Disability insurance for pharmacists

Submitted by Anonymous (not verified) on Tue, 09/21/2010 - 11:23

I've heard of disability insurance for surgeons and dentists. Is there any such coverage available for us pharmacists? I'm 50 years old and have DI worth 50% through my employer.

Posted: 22 Sep 2010 12:36 Post Subject:

Apparently you already have it in group form. It will probably be convertible, without qualification, to an individual policy if you leave your employer. But it will be more expensive.

50% is pretty low. Most DI policies start at 60%, and 70% is not uncommon. More than 70% is very expensive, if you can even find it.

Posted: 24 Sep 2010 01:56 Post Subject:

Max, mainly, I just have fun arguing with you, so let me pooint out that you didn't answer his question.

Mr. Pharmacist, yes coverage is available for pharmacists. If you are working because you need income, it is time to explore disability coverage.

Max, even if a policy is convertible, (and I actually think that most group policies are not) the typical group policy is pretty bad and doesn't offer enough coverage.

Posted: 24 Sep 2010 02:09 Post Subject:

Uh yeah Max, that was not you at your best moment...

To the OP, yes there is individual disability insurance that you can purchase. As a pharmicist typically you look for coverage that is pretty specific to your specialty--pharmacy.

Your group coverage is probably not portable, and chances it'll be convertible if you leave are low also.

50% is low, but you don't pay any more based on percentage of income coverage as Max made it sound--I don't think he really meant that, just bad wording. Price is all about the amount of monthly benefit that you purchase.

Since insurers limit the total percentage of income that is covered, the total coverage you are allowed to purchase will factor in the coverage you already have from your group policy.

It should be well noted that individual coverage is certainly not a bad idea. It's well worth having more than just half of your current income replicated if you were to become too sick or too hurt to go to work.

Posted: 24 Sep 2010 03:49 Post Subject:

Price is all about the amount of monthly benefit that you purchase.



and...
age
sex
insurance company
contractual terms
benefit period
waiting period
inflation protection
occupation class
protection of retirement plan contributions
etc.

Group coverage tends to be very cheap because the contracts usually have more holes than swiss cheese.

Posted: 24 Sep 2010 06:50 Post Subject:

Your group coverage is probably not portable, and chances it'll be convertible if you leave are low also.


Also, I guess there are group policies that need you to prove total disability and your inability to continue working prior to receiving such benefits.

Posted: 24 Sep 2010 11:33 Post Subject:

yeah Max, that was not you at your best



Perhaps not. But is it not true that group insurance is an outgrowth of individual insurance? If there is group DI insurance for pharmacists, then there is individual DI insurance for pharmacists, too. (I was probably just a bit too cynical in the tenor of my response. Happens sometimes.)

50% is low, but you don't pay any more based on percentage of income . . . Price is all about the amount of monthly benefit that you purchase.



That one I'm going to dispute . . . in part. While it's true that the maximum monthly benefit amount is a premium factor, it is not the only factor. The percentage of benefit is, indeed one of the determiners also. Especially in a group policy.

In a group policy, there may be insureds earning $50,000 per year and others earning $50,000 per month. If a policy benefit is set at 50%, the $50,000 employee's benefit will only be $2083/mo, and the chief executive's could be $25,000. So the insurer might limit the benefit for all to a maximum of $12,500 per month. That will be far more than some employees would ever be paid, and far less than 50% for the CEO. So the premium is going to be a function of "How much money might we pay out based on the actual 50% of income?" When you raise that percentage to 60%, with the same $12,500 monthly maximum, you don't increase the CEO's DI benefit one penny, but all those $50,000/year wage earners are going to get an extra $416.66 per month.

And that will definitely raise the rate per $100, even though the $12,500 has not changed.

In an individual policy, the effect is similar, but the monthly maximum also has to be raised as the percentage of compensation increases, otherwise the insured will find himself underinsured just like the CEO above.

Since the actual benefit will be based on provable income, more difficult for a self-employed person to document perhaps, raising the benefit from 50% to 60% does nothing if the monthly maximum does not cover the 60% payout. So, yes, in that sense, one's individual premium is also determined in part by the monthly benefit. But if the maximum benefit is too much more than what either 50% or 60% would be, the premium will be artificially high.

It makes no sense for a person earning $50,000 per year to have a benefit maximum so far beyond what a 50% or 60% payment would be, based on actual income, just in case their income increases in the future -- that is not "premium efficient". So the important rider to include is a guaranteed increase option, which is also dependent on provable income. 50% or 60% of income is going to be an important factor in establishing how much more benefit is needed, and will affect the total cost.

