Set for Life has been helping our family with an array of financial needs for 8 years. Back when we were starving students and starting a family, they helped us understand and outline goals for income protection, savings, college planning, and life insurance. Even though we could not afford to do it all at once, they helped us make a plan. Today, as our children are growing older and I am part of a thriving medical practice, Set for Life continues to help us with our goals. They are not only experts in their field, but they feel like friends, too.

— Dr. Willow M., Pediatrician, Anchorage, AK

Buy In Disability Insurance

When an individual is invited to become a partner in a business or a professional practice (such as a physician, law or dental practice), there is typically a period of time involving the buying in. The person buying in often times gives up a percentage of income in exchange for an equity position. If the person buying into the practice becomes disabled during the buying in period, problems can develop in the completion of the buy in agreement. The new, to be partner, is not yet a partner. Therefore, a traditional buy sell plan will not work in covering this risk. A specialty plan know as Buy In Disability Insurance can fulfill the financial obligations stated in the contract, thereby safeguarding the completion of partnership.

There are common solutions for the following:

•·        Limits as high as $50,000

•·        Medical History

•·        Risky Avocations

•·        Older Ages or Age Differences Between Partners

•·        Difficult to Insure Occupations

•·        Family Owned Businesses

•·        International Relationships

•·        Reducing Benefits From Traditional Carriers

           

Disability Retirement Protection.

What would happen to your ability to save for retirement if you were hurt or too sick to work? Most people in this situation, with no income and increased medical bills, are forced to use their savings to meet everyday living expenses. It’s important to put a fallback plan in place to ensure that money continues to be put away for your retirement even if you become disabled.

Can you afford a 42% loss to your retirement savings?

A permanent disability could disrupt your retirement savings, as shown here. If you can’t make contributions to your retirement plan, your retirement dreams may not become reality.

Retirement Protection Disability Insurance helps you continue saving for retirement in the event of a disability. If you become disabled, the policy pays a benefit in the amount of your retirement plans monthly contribution into a special trust. The money in the trust is invested at your discretion until you reach age 65 and then distributed to help supplement your retirement income. It is not a pension plan. Rather, it is a program that provides disability income insurance to ensure your ability to make retirement plan contributions until the age of 65. The goal: to provide you with close to what you could have expected from the retirement plan if you had not become disabled.

Retirement Protection Disability Insurance Features:

  • Monthly benefits up to $3,800/month
  • Coverage can be added to an existing individual or group disability insurance plan to cover more of your annual income
  • Non-cancelable, guaranteed renewable coverage to age 65, which means your policy cannot be changed or canceled except for non-payment of premiums
  • Portable, individually-owned coverage
  • Tax-free benefits (when premiums are paid by the insured with after-tax dollars; investment earnings within the Trust are taxable)
  • Underwriting is usually minimal and may not even require a paramedical exam.

Severance Disability 

An interesting problem develops when a termination of an employee involves a severance package and part of that package is the requirement to continue certain employee benefits such as their Long Term Disability Insurance. The human resource departments often times get these calls and panic when they realize they cannot perform as promised since they can no longer keep the terminated employee on the group LTD plan. Securing an individual plan is not available option since the person is currently unemployed.

 From the firm’s perspective: This situation has now placed the firm at risk for a significant liability should the terminated employee become disabled. The firm would have to fund the disability benefits themselves and this could be into the hundreds of thousands or even millions of dollars. The firm would have to book this liability as if the benefit will be fully payable.

 From the terminated employees perspective: While an individual is between jobs, the need for disability insurance continues to be very important. This may sound contrary to logical thinking, but consider the consequences of having a disability during unemployment. How will they continue to run their household, pay the mortgage, medical bills, etc?

 

To make matters worse, the disabled worker most likely now has a pre-existing medical condition which would preclude them from being able to purchase an individual policy.  The medical condition or physical limitation could also cause potential employers to deny employment leaving the individual with few options. 

The solution is a severance disability policy to help cover this risk.