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A man works on a laptop with crutches in the foreground from a long term disability injury.

5 Things to Look for in Long Term Disability Insurance

Long term disability insurance is important for all professions. But, due to the physical, hands-on nature of chiropractic care, it's especially important for DCs. While someone with a disabling injury or illness could possibly still work at a desk job, that same condition could easily sideline a DC.

If you don’t have enough money in your emergency savings to cover lost income, you’re not alone – only 1 in 5 Americans have enough in savings to cover three to five months of expenses. And when you consider that the average duration of a long term disability is 31.2 months, it’s easy to see why this type of insurance is so important for DCS.

This is where long term disability insurance factors in. It pays monthly cash benefits to help cover bills and expenses while you are disabled and unable to collect a paycheck.

Finding the Right Coverage

While there are many long term disability insurance plans available, not all may fit your needs. Here are five things to keep in mind when you’re comparing policies.

1. Preexisting Conditions

A preexisting condition is a health issue you were being treated or advised for prior to the start of your coverage. These conditions may not be covered under your new policy for a specified period of time, which is called a preexisting condition limitation.

Some insurance companies consider routine, preventive maintenance chiropractic care a preexisting condition and exclude it from coverage for a certain timeframe. As a DC, you know the importance of this type of care and that taking advantage of this care doesn’t necessarily mean someone has a preexisting condition. Instead, it is often used to prevent injuries. Look for a long term disability insurance plan and company that understands the nature of routine, maintenance chiropractic care and does not consider it a preexisting condition.

2. Own Occupation vs Any (Gainful) Occupation

It is also important to understand what a long term disability insurance policy covers in terms of own occupation versus any occupation. An own occupation policy means you, as the policyholder, can collect benefits if you are disabled and not able to work in your chosen field of employment (chiropractic). On the other hand, with an any occupation policy, you can collect benefits if you are disabled and not able to work in any occupation you are qualified for by education, training or experience.

Most policies are a hybrid model and will have an own occupation clause that switches to any occupation after a certain length of time. Be mindful of how long the own occupation clause lasts when comparing policies. Also, most any occupation clauses should include “gainful” in the definition. This means that the occupation should allow a person to earn a certain percentage of their chosen field earnings, such as 60%.

3. Benefit Amounts

Disability benefits are paid as a monthly benefit. Plans generally list a wide range of benefit amount options. You will choose an amount based on a stated percentage of your pre-disability monthly earnings. (This is generally around 60%.)

Example

Assume your pre-disability monthly earnings are $5,000. If the disability plan you are considering will pay up to 60% of your pre-disability monthly earnings, you could apply for a monthly benefit up to $3,000.

In the event of a claim, the insurance company will typically use your last two years’ income tax returns to calculate your pre-disability monthly earnings. Therefore, it is a good idea to review your last two years’ income tax returns to make sure you are applying for a monthly benefit amount for which you are eligible.

Keep in mind that long term disability insurance is only intended to replace the income you receive from your normal occupation as a DC. This does not include:

  • Investment income
  • Rent
  • Royalties
  • Any other income not directly produced by your work as a chiropractor

Make sure you understand if you will receive the entire benefit amount, or if benefits are offset by other deductible sources of income such as Social Security, Workers’ Compensation, retirement benefits or group or individual disability payments you may receive. In addition, look to see if the benefit amount decreases when you reach a certain age.

4. Elimination Period

The elimination period is the time between the start of your disabling injury or illness and when monthly benefits begin. (Some people call it a waiting period.) Your insurance company may offer you elimination period options, such as:

  • 90 days
  • 120 days
  • 180 days

When deciding, think about how long you could cover your expenses without a paycheck.

  1. If you typically don’t have a lot of money saved up, you may want to receive benefits sooner.
  2. If you have enough to cover bills and other expenses for a while, a longer elimination period may work fine for you.

Pay attention to the difference in premiums; the shorter the elimination period, the higher the premium.

5. Benefit Period

The benefit period of a disability insurance plan is the length of time you are eligible to receive benefit payments. For long term disability policies, a variety of periods can typically be found, including:

  • 2 years
  • 5 years
  • 10 years
  • To retirement or age 65

Although less common, you may find a policy that pays benefits for life. Here again, your decision will depend on your personal financial situation, including the cost of premiums for various options.

Prepare Now for the Unexpected

Protecting your ability to earn an income with disability insurance is a wise decision. It’s better to take care of it now, because once a disability strikes, it’s too late.

Talk with your financial planner or insurance advisor as you compare plans. Once you’ve found the right policy, don’t forget to review it on occasion. You may need to make changes as your family, finances and practice needs change over time.

NCMIC offers the DC Long Term Disability Insurance Plan, issued by The Prudential Insurance Company of America, exclusively to Doctors of Chiropractic. Get more information now.

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