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When it comes to purchasing “Own-Occupation” disability insurance, physicians have several companies to choose from including:
While many of the provisions in each policy are similar, there are some distinct differences between them that may influence which policy is most appropriate per specialty.
Occupational Classification and Pricing
Proper classification of your occupation or medical specialty is of primary importance in determining the premium rate that you will be charged by the insurance company. Generally, the higher the occupational classification assigned to your profession, the lower the premium rate. It is also important to note that different insurance companies may assign a different occupational class to the same occupation and, as a result, the premium rate may vary greatly from one company to another
Premium Structure
Berkshire (Guardian) offers both level and graded premium structures. Graded premiums gradually increase, and level premiums stay the same. The pay structure can be converted from graded to level without having to go through additional underwriting. MetLife offers a “term” disability insurance premium to lower your initial premium outlay. You can then convert from a graded or “term” premium structure to one with a level premium rate when you can more easily afford to pay a higher premium, Principal does not offer a graded premium option neither does MassMutual
Non-Cancelable and Guaranteed Renewable
Generally, any policy purchased should be both Non-Cancelable and Guaranteed Renewable (premiums can’t be raised and contract can’t be changed) instead of just Guaranteed Renewable (contract can’t be changed). While most companies include these provisions in their policies, others such as Standard Insurance Company sell policies that are just Guaranteed Renewable. Standard’s base policy is guaranteed renewable and the non-cancelable rider must be purchased in order to guarantee both the policy provisions and premium rates. Berkshire (Guardian)’s policy is a non-cancelable and guaranteed renewable policy. Otherwise, the insurance company reserves the right to change the premium rates as long as the change applies to all policies with similar benefits insuring the same risk class, although changes have to be approved by the state insurance department.
“Own-Occupation” Definition of Disability
Berkshire’s (Guardian’s) policy is very straightforward, at the time the application is taken, you state your occupation. Standard’s Protector Platinum policy series contain this definition as part of the base policy. However, in the Protector+ policy series, it must be selected (along with the purchase of the non-cancelable rider or it is not available). You must purchase the “Your Occupation” Rider with MetLife’s policy. You must purchase the “Regular Occupation Rider” with Principal’s policy. You must purchase the “Own Occupation” Rider with MassMutual’s policy. However, generally, the “Own Occupation” Rider is not available to Neurosurgeons, Orthopedic Surgeons, Anesthesiologists, Emergency Medicine Physicians and Thoracic Surgeons.
Residual Disability Rider
Most companies require a loss of income of at least 20% compared to your pre-disability income in order to qualify for residual disability benefits. Berkshire Life (Guardian) only requires a 15% loss of income. Generally, for the first six months of a residual disability claim, you will not receive less than 50% of your monthly benefit. This is not the case with MassMutual’s policy as they will not pay less than 50% of the monthly benefit for the first 12 months of a residual disability claim. Also note that Standard’s Protector Platinum policy series will pay 100% of the base monthly benefit, regardless of your earnings, for the first six months of a residual disability.
Berkshire’s (Guardian’s) policy series will provide dollar for dollar reimbursement to a claimant for the first 12 months of a residual disability claim. For example, if prior to your disability, your income was $20,000 month and you are now earning $10,000 month, you have lost $10,000 of income during that month. As a result, for that month, Berkshire would pay 100% of your income loss ($10,000) up to 100% your policy’s monthly benefit. After the first 12 months of a residual disability claim, benefits would then be paid proportionate to your loss of income.
MassMutual’s Residual Disability Rider is referred to as the Extended Partial Disability Benefit Rider. Standard’s Protector Platinum policy series includes the Residual Disability Rider as part of the base policy and it is referred to as the Partial Disability Benefit.
Recovery Benefits
A recovery benefit continues to pay benefits (in the same fashion as the residual disability rider) if you return to work on a full-time basis with no loss of time or duties but continue to suffer a loss of income. If there is a demonstrable relationship between your current loss of income and your prior disability, most companies will continue to pay benefits to age of 65 or longer as long as the required income loss is met. Other companies limit these types of claims – even if the loss of income continues. Companies with limited recovery benefits include MetLife (24 or 36 months if the recovery benefit is purchased as part of the residual disability rider) and policies issued in Standard’s Protector+ policy series.
