Much has been published on the need for protection against a disabling injury or illness–and for good reason.
Over the past year or so, there has been significant national coverage regarding increasing obesity rates in the United States. This leads to such medical conditions as diabetes, heart disease and stroke–all leading causes of disability. In addition, with advancing age, people are more likely to suffer a medical condition that leads to inability to perform work requirements.
The risk is not insignificant. Roughly 43% of people who are age 40 are expected to have a long-term disability event (at least 90 days) before age 65, according to the “2005 Field Guide to Estate Planning, Business Planning & Employee Benefits,” published by The National Underwriter Company, which also publishes NU.
Many traditional group and individual disability insurers may feel the market for their products is fully penetrated, maybe even saturated. This may be a reality when it comes to certain industries or occupations. However, there is a segment of the market whose needs are not met with these “traditional” products. Herein lies the opportunity for new approaches.
One such approach is to use a disability income rider. Such riders are sold in conjunction with individual life insurance policies.
This product enhancement is typically targeted to individuals with limited access to group insurance coverage or to those who are never approached by traditional DI producers. The coverage offered by a DI rider is typically more limited than that of a traditional DI policy. It has a lower income replacement ratio and a shorter benefit duration period, for example. Otherwise, the coverage is similar in many aspects to that offered as part of a traditional group disability plan.
The application process for a DI rider policy is fairly simple. The individual life insurance application is used as a starting point to determine the individual’s qualification for the DI rider. When a candidate for DI rider coverage is identified, additional questions typically are asked.