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The best time to get an income protection policy (or any other form of coverage) is to get it immediately just prior to a disability!

Seriously, even though that is not an inaccurate answer, the best time to get coverage is at the earliest possible moment–when it is both financially feasible and practical (even though there may not be an obvious need at the moment).

The reason is, health can change, circumstances can change, and so on.

Why, then, do people wait until it is too late to buy this valuable insurance?

One reason might be that they dont see the need for it. Another reason might be that no one told them they should have disability insurance or that this form of protection even exists. They also could have a (false) belief that they will never get disabled or that their employer will pay their expenses if they do.

To dispel some of these notions, refer to the chart on this page. It statistically points out that disability happens, even at young ages.

What happens if someone wants coverage but already has been turned down for any number of reasons and not necessarily due to health? Is the “best” time gone? No, not if the agent knows where to go for assistance and a probable solution. There are brokers who do specialize in hard-to-place cases.

In general, though, the best time to obtain disability insurance is at the earliest possible moment. As the chart shows, the sooner the better.

This is so, even if a person cant immediately afford to pay the 2% to 4% of income a plan might cost if written for the full amount and benefit period (depending on age/sex, etc.).

Consider: Most disabilities last less than 2-5 years. So, then, what is wrong with recommending that period of time as a possible (initial) benefit period? Remember half a loaf is better than none.

Besides, most DI carriers have an option that will allow the policyholder to purchase more coverage in the future, strictly based on financial underwriting (no evidence of medical insurability). Some carriers even allow all (before a certain age) or part of this option to be exercised and paid along with a current claim. This option also has other benefits.

In addition, the client will get the best cost/benefit relationship by buying sooner rather than later–because the lowest cost per $100/month of benefit is at the younger ages, assuming comparable age, ratings and other facts.

Is there a time when the coverage should be discontinued? Only when the person is either self-insured or retired before the termination date (which is usually age 65).

Dropping DI insurance for other reasonssuch as, if money is tightreally is not necessary. To lower the premium, the client can request that the coverage be reconfigured to a lower benefit amount or to a shorter benefit period. Such a change can possibly make enough premium difference to enable the client to keep the coverage in force.

Does the financial planner or agent have a responsibility to the client as far as the “best time” is concerned? You betcha! The job of these professionals is to position disability insurance as a key cornerstone of financial planning and to recommend its purchase, according to the clients needs and circumstances.

Doing this should help boost industry sales of DI insurance, as well as ensure that more American families have this critical coverage.

is a disability insurance specialist at Disability Insurance Resource Center, Albuquerque, N.M. E-mail him at info@di-resource-center.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 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.