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DISABILITY GLOSSARY
DISABILITY INCOME- THIS IS A POLICY FORM THAT IS DESIGNED
TO PAY AN INCOME TO AN INSURED
BASED UPON
THE INABILITY TO PERFORM THE
DUTIES OF THE
INSURED'S OCCUPATION AND / OR
A LOSS OF PRE-DISABILITY
INCOME.
THIS TYPE OF COVERAGE IS AS IMPORTANT
AS
LIFE INSURANCE, IN ORDER TO MAINTAIN
THE
INSURED'S FAMILY IN THE LIFESTYLE
TO WHICH
THEY HAVE BECOME ACCUSTOMED.
THE COST IS DETERMINED BY SOME
OF THE SAME
FACTORS (SEE ABOVE) AS A LONG
TERM CARE POLICY,
FOR EXAMPLE:
1- ELIMINATION PERIOD
2- BENEFIT PERIOD
3- MONTHLY BENEFIT
4- INFLATION RIDER
5- FUTURE PURCHASE OPTION
6- AUTOMATIC INCREASE OPTION
7- RESIDUAL BENEFIT- THIS CHANGES
THE POLICY
FROM AN "ALL OR NOTHING"
TYPE OF
BENEFIT, TO ONE WHEREBY THE INSURED
MAY RECEIVE
A PORTION OF THE BENEFIT IF THERE
IS A PARTIAL
DECREASE IN INCOME DUE TO THE
DISABILITY.
8- OCCUPATION AND DUTIES
9- NON CANCELLABLE AND / OR GUARANTEED
RENEWABLE
THERE ARE SEVERAL ADDITIONAL
DISABILITY INCOME
RELATED POLICY FORMS, NAMELY
BUSINESS OVERHEAD
EXPENSE AND DISABILITY BUY-OUT
INSURANCE.
BUSINESS / PROFESSIONAL OVERHEAD EXPENSE- THIS POLICY FORM IS DESIGNED TO PAY CERTAIN
SPECIFIC FIXED AND RECURRING
EXPENSES ASSOCIATED
WITH A SMALL BUSINESS OR PROFESSIONAL
PRACTICE.
THESE EXPENSES WILL CONTINUE
EVEN IF THE
INSURED IS DISABLED AND NOT WORKING.
THEREFORE
THIS TYPE OF COVERGAE HELPS THE
INSURED FROM
HAVING TO BORROW OR USE SAVINGS
IN ORDER
TO PAY EXPENSES. THE INSURED
WOULD WANT TO
PAY THESE EXPENSES IN ORDER TO
KEEP THE BUSINESS
GOING WHILE RECOVERING FROM A
DISABILITY.
USUALLY THE BENEFIT PERIOD IS
1-2 YEARS BASED
UPON THE FACT THAT BY THEN EITHER
THE INSURED
IS BACK TO WORK OR HAS SOLD THE
BUSINESS
/ PROFESSIONAL PRACTICE DUE TO
AN INABILITY
TO RETURN TO WORK.
EXAMPLES OF TYPES OF COVERED
EXPENSES ARE:
1- RENT
2- ELECTRICITY
3- TELEPHONE
4- HEAT
5- WATER
6- LAUNDRY, JANITORIAL, MAINTENANCE
EXPENSES
7- INTEREST ON DEBT
8- REAL ESTATE TAXES
9- DEPRECIATION
10- OTHER FIXED EXPENSES AS ARE
NORMAL AND
CUSTOMARY IN THE CONDUCT OF THE
BUSINESS
AND / OR PROFESSIONAL PRACTICE
11-SALARIES OF EMPLOYEES WHO
ARE NOT
MEMBERS OF THE INSURED'S OCCUPATION
DISABILITY BUY-OUT INSURANCE- THIS IS A POLICY FORM THAT IS DESIGNED TO
BUY OUT THE BUSINESS INTEREST OF AN INSURED
WHO HAS BEEN DISABLED FOR A SPECIFIC PERIOD
OF TIME, USUALLY ONE YEAR OR LONGER. BENEFITS
CAN THEN BE PAID OUT IN EITHER A LUMP SUM
OR INSTALLMENT PAYMENTS.
THIS POLICY FORM PROTECTS THE
SURVIVING SHAREHOLDER
/ PARTNER AS WELL AS THE SURVIVING
SPOUSE
/ ESTATE OF THE DECEASED. IN
EFFECT, THIS
IS THE SAME AS USING LIFE INSURANCE
TO BUY
OUT A BUSINESS INTEREST IN CASE
OF DEATH.
IN ALL THREE OF THESE DISABILITY
POLICY FORMS,
THE HEART OF THE CONTRACT IS
THE DEFINITION
OF DISABILITY. CAREFUL COMPARISONS
SHOULD
ALWAYS BE MADE AS TO ALL POLICY
PROVISIONS
AND EXCLUSIONS. AMOUNTS AVAILABLE
TO BE PURCHASED
ARE BASED UPON A CARRIERS ISSUE
AND PARTICIPATION
LIMITS, AND FINANCIAL UNDERWRITING
IS AN
INTEGRAL PART OF THE PROCESS.
TO ORDER PROPOSAL
GLOSSARY INDEX
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