To infer that %% is not important, or not a consideration, is incorrect.

Posted: 24 Sep 2010 11:47 Post Subject:

I guess there are group policies that need you to prove total disability



Goes without saying. What insurance company is going to pay a claim without proof of loss -- for any kind of insurance?

In disability income insurance, it is far more important to be sure the definition of disability is the correct one. For a professional person, such as a pharmacist, having a policy with an OWN OCCUPATION definition is extremely important. What other work will they be able to do that provides the same kind of income they make?

And just as important is knowing whether the definition reverts to ANY OCCUPATION in the future. Most professionals would not want that to happen, so they pay a little more to get a policy that maintains the OWN OCCUPATION definition for as long as their disability lasts (or to age 65, perhaps).

Posted: 25 Sep 2010 01:01 Post Subject:

If there is group DI insurance for pharmacists, then there is individual DI insurance for pharmacists, too.



It is doubful that it is "group DI for pharmacists" that he has. More likely, he has group DI for employees of his company and he just happens to be a pharmacist.

And that will definitely raise the rate per $100, even though the $12,500 has not changed.



No. That won't raise the rate per $100. It will raise the rate simply because there are more $100's being insured.

Posted: 25 Sep 2010 01:09 Post Subject:

In an individual policy, the effect is similar, but the monthly maximum also has to be raised as the percentage of compensation increases, otherwise the insured will find himself underinsured just like the CEO above. .....


...It makes no sense for a person earning $50,000 per year to have a benefit maximum so far beyond what a 50% or 60% payment would be, based on actual income, just in case their income increases in the future -- that is not "premium efficient". So the important rider to include is a guaranteed increase option, which is also dependent on provable income. 50% or 60% of income is going to be an important factor in establishing how much more benefit is needed, and will affect the total cost.



Max, you are missing something important. Individual policies aren't written as a % of income. They are done as a dollar amount.
An insurance company isn’t going to allow someone who is making $50,000/year to buy a benefit of $10,000/month. However, if someone was making $300,000 and bought a benefit of $10,000/month and quits their job and takes a new one for $60,000, they can keep their $10,000/month policy. If they subsequently become totally disabled, they will collect $10,000/month despite having an income of $5,000/month.

Posted: 25 Sep 2010 01:16 Post Subject:

Quote:
I guess there are group policies that need you to prove total disability




Goes without saying. What insurance company is going to pay a claim without proof of loss -- for any kind of insurance?

In disability income insurance, it is far more important to be sure the definition of disability is the correct one. For a professional person, such as a pharmacist, having a policy with an OWN OCCUPATION definition is extremely important. What other work will they be able to do that provides the same kind of income they make?

And just as important is knowing whether the definition reverts to ANY OCCUPATION in the future. Most professionals would not want that to happen, so they pay a little more to get a policy that maintains the OWN OCCUPATION definition for as long as their disability lasts (or to age 65, perhaps).



Max, I believe that you may be missing the point. The emphasis isn't on "proof of loss". It is on, "total disability." Some group policies don't cover partial disability. Others require total first to get partial.

Posted: 25 Sep 2010 10:43 Post Subject:

And just as important is knowing whether the definition reverts to ANY OCCUPATION in the future.


I just couldn't figure out the difference that it causes between 'Any occupation' and 'Own occupation'. I'm sure you'll find some time and explain it to me.

Posted: 26 Sep 2010 03:24 Post Subject:

That one I'm going to dispute . . . in part. While it's true that the maximum monthly benefit amount is a premium factor, it is not the only factor. The percentage of benefit is, indeed one of the determiners also. Especially in a group policy.

In a group policy, there may be insureds earning $50,000 per year and others earning $50,000 per month. If a policy benefit is set at 50%, the $50,000 employee's benefit will only be $2083/mo, and the chief executive's could be $25,000. So the insurer might limit the benefit for all to a maximum of $12,500 per month. That will be far more than some employees would ever be paid, and far less than 50% for the CEO. So the premium is going to be a function of "How much money might we pay out based on the actual 50% of income?" When you raise that percentage to 60%, with the same $12,500 monthly maximum, you don't increase the CEO's DI benefit one penny, but all those $50,000/year wage earners are going to get an extra $416.66 per month.

And that will definitely raise the rate per $100, even though the $12,500 has not changed.

In an individual policy, the effect is similar, but the monthly maximum also has to be raised as the percentage of compensation increases, otherwise the insured will find himself underinsured just like the CEO above.

