Short-Term Disability Insurance provides income replacement for a limited period, typically ranging from three to six months. It covers temporary disabilities caused by illness or injury, helping clients manage their finances during recovery. Short-term policies generally offer quicker benefit payouts but are limited in coverage duration and scope.
Long-Term Disability Insurance is designed to provide financial support for extended periods if the insured becomes unable to work due to a severe illness or injury. Many LTD policies offer a True Own Occupation definition of disability for the first two years. Under True Own Occupation, you’re considered disabled—and eligible to receive benefits—if you cannot perform the primary duties of your specific occupation, even if you’re able to work in a different field. This coverage is particularly valuable for specialists, such as surgeons or attorneys, who have specific skills that may not easily transfer to other roles.
After the initial two years, most LTD policies transition to an Any Occupation definition of disability. This means that to continue receiving benefits, you must be unable to perform the duties of any occupation for which you are reasonably suited by education, training, or experience. This shift in definition can impact the benefits available to insured individuals, as it’s generally more challenging to qualify for continued benefits under the Any Occupation definition.
Individual Disability Insurance policies can often maintain the True Own Occupation definition for the entire benefit period, which is especially advantageous for high-income professionals and specialists. With True Own Occupation coverage lasting through the end of the benefit period, policyholders are eligible for disability benefits if they cannot perform their specific job duties, even if they can work in another capacity. For example, a surgeon who becomes unable to perform surgery due to a hand injury could receive full benefits, even if they are capable of working as a medical consultant.
This type of coverage is ideal for individuals who want maximum protection tailored to their specific career and skills. It provides flexibility, allowing them to pursue other roles or career changes during their disability period without affecting their benefit eligibility. By maintaining the True Own Occupation definition, these policies offer enhanced income security, aligning with the financial needs and professional goals of high-skill individuals throughout their benefit period.
Business Overhead Expense Insurance covers the essential operating expenses of a business if the owner is unable to work due to disability. BOE concepts typically cover costs such as rent, utilities, employee salaries, and other fixed expenses. This concept of disability insurance is essential for business owners who want to ensure their business remains viable during a period of disability.
Executive Carve-Out Disability Insurance is a specialized concept offered on top of standard group benefits, designed specifically for management, business owners, partners, and highly compensated employees. Unlike typical group disability coverage, this concept functions much like an individual disability insurance plan, providing enhanced benefits that can cover items not typically included in group plans, such as K-1 contributions and bonuses.
Individual disability insurance is portable, meaning that if the employee leaves the company, they can take the policy with them, ensuring continued protection. Executive Carve-Out Disability Insurance is often issued on a Guaranteed Issue basis, requiring no medical underwriting. This approach makes it easier for businesses to implement the plan quickly, providing top talent with immediate access to meaningful coverage.
Offering an Executive Carve-Out plan helps businesses attract and retain key employees by providing an additional layer of financial security that goes beyond standard benefits. It’s an excellent tool for companies looking to differentiate their executive benefits package, protect key individuals, and foster long-term loyalty.
The purpose of disability insurance varies for each client. When evaluating policies, consider your client’s specific goals, insurability, financial situation, health, and occupation. Avoid focusing solely on price; often, a small increase in premiums can provide significant added value through features like True Own Occupation coverage, residual benefits, and cost-of-living adjustments. It’s essential to look beyond the surface, understand the full scope of the coverage, and ensure it aligns with your client’s needs.
Partnering with a knowledgeable insurance brokerage agency is one of the best ways to access multiple carriers and policy options. Quality brokerages work closely with carriers to design tailored solutions, which can make all the difference between finding a policy that fits your client’s needs perfectly and settling for one that falls short. The right brokerage will help you navigate the options, ensuring your client receives comprehensive and reliable disability coverage that offers confidence.
Finding a high-quality disability insurance broker is essential to securing the right coverage for your clients. Start by asking for referrals within your network or connecting with reputable organizations like NAIFA, which represents trusted insurance brokers and financial advisors.
When researching brokers, consider these key qualities:
Product Knowledge and Expertise: Are they knowledgeable about the range of disability insurance products available, including features like True Own Occupation coverage and supplemental riders?
Responsiveness and Attentiveness: Do they take the time to understand your clients' needs and respond promptly to questions or concerns?
Tech-Savvy: Are they leveraging technology to streamline the process, such as electronic applications and virtual policy management?
Strong Back-Office Support: What kind of support do they offer after a policy is submitted? Look for brokers with dedicated case managers to ensure smooth underwriting and policy issuance.
