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- Elimination Period—This type of period is also known as a time deductible. Before you are eligible to file a claim for benefits, a specific number of days have to pass after you are considered unable to work. The time frame ranges from 30 days to 180 days. The applicant selects the time frame during the application process. The length of the time frame will affect the premium. The shorter the length of the elimination period, the higher the premium. The standard elimination period is 90 days. {long-term care key terms are numbered but here the terms are bulleted-Jill}
- Benefit Period—The length of time the policy holder will receive the benefit after being approved for a claim. The benefit period is selected by the applicant during the application process. The benefit period ranges from a minimum of 2 years, up to age 67. The length of the benefit period will affect the premium and the amount of the benefit received.
- Own Occupation Rider—Under their own occupation definition, disability is defined as a policy holder’s inability to perform any or all the duties of their specific occupation at the time the disability begins. The policy holder’s occupation is defined as their specialty.
- Any Occupation—Under any occupation definition, disability is defined as a policy holder being unable to work in any occupation. If a pharmacist is unable to perform the duties of their specific occupation, but they are still able teach or work in another field such as retail, then they are not considered disabled.
- Presumptive Disability—This type of disability is a severe condition that automatically qualifies a policy holder for disability benefits whether or not they work. Generally, conditions that are considered to be presumptive disabilities include the following:
- Loss of or loss of use of any two limbs
- Total and permanent blindness in both eyes
- Total loss of speech
- Total loss of hearing in both ears
- Partial Disability Benefits—The policy holder can perform some, but not all, of the essential duties of their occupation. Generally, the partial disability benefit is 50% of the total disability benefit. Partial disability benefits are paid for a relatively short period, commonly three or six months. An individual may qualify for these benefits either as a result of experiencing a partial disability illness or injury and returns to work in a reduced capacity.
- Residual Disability Benefits—Benefits are paid when the policy holder cannot perform some of the duties of their occupation and are based on the amount of income lost rather than 50% of the total benefit.
- To receive residual disability benefits, the policy holder’s earnings must be reduced by a stated percentage due to the disability. If the reduced income is less than the stated percentage, no benefit is payable.
- If the earnings meet or exceed the stated percentage, then the loss is multiplied by the total disability to determine the benefit payment.
- Example: Michael Scott has a $1,000 monthly benefit with a stated residual disability benefit percentage of 20%. Michael’s earnings are reduced by 60% due to a disability. Michael will receive 40% of the monthly benefit, or $400.
- Recurring Disability—The provision protects employees who return to work but become disabled again for the same or related cause. If the disability has a recurrence within a certain period of time, then the policy holder is still considered disabled from the original disability and is not subject to a new elimination period.
- Cost-of-Living Adjustment Rider—Inflation will impact the purchasing power of disability benefits over time. The benefit received by a policy holder is increased automatically to match increases in the Consumer Price Index (CPI). Typically, cost-of-living adjustments are made every 12 months for as long as the policy holder receives disability benefits.
- Non-Cancelable Rider—A rider that states that the insurance company cannot cancel coverage except for nonpayment of premiums. Additionally, the insurance company cannot raise premiums.
- Return of Premium Rider—The insurance company returns a predetermined percentage of premiums paid after a specified period of time if benefits have not been paid.
- Future Purchase Option Rider—This rider allows policy holders to buy additional amounts of disability income insurance coverage at stated future times. The policy holder does not have to provide a medical assessment. The rate for the additional coverage will be based on the policy holder’s age at the time of purchase, not the age when the policy was originally issued.
- Automatic Increase Benefit Rider—This increases your monthly benefit for the first four to five years you own the policy, with no additional underwriting, to cover normal pay increases without any underwriting needed to justify the increase. The increase is optional and can be declined annually. If you choose to increase your benefit, your premium also increases.
- Student Loan Rider—Depending on the carrier, the policy holder can have their student loan payments covered up to a maximum period while they are disabled and receiving benefits.