Some questions about my disability insurance

[Raddoc123]

I am about to write a check for my disability insurance premiums and some questions came up.  I have modified own occ. policies from standard and principal for which I pay about about 3750/yr post tax.  This is for about 11-12k monthly income.

I got these policies yrs. ago after I finished residency.  Mod own occ essentially means that I cant double dip from another profession if I became disabled.  The definition of disability is the same as far as I know.

I also have a policy from my medical group employer which covers 50% of income.  Main difference I am aware of is that mental/nervous is 2 yrs with my employer and indefinite with my personal policy.

if I were to become disabled, would I receive the benefit from both policies, or would the mod. Own occ policy consider my work policy payout as income and not pay?

Lets say I leave my current job and work part time or locums, how would my personal policy pay?  Would it based on the income I originally bought the policy or the income from the last year?  How about if your not working at all or between jobs?

Thanks

 

[jfoxcpacfp]

Bumping in case anyone can advise. Hoping Scott Nelson-Archer will see and comment. However, these are specific questions that you probably need to ask your insurance agents.

[tmtarpinian]

Raddoc123,

You've asked several questions here, so let me address in order:

"if I were to become disabled, would I receive the benefit from both policies, or would the mod. Own occ policy consider my work policy payout as income and not pay?"

Principal and Standard's contracts don't coordinate with employer paid LTD plans, so your employer's plan would pay 50% of salary policy (as taxable income), then your standard and principal policies would respectively pay you the tax-free monthly income for the amount of monthly benefit they currently state in your policy.

Lets say I leave my current job and work part time or locums, how would my personal policy pay?

If you are totally disable and can't do your work as a physician, your standard and principal policies would respectively pay you the tax-free monthly income for the amount of monthly benefit they currently state in your policy, regardless of how much you were making the past 12 months.

Would it based on the income I originally bought the policy or the income from the last year?  How about if your not working at all or between jobs?

This depends on the type of disability.

If you're totally disabled and can't do your work as a physician, your standard and principal policies would respectively pay you the tax-free monthly income for the amount of monthly benefit they currently state in your policy - regardless of whether you were working part time or how much income you were making pre-disability. What the Standard and Principal policies state in their contract with you are what they pay.

If you're partially or residually disabled, both principal and Standard will take into account your recent earnings to determine how to pay out a claim for partial disability. If you're working part time, you could receive less than the stated monthly benefit of your respective policy, simply because a payout based on a percentage of your current income could be less than the stated monthly benefit amount.

How do Principal or Standard know your current income or have info to make such a calculation? Principal requests updated financials at a minimum of every 3 years with their benefit update. Standard does similarly. Your current advisor should be updating your financials on both policies. For example, our office does this for our clients annually in a 15-minute review. If you have a major life change such as dropping to part time, your disability policies should be reviewed with the professional managing them for you so you can be informed about how the policies will respond at time of claim.

 

Hope that helps,

TMT