Commitment to Service: A good broker is backed by a strong team focused on client service, not just sales. Excellent service helps build long-term relationships and trust.
Ask potential brokers direct questions, such as:
How long have you specialized in disability insurance?
Who are your primary carriers, and what are their ratings?
What types of disability insurance products do you offer?
Do you gravitate toward any specific products or carriers, and why?
If You’re a Physician, Here Are Key Questions to Ask About Your Disability Insurance Policy:
Is there a Medical Specialty Definition?
This is essential for physicians, as it ensures you’ll receive benefits if you can’t perform the specific duties of your medical specialty, even if you could work in another capacity.
Understand the conditions under which partial disability benefits are paid and how they’ll support you if you’re able to work part-time or at a reduced capacity.
This rider provides additional benefits if you experience a catastrophic disability that significantly impacts your ability to perform basic daily activities, ensuring extra financial support.
Does the policy include a COLA rider? This helps your benefits keep pace with inflation, ensuring your income replacement retains its purchasing power over time.
This option allows you to increase your coverage as your income grows, without additional medical underwriting, which is ideal for physicians as their careers progress.
Understand how premiums are waived if you become disabled, and if there’s a waiver of the elimination period. This feature ensures you won’t have to continue paying premiums while receiving benefits.
Some policies offer this feature for specific conditions, which means benefits start immediately without waiting through the usual elimination period.
Check if the policy includes presumptive disability coverage, which typically pays full benefits for severe conditions, such as loss of sight, hearing, speech, or the use of limbs, without needing to meet other policy requirements.
Some policies offer additional benefits if you require hospice care. This can provide financial relief during end-of-life care.
This feature provides a lump-sum benefit if you’re diagnosed with a serious illness, offering extra support beyond your regular disability benefits.
If You’re a Resident or Fellow, Here Are Key Questions to Ask About Your Disability Insurance Policy:
In addition to the essential questions a practicing physician would ask, consider these specific questions as a resident or fellow:
Is There a Guaranteed Issue (GSI) Program Available Through My School?
A GSI program allows you to get coverage without going through medical underwriting. This can be especially helpful for residents and fellows, as it simplifies the application process and ensures coverage regardless of health history.
Some carriers offer special discounts for residents and fellows, which can significantly reduce your premium costs while you’re still in training.
Check if there’s a program specifically designed for high-earning professions that waives financial underwriting requirements. This can be especially beneficial as it allows you to obtain coverage based on your future income potential, without needing to satisfy typical income verification requirements.
Lastly, do your homework to ensure the brokerage prioritizes your client’s best interests, not just commission. A high-quality disability insurance broker will take the time to tailor coverage to your client’s specific needs, providing comprehensive protection and peace of mind.
As a brokerage general agency, Milo at Hunken Ewing Financial Group handles everything from submitting business to getting you paid. We have strong relationships with major insurance carriers, enabling us to find the ideal carrier for your client based on coverage purpose, product type, and underwriting challenges. You’ll benefit from a dedicated case manager, a knowledgeable sales team, and carrier underwriters who work closely with you to tailor solutions that meet each client’s unique needs.
Connect with us by phone, online, or in person—or schedule a consultation with your sales director today to discover how we can help you grow your business.
You have family members who depend on your income
- If you have a spouse, children, or other family members whom you support—and who would feel a financial burden if illness or injury kept you from earning income—then disability insurance can be an important source of financial protection.
You’re self-employed or a small business owner
- Without the safety net of employee benefits provided by a large employer, your ability to generate income could be severely impacted if you become disabled. Disability insurance can help you meet ongoing financial obligations.
You’re a professional with specialized skills
- If a disability took your ability to practice your specialty away, how would it impact your earning potential? Certain kinds of disability insurance, known as own-occupation policies, pay benefits if you suffer a disability that prevents you from practicing your specialized profession, even if you can do other work.
You can get coverage at work
- If your employer offers long-term disability coverage at work—or you can get it through an association—you may benefit from attractive group rates, and the underwriting (approval) process will likely be simpler than it would be for an individual policy.
The Different Types of Disability Insurance Policies – and What They’re For
All disability insurance policies are designed to help you avoid financial hardship by giving you money if you become disabled. However, not all types of disability are the same. There are different types of policies you can get:
Short-term disability insurance
- Also called STD, short-term disability coverage is for temporary disabilities. It is designed to replace 60-80 percent of your income for a short period, typically 3-6 months (and rarely more than a year), or until you get back to work.
