How well does your income protection policy protect your income?
Many employers and their employees believe they have some sort of group income protection policy in place which may or may not be true. The challenge is knowing how much and how well it will replace their income if they’re too sick or too hurt to work for any extended period of time.
According to the Council for Disability Awareness, most people understand that people can be sick or hurt and not be able to work as long or as effectively for an extended period of time — they just don’t think it will happen to them. If you are part of a group of 5 or more employees, there is a 90% chance that one or more in your group will need to use this valuable benefit. Next to health insurance, this is probably the most valuable benefit you will use.
Talk to your clients and help them understand where their policy lands on the income protection scale by having them answer the questions below.
Income Protection Guide
Use this checklist to test your knowledge of how well your present benefit would protect your most valuable financial asset: Your ability to produce an income.
For each “Yes” answer, score 2 points. If you are unsure, or answer “No,” score 0 points:
- Is your Insurance Company’s Comdex Rating* a 90 or above?
- Does your Policy’s definition of “Income” not only include your base wages, but also include your commissions, dividend, K-1 Income, bonuses, and overtime that you get paid for?
- Have you updated incomes with the insurance company for all covered employees, including yourself, in the last year?
- Have you provided the benefit to all eligible employees, including new hires since the policy was put in place?
- Does your Policy’s definition for total disability include your specific professional specialty for the benefit payment to you?
- Does your Policy’s definition of Residual or Partial Disability not require a period of total disability first before you are paid?
- Is the benefit paid to you free of any Federal, State, and FICA taxes?
- Is the benefit paid to you regardless of any individual income protection policy that you may have or want to include in the future?
- Is the cap on the benefit high enough to provide you the full benefit you qualify for?
- Is your benefit portable, so that you can take it with you if you were to leave your present employment?
So, how well did you do?
If your score is 16-20, you probably have a great policy, but still may not have all the benefits that you rightfully deserve, such as a benefit that doesn’t coordinate with potential Social Security or Worker’s Comp benefits. It may also not have a Cost of Living increase to keep your benefit up with inflation.
If your score is 10-14, you probably have a good group policy, but there are some definite deficiencies that need to be addressed to have the fullest benefit that you may believe that you already have.
If your score is below 10, it’s definitely time to review your current policy. It may not give you the income that you need at the time that you need it most.
In any case, it is probably worth your time to sit down with a Group Benefits Disability Specialist (GBDS) to review your current coverage. This should include reviewing what you want your policy to do for you, as well as what you may not be aware that it should do for you.
*Not sure what a Comdex Rating is? Contact us and we’ll tell you why it’s important to know.