Since the actual benefit will be based on provable income, more difficult for a self-employed person to document perhaps, raising the benefit from 50% to 60% does nothing if the monthly maximum does not cover the 60% payout. So, yes, in that sense, one's individual premium is also determined in part by the monthly benefit. But if the maximum benefit is too much more than what either 50% or 60% would be, the premium will be artificially high.

It makes no sense for a person earning $50,000 per year to have a benefit maximum so far beyond what a 50% or 60% payment would be, based on actual income, just in case their income increases in the future -- that is not "premium efficient". So the important rider to include is a guaranteed increase option, which is also dependent on provable income. 50% or 60% of income is going to be an important factor in establishing how much more benefit is needed, and will affect the total cost.

To infer that %% is not important, or not a consideration, is incorrect.



I admittedly did not read this whole thing, but we are talking about individual di no?

Either way, the basis for price is not percentage of income covered, it's amount of coverage. Sure I'm going to pay more for 50% of my income if I make 100k rather than 50k

My comment was concerning this statement:

More than 70% is very expensive, if you can even find it.



I read this to mean that the higher the percentage of your income you cover the more expensive, which is superficially true, but it's no the percentage amount that is making it more expensive as this makes it sound, it's the shear amount of coverage (percentage of income is not a determining factor).

Additionally, your example of the CEO would be a highly unlikely scenario as most group LTD policies have a cap of 6-8k of total benefit (the richest I've run into when up to 16k at a hospital, though I suppose it's possible a higher benefit could exist). Alternatively there's also always multi-life DI, which is typically individual DI coverage issued on some sort of simplifies or guaranteed issue basis. This is wildly different from group LTD though.

Posted: 26 Sep 2010 03:26 Post Subject:

and...
age
sex
insurance company
contractual terms
benefit period
waiting period
inflation protection
occupation class
protection of retirement plan contributions
etc.



Correct, but you need to full context of that comment, which had to do with a basic explanation of DI pricing, which was directed at a comment that made it appear as though pricing was based on percentage of premium covered.

Posted: 26 Sep 2010 05:44 Post Subject:

Additionally, your example of the CEO would be a highly unlikely scenario as most group LTD policies have a cap of 6-8k of total benefit (the richest I've run into when up to 16k at a hospital, though I suppose it's possible a higher benefit could exist).

The agency I worked for a few years ago specialized in executive benefits. One of our clients was an oil exploration company in Texas. The CEO earned $750,000 per year plus bonuses. The group LTD policy for the executives was stated as 60% of income, and the policy maximum was $12,000. Far below the CEO's income, but close to the mark for the typical executive pay of about $250,000.

Unum offered to provide a higher limit of $20,000 / month (almost 33% of salary), but the company didn't want to pay for it. Figured they would just supplement the CEO's disability pay out of the General Fund, as if he was working -- if it ever happened.

Posted: 27 Sep 2010 06:23 Post Subject:

Max, it may just be Californial that has low caps like that. Most that I see know cap out at $10,000. Some are higher. I don't see too many that are lower any more. A cap higher than $5,000 doesn't impact the price all that much since it only impacts those making above $100,000, plus those are the ones making the decisions.

Posted: 28 Sep 2010 03:49 Post Subject:

California that has low caps like that.



California has no "caps" on private DI (workers' comp is much different). What low caps were you thinking about? The $12,000/mo or the $20,000/mo? Besides, the client was in Texas.

Posted: 28 Sep 2010 09:35 Post Subject:

California has no "caps" on private DI (workers' comp is much different). What low caps were you thinking about? The $12,000/mo or the $20,000/mo? Besides, the client was in Texas.



The low caps were from your statement, "...as most group LTD policies have a cap of 6-8K of total benefit."

I was simply pointing out that where I am, this is simply not the case, so I was wondering if this low cap thing had to do with California. Even your example of the higher cap came from a different state.

Posted: 29 Sep 2010 07:22 Post Subject:

as most group LTD policies have a cap of 6-8K of total benefit."



Sorry, but that was NOT my statement, it was a statement made by BNTRS (two posts above it) that I was replying to (I just forgot to quote it as such). I won't hold that against you.

Posted: 01 Oct 2010 02:57 Post Subject:

Max,

No doubt, but I think we need to thinking about exceptions and rules (or perhaps rules of thumb).

Sure we can find examples such as your prior company working on a case where a carrier was willing to make an offer.

Either way, our original discussion concerned the basis for cost, which I believe we have squared away, but it's been a little while since I've looked at this, and it's been a busy month.

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