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Traditionally, disability income policies do not pay more than the monthly benefit amount stated in the contract.

But some insurers are deciding that additional benefits might be helpful–and necessary–in certain situations, so they are offering features to meet that need. One example is the retirement contribution feature discussed in the accompanying article.

Another example is a DI feature that pays an extra benefit if the insured suffers a disability of catastrophic proportions. MetLife rolled out such a contract early this year.

Called a catastrophic disability benefit rider, the feature can be added to MetLifes Omni Advantage, Essential and Select DI policies. It provides an additional monthly benefit if the insured suffers catastrophic disability. The insured may use the money for any purpose, says the New York insurer.

What is a catastrophic disability? It would be the most serious of disabilities, says Robert McNichol, a financial planner with MetLife Securities Inc. in Cincinnati, Ohio.

“Examples include becoming unable to see, walk or communicate,” he says. “This includes cognitive dysfunctions but not mental or nervous conditions.” The insured does not have to lose the ability to perform activities of daily living such as dressing or eating.

By comparison, the base policy has a “very different definition of disability.” McNichol says.

The rider can be written for up to 100% of the insureds monthly income, subject to underwriting guidelines. Maximum issue amount is $8,000 a month.

The coverage functions like accident insurance, McNichol says. “We probably will not see a lot of use of this feature,” he says, but when a qualifying disability occurs, it can be very helpful to the insured.

The target market is the white-collar individual who may at one time have seen himself or herself as invincible but who now sees this is not so, says the planner.

The cost varies but might run perhaps three to five dollars a month. “For the price involved, it provides a lot of potential benefit,” McNichol contends.


Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.