Long-term disability insurance
- Also called LTD, this type of policy is designed to last for many years—potentially through retirement (age 65, 67, or Social Security’s normal retirement age) if needed. If something happens and you can no longer work, it potentially replaces 50-67 percent of your income (for an individual policy) or about 40-60 percent (for group long-term disability).
Social Security Disability Insurance
- Also called SSDI, this coverage is paid by your Social Security benefits. However, it is usually much more challenging to qualify for than a disability policy purchased individually or through work. SSDI applicants have a higher chance of rejection, and the monthly Social Security disability benefits are typically lower than with a private long-term disability insurance policy. That’s why specialists say you shouldn't rely on Social Security Disability Insurance as your only source of income protection.
The basic concept of disability insurance is simple: If you become sick or injured and can’t work due to a disability covered by your policy, you receive benefits. However, there are important issues that need to be clarified before you can get a disability policy. This is why it’s essential to have a mutually-binding contract with an insurance company that answers the following questions about how your disability insurance benefits will work:
What is the policy’s definition of disability?
- Some types of catastrophic injury or illness make you clearly unfit for work, but others may not be so obvious. There needs to be a clear understanding of what it means to be disabled to qualify for benefits under your policy. This may include different specific levels of disability, such as a "partial disability," along with the percentage of the total disability benefit you can receive under that definition.
- Own-Occupation or Any-Occupation?
A long-term disability policy will include this distinction in its definition of disability, and the implications are significant:
Own-Occupation: You need only be disabled from doing your current work or profession to qualify for benefits. For example, a surgeon who can no longer perform surgery would most likely qualify for benefits, even if they were healthy enough to do other work.
Any-Occupation: You qualify for benefits only if you can’t do any work. If you’re able to work in a simpler, lower-paying position, you would not qualify for the full benefit amount, and you may not be eligible for any benefit. This type of policy is typically less expensive.
- Every policy has a waiting or "elimination" period—the period you have to wait after you are disabled until benefits begin. It will generally be shorter for an STD policy and longer for an LTD policy. A longer elimination period tends to lower your premiums, while a shorter period tends to raise them.
- This is the monthly amount that will be paid to you once the elimination period has been met. Most financial professionals suggest looking to replace about 60-80 percent of your after-tax income.
- This is the maximum length of time you can receive benefits. In a short-term policy, this typically lasts 3-6 months. For a long-term policy, the benefit period could range from as little as two years to age 65, 67, or even Social Security's average retirement age (unless you recover from your disability).
- A disability policy contains fixed terms and provisions, as well as optional provisions known as riders. These may include options like a cost-of-living adjustment (COLA) rider, which ensures the insurance company will increase your benefit to account for inflation or cost of living increases while you’re receiving benefits.
The simplest answer to “How much should I get?” might be “Enough to replace all my income.” However, disability insurance policies typically replace only a portion of your income, usually ranging from 40% to 80%. Here are some factors to consider:
- Consider your monthly take-home pay and subtract any savings or discretionary spending to understand your core expenses.
- Most people spend less when they don’t work due to reduced costs for commuting, lunch breaks, clothing, and potentially taxes. You may also choose to move to a less expensive area if location is no longer tied to work.
- If you’re at home, you may be able to take on responsibilities that free up more time for your spouse to work and potentially increase their income.
- Individual LTD policies are generally bought with post-tax dollars, so the benefit is not subject to income taxes. Employer-paid coverage, on the other hand, may be taxable. Consider a supplemental disability policy to make up any shortfall.
- If you have savings or additional sources of income, such as rental property, this can supplement your disability insurance benefits.
- Add up your total current monthly expenses, then subtract any reductions in spending, income from other sources, and estimated savings. This will give you a minimum monthly disability benefit amount that aligns with your needs. Remember: Long-term disability coverage is designed to last a long time. The lower the monthly benefit you can comfortably live with, the easier it will be to pay premiums while you are healthy and working.
The Disability Income Brokerage Process begins by contracting a licensed insurance agent with an agency and appointing them with a carrier, enabling them to offer disability income insurance products to their clients. Upon appointment as a broker, we set up a personalized page for them, featuring professional photos, logos, and contact information.
We provide a secure, encrypted pre-application link that clients can fill out at their own convenience. This streamlines the onboarding process and minimizes client drop-off due to the back-and-forth for personal data. This feature alone can save brokers up to 30 minutes per application. Once the pre-application is filled out, our team transfers the data onto the official application on behalf of the broker, eliminating the need for brokers to fill out the application themselves.
