Shopping Tips
Best Disability Insurance
Shopping Tips
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Choose by Strength of Contract
You will find this statement throughout this website. This is what decides whether you get paid a benefit check or not! Know the contract and its features for the company you are selecting.
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Disability Insurance Companies – Comparison by Contract Features (updated 09/01/2013) 
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You Get What You Pay For!
When it comes to disability insurance, it’s not as black and white as life insurance in regards to whether or not you will be paid your benefit. In regards to a contract that you buy, value quality over price.
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Cheaper is usually not better with disability insurance carriers because it likely means the company does not intend to pay claims, and their contract language will reflect this with built-in loopholes.
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Before you buy from any company, be sure that you clearly understand the contract.Expect to pay between 1%-4% of your income for a quality disability insurance policy contract.
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Consider Company Ratings
You want to make sure your disability insurance company will be around in the event you need to be paid a benefit. Choose a company with ratings at least “A+” or better with A.M. Best.
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Disability Insurance Companies – Comparison by Financial Strength (update 06/01/2011)
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Be Cautious of Group Plans
- Group plans can be changed or canceled at any time. This could leave you without coverage when you need it most.
- Most group plans cannot be taken with you if you switch employers. If your health changes and you need to change jobs, this could leave you without coverage.
- Most group plan benefits are taxable and do not cover bonuses, which leaves you with a lower net after-tax benefit.
- Group plans have a benefit cap (some as low as $5,000 per month).
- Many group disability plans have a restrictive definition of disability. These plans require you to be COMPLETELY disabled before they pay a benefit. In other words, if you have the ability to do any type of work, benefits may not be payable.
- Benefits are typically reduced by income received from workers comp, social security, and other income sources.
- Most group policy benefits do not keep pace with inflation.
- Many group plans do not cover a partial disability (which is the most common type of disability).
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Be Cautious of Association Plans
In virtually all cases, association plans are group plans. Be sure to read the master association contract (not just the marketing piece they give you) so you can understand all of the contractual provisions.
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Buy from a Specialist and a Broker
There is a lot to understand about disability insurance contracts and the different companies in the marketplace. Most insurance agents do not know how the contracts work. Out of those who do, they usually only know the contract of the company they primarily represent. Very few agents know about all of the various contracts in the marketplace. Seek out a disability insurance specialist that is a broker who offers more than just one company’s point of view and offers you objective advice.
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Ask About Special Multi-Policy Discounts
With some carriers, three or more people in the same company who buy disability policies can get a discount, and can save nearly 50 percent per year when they buy their policies together. Also, if you buy disability insurance and life insurance from the same company there is often a discount applied, at least for the first year. Some general industry discounts include:
- Student/Resident Discount: Available to students and residents affiliated with a school or hospital.
- Professionals Group Discount: Available to groups of 3 or more employees of the same medical practice or clinic.
- Voluntary Income Protection: For business owners who want to provide income protection to their employees at no expense to the business.
