Personal Disability

Why Your Client Should Care

The leading cause of foreclosure and bankruptcy is disability, yet most people do not have a disability insurance policy or enough coverage to replace their monthly incomes in the event that disaster strikes.

The right candidate for personal disability insurance is anyone who does not have enough income coming in through passive investments to pay financial obligations in case of disability.

Your clients might think they are covered through their employer, but while many companies do provide long-term disability (LTD) insurance, there are issues with group LTD coverage, including:

  • Maximum amount of coverage — A group disability plan will only cover a certain percentage of an individual’s income up to a maximum monthly benefit. For example, a group plan might cover 65 percent of an employee’s income up to $10,000 a month, but what if they need more than $10,000/month?
  • Taxes — Employers will deduct the premiums they pay for group LTD coverage. The problem is that benefits become taxable to the disabled employee. As an example, that employee earning $10,000 a month who thought he or she was going to receive a $6,500-a-month benefit is actually going to receive much less after taxes.
  • Own occupation definition — the basis of a disability policy is how the disability is defined. Own occupation (or own occ) refers to a disability that affects the client’s ability to do the material and substantial duties of his or her job. Many group policies will pay benefits for an own occ disability, but will only do so for a limited amount of time, such as two years. After the own occ period expires, the policy will only continue to pay benefits if the client is unable to hold any job.

How Orion Can Make You The Hero

An Individual Disability insurance policy can help clients that do not have a disability policy now, who need better coverage due to a restrictive own occ definition or who are underinsured due to benefit limitations or taxation issues with their group LTD plan. Orion can help you identify these needs and can provide you with the best quality disability coverage available.

The leverage of premium dollars in a disability policy is truly amazing. A $100 monthly premium can literally protect hundreds of thousands of dollars in income. There is no investment or savings tool that can give that sort of return to your clients instantly. You can tell your clients that 1-2 percent of their income today can protect the other 98-99 percent for the rest of their working life.

Shaping Perceptions

Ask your client the following:

  • Would you find it acceptable to go from an executive position to any position?
  • Have you thought about the taxation issues with your group plan?
  • How would you make up the difference between your monthly income needs and what your policy would pay out?