Our team collaborates with brokers to select the ideal disability income carrier for each client, based on their financial goals, budget, health status, and occupation. Through this process, brokers avoid the hassle of switching between carriers to find the right fit. Our dedicated underwriters also review the client’s medical and financial records to ensure they’re matched with the most suitable carrier.
Brokers can run their own policy illustrations, but we know their time is limited. They can communicate their goals to us, and we will take care of running the illustrations.
We support brokers throughout the sales process, informing clients about policy details and assisting in closing sales. Our case managers handle administrative aspects, such as ordering medical exams and providing regular updates throughout the underwriting process to expedite approvals.
When a policy is approved, we handle delivery—either electronically or in paper form—according to client preference. For electronic deliveries, clients can conveniently make payments online.
Brokers can rely on us for ongoing policy management, including graded-to-level illustrations, assistance with filing claims, and other administrative needs. This ensures clients receive exceptional service throughout the life of their policy.
As the writing agent, brokers receive a first-year commission and vested renewals, even if they choose not to write business with us again. Based on production, brokers may also qualify for overrides.
This service is designed for insurance agents, carrier agents from all mutual and private companies., as well as independent financial advisors, investment advisors, employee benefits specialists, and Property and Casualty (P&C) insurance agents.
Disability Income Insurance: Offering a variety of disability income products to help protect clients' income in case of illness or injury. We provide business-focused solutions, including overhead expense, key person, and disability buyout insurance, to safeguard business interests. Our offerings include access to a 70 + Guaranteed Standard Issue (GSI) program for residents nationwide. Additionally, we work with carriers who specialize in executive benefits, such as multi-life disability insurance, which is guaranteed issue and can be set up either voluntarily or as an employer-paid benefit for highly compensated employees.
Carrier Access and Selection: Collaborating with multiple carriers to provide a wide selection of competitive products, ensuring brokers find the best match for each client.
Pre-Application and Underwriting Support: Streamlining the application process with a secure pre-application link and a dedicated underwriting team to review medical and financial records.
Policy Illustration and Presentation: Running policy illustrations and providing brokers with the resources to confidently present products to clients.
Sales Support and Case Management: Supporting brokers throughout the sales process, from policy education and client meetings to administrative tasks and case management.
Ongoing Policy Service and Management: Offering support with in-force illustrations, beneficiary updates, policy changes, and other maintenance needs to ensure continuous service for brokers and their clients.
Marketing and Branding Assistance: Creating personalized pages with professional branding for brokers, enabling them to present a polished image to clients and potential leads. We also provide sales ideas and marketing strategies to help brokers enter new markets and niches, driving business growth.
Commission and Compensation Management: Managing commission payments, renewals, and performance-based incentives, such as overrides or expense allowances, based on broker production levels.
Time-Saving: Our simplified pre-application process reduces back-and-forth for data collection. By allowing clients to complete their information at their convenience, brokers save up to 30 minutes per application, allowing them to focus on building client relationships and closing sales.
Customized Support: We handle data transfer, case management, and ongoing policy support on behalf of brokers. Our team assists with every step, from illustrations and medical exams to policy delivery, providing brokers with a streamlined experience.
Tailored Carrier Selection: We collaborate with brokers to find the best carrier based on each client’s specific financial goals, health status, and budget. Our underwriters carefully review medical and financial records to ensure clients receive the most suitable coverage.
Sales Assistance: Our sales support team helps educate clients on policy details, assisting brokers in closing sales with confidence. We act as an extension of the broker’s team, providing valuable insights and facilitating a smooth sales process.
Enhanced Client Service: Brokers can rely on us for ongoing policy management, including graded-to-level illustrations, help with filing claims, and other administrative needs. This ensures clients receive exceptional service throughout the life of their policy.
Future Sales Growth: We support brokers in growing their business with existing clients by utilizing future increase options. As clients' incomes rise, they have the opportunity to make additional purchases. Our system automatically markets these options to clients, enabling them to view how much more they qualify for and to see their own updated quote.
Competitive Compensation: Brokers receive first-year commissions and some of the highest renewals in the industry. Renewals from years 2 to 10 are up to 17.5%, and from year 11 and beyond, up to 14.5% for the life of the policy. We also provide access to true own occupation definitions for physicians with specialty medical language, ensuring exceptional coverage and peace of mind. Based on production levels, brokers may also qualify for additional overrides or expense allowances, further enhancing their earning potential.
Material discussed is meant for general informational purposes only and is not to be construed as a recommendation or advice. Please note that individual situations can vary therefore, the information should be relied upon only when coordinated with individual professional advice. 7200322.1 Exp 10/26
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