note information in this presentation is derived from insurance for dummies by jack hungelmann. i...
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![Page 1: Note Information in this presentation is derived from Insurance for Dummies by Jack Hungelmann. I highly recommend this book](https://reader036.vdocuments.net/reader036/viewer/2022070400/56649f0d5503460f94c21666/html5/thumbnails/1.jpg)
Note
Information in this presentation is derived from Insurance for Dummies by Jack Hungelmann.
I highly recommend this book.
![Page 2: Note Information in this presentation is derived from Insurance for Dummies by Jack Hungelmann. I highly recommend this book](https://reader036.vdocuments.net/reader036/viewer/2022070400/56649f0d5503460f94c21666/html5/thumbnails/2.jpg)
Before age 65, you are three times more likely to become disabled for six months or more than die
Odds of suffering a disability that lasts 90 days or more before the age of 65: 1 in 8Source: www.ricedelman.com
Someone age 45, has a 1 in 4 chance of suffering a long-term disability before age 65Source: www.ricedelman.com
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Age Death Long Term Disability
25 24.1% 34.8%
30 23.5% 33.1%
35 22.8% 31.3%
40 21.8% 29.1%
45 20.4% 26.3%
50 18.3% 22.6%
55 14.9% 17.6%
60 9.3% 10.6%
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Review the prior statistics
Severe Example from www.ricedelman.com Say, a 35 year old is disabled and collects
$2,000 per month for 30 years.
The Insurance company would pay out $720,000 over time
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What percentage of income is paid? usually 60-80 percent
What is the benefit period/length of coverage? e.g., to 65, five years
What is the definition of disability? “any occupation” vs. “own occupation”
Total Disability vs. Residual Disability?(discussed later)
What is the elimination or waiting period? (discussed later)
Is the policy “noncancelable”? Is the policy “guaranteed renewable”? (discussed later)
What steps are required to prove you are unable to work?
Is there a “cost-of-living” rider? Is there a future purchase option?
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Living Expenses
PLUS
Add 10-20% because expenses may increase when you have a disability
________________________________________Note 1: Insurance companies often limit
coverage to 80-90% of take-home pay.Note 2: Social security disability is difficult
to qualify for, so ignore it in your planning.
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Typically 2, 5, to age 65, or rest of your life
Considerations Many disabled people recover within 5
years Risk if you are one of the unlucky
individuals who have a lifetime disability Your other resources
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Total Disability: policy only covers you if you cannot work at all– so, if you can work a few hours a week, your disability insurance would not “kick in”.
Residual Disability (recommended): receive proportional coverage if you are unable to work full-time
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Typical choices: 30, 60, 90, or 180 days
Considerations Employer package regarding sick days
and so forth Your safety net– how much savings do
you have?
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Noncancelable: cannot raise the premium to age 65
Guaranteed Renewable: can raise the premium, but cannot single you out based on your personal situation
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Provides the opportunity to purchase additional insurance in the future regardless of your health– no physical exam or application required
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Usually no cost of living increase
Many cover only total disabilities, not partial or residual benefits
Group benefits are taxable