The article below emerged in this week’s New York Times. It discusses how banks are becoming more weary of providing mortgages to potential clients where there may be a potential loss of income due to pregnancy. However, in my opinion, they are somewhat missing the mark. Pregnant people are not the only people who will potentially lose their income. Statistically speaking, people between ages 30 and 60 have a 1 in 3 chance of losing their income due to a sickness or injury. These same people who are between ages 30 and 60 are also most likely the ones who hold mortgages on their homes. (more…)
Archive for the ‘Articles’ Category
NY Times Article: Mortgage Brokers Want Guaranteed Income. Shouldn’t They Require Disability Insurance?
Thursday, July 22nd, 2010
Incontestability Clause for Life and Disability Insurance
Sunday, July 18th, 2010
When you apply for life and disability insurance, you are required to go through medical underwriting. This typically involves a paramedical exam (blood and urine test) and questions about your medical history. It is up to the applicant to answer the questions to the best of their knowledge and to fully disclose any medical conditions.
If a life or disability insurance claim occurs in the first 2 years from the initial policy date, the insurance company has the right to contest the claim if they deem there was missing or non disclosed information provided on the application. This is to protect the insurance company from people committing fraud.
For example, if a person applied for a disability policy and didn’t fully disclose they were seeing an oncologist for a lump they found on their body. Since the company didn’t have this knowledge during the underwriting process, they issue the policy. In the first 2 years, the insured files a claim for cancer. The company then re-underwrites the application and finds out that the insured didn’t disclose this pertinent fact. Had the company known there was this pre-existing condition, they would not have issued the policy. Therefore, the claim would be denied. If the insured filed a claim after 2 years, the claim would have been paid.
In the same example, assume the same person did not have any knowledge of any lumps. They apply for a policy and get approved. Within the first 2 years, the lump becomes larger and a claim ensues. The insurance company would pay this claim as the client didn’t have any knowledge at the time of application and therefore fully disclosed their medical history.
In the case of life insurance, the company may reduce the benefits at the time of claim during the incontestability period if they find out pre existing conditions were not disclosed. For instance, if the insured didn’t disclose family history of heart disease on the application and receives the best possible rates. The insured dies of a heart attack within the first 2 years of the policy date. The insurance company may go back and re underwrite the case. At this time, they may say that had they known about the family history, they would have issued the policy at standard rates. Therefore, they may pay benefits based on the amount paid assuming standard rates which would reduce the death benefit.
When applying for life and disability insurance, it is important to answer the questions on the application to the best of your knowledge. If you fully disclose your medical history and answer the questions accordingly, the 2 year period of incontestability should not be an issue for you.
For more information, please contact the Set for Life Insurance office today!
Are Own Occupation and Specialty Specific the Same for Individual Disability Insurance Policies?
Wednesday, July 14th, 2010
The most important part of an individual disability insurance contract is the definition of disability. This is the determining factor for the company to decide whether or not to pay a claim. Without a strong definition, you may not qualify for benefits when you need them the most.
Contract language can be very confusing and each company has slightly different names. For instance, some companies call the definition “own occupation” whereas another company calls it “regular occupation” and both have identical definitions.
Instead of only looking at the name of the definition, read the fine print. The most liberal definition will cover you if you can’t work in your occupation. This includes physicians working in a medical specialty. Some companies have specific language to address medical and dental specialties and some don’t. However, if the clause states it will cover you in your occupation, it would deem your medical specialty you were practicing at the time of claim to be your occupation. For instance, if you are an anesthesiologist and hurt your hands and can’t work, you would be able to file a claim because you couldn’t work in your occupation. Even if you were to then go on and do medical research, the policy would continue to pay your benefits as long as you couldn’t do the work you were doing (in this example anesthesiology) at the time of claim.
If you are a physician and changes specialties or do a fellowship in a sub-specialty, you do not need to change your contract. The company would cover you in the medical specialty you were working in at the time of claim.
For more information about policy definitions, contact the Set for Life Insurance office today.
Disability Insurance for Actors, Actresses and the Entertainment Industry
Tuesday, July 6th, 2010
Whenever I pass the checkout line at the grocery store, I can’t help but notice all of the celebrities in trouble. Many of them are in rehab for drugs, alcohol or some other kind of addiction. Some of them are fighting for their lives while getting treatment for cancer.
I often wonder whether these celebrities have properly protected their income with an individual disability insurance policy. How are they able to work when they are in rehab or on the mend? What if they were in the middle of a making a movie? Losing the ability to work as an actor can be financially devastating.
Just like traditional careers such as working as an attorney or a physician, actors and actresses can also protect their income with an individual disability income policy.
n addition to actors and actresses, Set for Life can help others in the entertainment industry protect their incomes including:
- Directors
- Producers
- Lighting
- Make-Up
- Voice Over
- Photographers
- Set Designers
- Writer
For more information, please contact Set for Life Insurance today!
What Happens To My Disability Policy If I Change Occupations or Medical Specialties?
Tuesday, June 29th, 2010
According to the US Department of Labor, the average person changes careers 5 times during their lifetime. So what happens to your disability policy when you change occupations or medical specialties?
When you purchase an individual disability insurance policy, the premium is priced based on your risk classification, including your occupation. Some occupations are deemed riskier than others. For instance, an orthopedic surgeon is considered riskier and more likely to become disabled than an attorney.
If you chose an own occupation definition of disability, your policy would cover you if you couldn’t work in your occupation or medical specialty due to sickness or injury.
This definition defines your occupation as the occupation or medical specialty you were working in at the time of claim.
Take for example someone who purchased their policy while in medical residency for general pediatrics. They would pay their premiums based on this occupational class. If they later go on to train in a riskier specialty such as pediatric emergency medicine, they would continue to pay premiums as a general pediatrician even though it would cover them as a pediatric emergency physician.
Another example is someone who purchased a policy while practicing as an attorney. They later decide to switch careers and open up a restaurant. With an own occupation policy, if they become sick or injured and can’t run the restaurant, the policy would pay benefits, even if they can go back and practice law.
For more information, please contact Set for Life Insurance today!