into your agents advice.

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P.S. Any thoughts on the 3% simple vs 2-6% compound CPI-U linked COLAs for the Ohio National DI policies? The 3% simple technically outperforms inflation when looking at the past 16 years, but only does so ~1/3rd of the time when looking at all 16 year periods for CPI-U's since 1913. Also, it seems like the worst-case scenario would be underperforming in a high CPI-U environment rather than no growth in a low CPI-U environment, so I feel like I favor the more expensive 2-6% compound CPI-U linked COLA... Any thoughts?

[wcireader]

leveragerx wrote:

Ohio National revamped their disability insurance policy (ContinuonII) within the last year and a half which is why agents are talking about it and showing it more. It has a strong own-occupation definition of disability with medical specialty language in it and is often very competitively priced (even after accounting for discounts on other policies). We recently wrote a post comparing the language of Ohio National to a few of the other policies and shows the actual language (https://www.leveragerx.com/own-occupation-disability-insurance).

I can’t speak to claims history but this is a great site to see how each insurance company has handled claims in the past http://www.diattorney.com/disability-insurance-companies/

Lastly, the policy is not available in all states and therefore not all agents can sell it (depending on where they are located). Make sure that isn’t factoring into your agents advice.

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Thank you, so much, for the very helpful information!

As far as the state thing, that may be the factor here (my guess). The WCI-recommended agent is located in a different state (Northeastern US) from me, whereas the local agent is located in the same state as me (South).

Thank you again!

[wcireader]

Rex wrote:

Just bc an agent isn’t captive doesn’t mean there aren’t incentives. Most independent agents are only so independent. Many have all kinds of pay benefits to go one way vs another.

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Thank you for letting me know. I did not fully realize that independent agents could be restricted from buying policies from certain insurers or perhaps have incentives not do so.

[wcireader]

Rex wrote:

Like I mentioned there is zero evidence that claims data will be different. Ask the doubting agent for some verifiable evidence and you will see he or she has none. NWM in particular likes to pretend that their strength will make claims easier even though not own occ. it’s a common tactic when you are losing a sale.

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Thank you so much for sharing your thoughts.

I guess since it is not a captive agent, why don't they just offer policies from Ohio National as well? I referred a colleague to them, and they also didn't send any Ohio National policies to my colleague. Just wanted to be super sure about Ohio National since this was a WCI-recommended agent who seems to doubt them. I guess maybe there is some reason they cannot sell Ohio National but can sell other 5 own-occupation disability insurance about which I do not know.

[childay]

My wife and I have life insurance with Ohio National.  I thankfully cannot speak to their likelihood of paying claims

Interesting though I did not know they offered disability.  I am sure one of the forum DI agents will chime in.

[wcireader]

Thank you, Dreamgiver and Rex, for your thoughts.

I apologize if I may not have been completely clear. My concern is not specifically for the agents' feelings. I am just trying to make sure I don't make a mistake if I go with an otherwise reasonably-spelled out policy from Ohio National.

Specifically, agent A seems to feel strongly that Ohio National is not a great company for disability insurance due to its fairly recent entry in the market and low market share, although agent A includes them in the "6 major companies" that have true own-occupation disability insurance.

On the other hand, agent B seems to think they are reasonable for own occupation disability insurance. He agrees that they have low market share but thinks this is an opportunity as they are competitively priced to acquire market share and are otherwise a large and reputable company.

As agent A was WCI-recommended and agent B is a local agent, I just want to make sure that I am not missing something about Ohio National, as agent A (WCI-recommended) really doesn't seem to like/trust them (?yet) for unclear (to me) reasons.

[Dreamgiver]

I am not going to comment on the company itself as I do not know much about them. I personally would stick with the major players for something like this.

What I will comment on is this...you are buying a product. You can talk to as many people as you wish, with them knowing or not knowing anything else. Forgive me if I misunderstood what you wrote, it just seems you feel bad you are shopping around. Nobody's feelings get hurt ;-)

[wcireader]

Thank you all for your past help!

I've inadvertently talked to two different agents about DI (with each agent knowing about the other), and one agent (not from WCI site) is very enthusiastic about a policy from Ohio National. I talked to my original agent about the policy in detail, and went ahead and let the 2nd agent know the 1st agents thoughts. Lo and behold, a long reply from the 2nd agent.

Basically, my take, given that both are inherently salespeople: Ohio National is new in the DI market, currently trying to get market share and is much cheaper than other options. Obviously it is new, also, so that naturally raises some unknowns (although I'm not 100% clear what these unknowns are???, as I understand they have been in the life insurance business for many years and are rated A+).

In any case - my question, especially for folks that are well-versed in DI business. Is Ohio National a good company for DI or not? I realize that they are priced competitively to increase market share. Is that the whole story, or is there any other (bad) reason why their prices are so low (e.g., failure to pay out claims that they should have paid)?

Thank you

P.S. For example, a quick google search for "Ohio National Disability Insurance" without the quotes turned up this video (albeit from 2011) about denied claims, which was not very positive: https://www.youtube.com/watch?v=HJSHfB7AwKg . Is this something about which I should be concerned?