When it comes to purchasing “Own-Occupation” disability insurance, physicians have several companies to choose from including:
- Berkshire Life (Guardian)
- MetLife
- Principal
- MassMutual
- Standard Insurance Company
While many of the provisions in each policy are similar, there are some distinct differences between them that may influence which policy is most appropriate per specialty.
Occupational Classification and Pricing
Proper classification of your occupation or medical specialty is of primary importance in determining the premium rate that you will be charged by the insurance company. Generally, the higher the occupational classification assigned to your profession, the lower the premium rate. It is also important to note that different insurance companies may assign a different occupational class to the same occupation and, as a result, the premium rate may vary greatly from one company to another
Premium Structure
Berkshire (Guardian) offers both level and graded premium structures. Graded premiums gradually increase, and level premiums stay the same. The pay structure can be converted from graded to level without having to go through additional underwriting. MetLife offers a “term” disability insurance premium to lower your initial premium outlay. You can then convert from a graded or “term” premium structure to one with a level premium rate when you can more easily afford to pay a higher premium, Principal does not offer a graded premium option neither does MassMutual
Non-Cancelable and Guaranteed Renewable
Generally, any policy purchased should be both Non-Cancelable and Guaranteed Renewable (premiums can’t be raised and contract can’t be changed) instead of just Guaranteed Renewable (contract can’t be changed). While most companies include these provisions in their policies, others such as Standard Insurance Company sell policies that are just Guaranteed Renewable. Standard’s base policy is guaranteed renewable and the non-cancelable rider must be purchased in order to guarantee both the policy provisions and premium rates. Berkshire (Guardian)’s policy is a non-cancelable and guaranteed renewable policy. Otherwise, the insurance company reserves the right to change the premium rates as long as the change applies to all policies with similar benefits insuring the same risk class, although changes have to be approved by the state insurance department.
“Own-Occupation” Definition of Disability
Berkshire’s (Guardian’s) policy is very straightforward, at the time the application is taken, you state your occupation. Standard’s Protector Platinum policy series contain this definition as part of the base policy. However, in the Protector+ policy series, it must be selected (along with the purchase of the non-cancelable rider or it is not available). You must purchase the “Your Occupation” Rider with MetLife’s policy. You must purchase the “Regular Occupation Rider” with Principal’s policy. You must purchase the “Own Occupation” Rider with MassMutual’s policy. However, generally, the “Own Occupation” Rider is not available to Neurosurgeons, Orthopedic Surgeons, Anesthesiologists, Emergency Medicine Physicians and Thoracic Surgeons.
Residual Disability Rider
Most companies require a loss of income of at least 20% compared to your pre-disability income in order to qualify for residual disability benefits. Berkshire Life (Guardian) only requires a 15% loss of income. Generally, for the first six months of a residual disability claim, you will not receive less than 50% of your monthly benefit. This is not the case with MassMutual’s policy as they will not pay less than 50% of the monthly benefit for the first 12 months of a residual disability claim. Also note that Standard’s Protector Platinum policy series will pay 100% of the base monthly benefit, regardless of your earnings, for the first six months of a residual disability.
Berkshire’s (Guardian’s) policy series will provide dollar for dollar reimbursement to a claimant for the first 12 months of a residual disability claim. For example, if prior to your disability, your income was $20,000 month and you are now earning $10,000 month, you have lost $10,000 of income during that month. As a result, for that month, Berkshire would pay 100% of your income loss ($10,000) up to 100% your policy’s monthly benefit. After the first 12 months of a residual disability claim, benefits would then be paid proportionate to your loss of income.
MassMutual’s Residual Disability Rider is referred to as the Extended Partial Disability Benefit Rider. Standard’s Protector Platinum policy series includes the Residual Disability Rider as part of the base policy and it is referred to as the Partial Disability Benefit.
Recovery Benefits
A recovery benefit continues to pay benefits (in the same fashion as the residual disability rider) if you return to work on a full-time basis with no loss of time or duties but continue to suffer a loss of income. If there is a demonstrable relationship between your current loss of income and your prior disability, most companies will continue to pay benefits to age of 65 or longer as long as the required income loss is met. Other companies limit these types of claims – even if the loss of income continues. Companies with limited recovery benefits include MetLife (24 or 36 months if the recovery benefit is purchased as part of the residual disability rider) and policies issued in Standard’s Protector+ policy series.
