1. A Few Minutes About the
Rest of Your Life
Your Career, Your Income
& Your Future
Material discussed is meant for general illustration and/or informational purposes only and
it is not to be construed as tax, legal, or investment advice. Disability income products
underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA,
a wholly owned stock subsidiary of The Guardian Life Insurance Company of America,
8532-08-10 New York, NY or The Guardian Life Insurance Company of America, New York, NY.
2010-8266 Products and features may vary from state to state.
2. Investment in Your Career
• Years of education & training
• $$$,$$$
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3. What Are Your Professional
and Financial Goals?
• Developing your specialty
• Building a practice
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• Purchasing a home
• Starting a family
• Accumulating assets
5. What Causes Disability?
Major Disablers Claims %
Musculoskeletal / 26.2%
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Connective edit
Cancer 15.3%
Injury/Accident 8.8%
Maternity-related 7.5%
Cardiovascular 8.9%
Mental/Psychiatric 7.8%
Neurological 6.7%
Source: 2010 Long-Term Disability Claims Review, Council for Disability Awareness
6. Income Protection:
What are Your Options?
• Employer-provided group coverage
• Professional to edit Master title style
Click association group coverage
• Individual disability insurance
7. Income Protection:
The Important Questions
• Can the insurer…
– cancel coverage?
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– modify the terms of coverage?
– raise my premiums?
• Am I protected in my specialty?
• Can I obtain adequate coverage?
• Can it be tailored to my needs?
• Can I carry it with me?
8. Group Disability
Insurance Plans
Typical Employer-sponsored Group Plan
Basic protection: 60% of income, subject to a cap
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Benefit is offset by government programs
Coverage can be modified or cancelled
Costs are not guaranteed
You don’t own the coverage
May not adequately protect you in your specialty
9. Association Coverage
• You purchase a set benefit
• Insurer can modify or cancel coverage
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• Costs are not guaranteed
• Limited optional benefits
• May not adequately protect you in your specialty
10. Individual Disability
Insurance
• Most generous level of benefits
• Broad array to optionsMaster title style
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• Policy individually owned
11. Key Benefits to Look For
• Non-cancellable and guaranteed renewable
• True “own-occupation”Master title specialty
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language for medical professionals
12. Details to Consider
• How long do I want to wait before benefits
begin?
• HowClick towant benefits to last?
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• How much benefit can I get?
13. Details to Consider
• Am I protected if partially disabled?
• What happens when I recover, but continue to
have a loss of edit Master title style
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• Can I guarantee my right to increase coverage
in the future?
• Will my benefit keep pace with inflation when
I’m disabled?
14. Why Now?
• You’re young and healthy
• Low premiums
• Guarantee your right to Master title style
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maximum coverage
15. Special Issue Amounts for
Medical Residents
• Monthly benefit: $5,000
• Future Increase Option: $11,000
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Plus…
• Catastrophic Disability Benefit: $5,000
Note to Presenter This is a 20 - 30 minute presentation intended for use with a group of medical residents. It is ideal for use with a small group of prospects invited to an informal “lunch and learn” session. Text in bold italics indicate items to be spoken by the presenter. Welcome the attendees and thank them for being there. Briefly introduce yourself and your agency. We will spend the next few minutes considering your income and the importance of protecting your income in the event that sickness or injury prevents you from working. As physicians, you are going to be approached by many financial service professionals, because, let’s face it, you have high income potential and needs for financial services. Our objective today is to help you become educated consumers in the critical area of protecting your income potential. You might use the Seminar Evaluation Survey (7126). It is available at www.berkshirelifetools.com (Marketing and Training Center>Presentations and Sales Materials>Consumer Seminars). The Survey gives you useful feedback, and is also a tool for the attendees to give you their contact information and indicate if they want to discuss the topic further.
You have worked hard investing in your career with years of education, medical school, and specialized training. There is no doubt that you have also invested a great deal financially.
You’re looking forward to having a life after residency… It’s only natural that you begin to think about investing in your future – asking yourself questions about where you want to be, goals that are meaningful to you, and how to form an intelligent plan to achieve those goals. Your goals may include things like… Developing your specialty Building your practice Purchasing a home Starting a family Accumulating assets Achieving your goals will require both money and a sound financial strategy, wouldn't you agree?
We could picture a financial strategy as something like a pyramid. We save and invest with the aim of building assets for the future. What many overlook is that the entire pyramid rests on a foundation: your ability to practice your profession and earn an income. Since income is the foundation of your financial strategy, doesn’t it make sense to protect that income if illness or injury prevents you from practicing?
Most people have trouble picturing themselves as “disabled” – and we think, “It won’t happen to me.” One reason is that we associate disability with catastrophic injury, for example being confined to a wheel chair. These are rare, so we don’t feel vulnerable. The reality is that most serious disabilities are caused not by injuries, but by illness . This chart shows the top causes of new long-term disability claims filed in 2009. Less than 9% of claims were due to injuries or accidents. The vast majority of long-term disability claims as reported by insurers result from illness. Illness happens to those who are young as well as old. You no doubt have seen, even among relatively young people, conditions such as stroke, cancer and multiple sclerosis.
The question is: If you become sick or injured and cannot practice for an extended period of time, what are your options? You currently have group long-term disability coverage through the hospital. This is meant to cover you in case of disability while you are here. Once you go into practice you will have other options, such as employer-provided group coverage, or you may participate in a group plan sponsored by a professional association – including national, state or local associations. There is also individual disability insurance. Note to Presenter: You must be familiar with the residents’ current group plan when presenting this section.
When considering the options in an income protection policy, there are some important questions you should ask: Can the company cancel my coverage? Can the company modify the terms of my coverage? Can the company raise my premiums? Will I be protected in my specialty? Can I get adequate coverage? Can coverage be tailored to fit my needs? Can I carry my coverage with me if I leave this position?
As I mentioned, you currently are participants in the hospital’s group long-term disability plan. As you enter practice, you may be given the opportunity to participate in an employer-sponsored plan. In general, group plans are designed to provide a basic level of disability coverage at a modest cost and with minimal underwriting. A typical group disability plan covers up to 60% of your income. Some cover as much as 66 2/3%. However, benefits are generally subject to a cap e.g. $5,000 - $10,000 per month, which may leave you underinsured. Typically the benefit payable under an employer-sponsored group plan is offset by payments from government programs such as Social Security disability benefits. With group coverage, the level of benefit and coverage requirements are determined for you, and they can change. Also, coverage under the plan can be modified by the insurer or cancelled altogether. Costs are not guaranteed for more than a year or two. The rate that individuals within the group pay rises with age (typically in five-year bands, e.g. age 40-44, 45-49, etc.). Note also that, if the employer pays for coverage under the plan, benefits are taxable, reducing their value. You do not own the coverage. This means that if you leave the employer you can’t take coverage with you, though you may have a limited right to convert the coverage to an individual plan. The primary weakness of group coverage is that you may not be adequately protected in your occupation or specialty.
You will also become eligible for disability coverage through a professional association. For example, the American Medical Association sponsors such a plan, as do many local and state medical associations. Association plans do require medical underwriting. Here is how they work: You purchase a set monthly benefit, e.g. $5,000 per month. The insurer often may be able to modify benefits or cancel coverage. Costs are not guaranteed, and the rates you pay increase with age, e.g. in five-year bands. The range of optional benefits, such as cost of living protection, is limited. And again, you may not be adequately protected in your specialty. Note to Presenter: You must be well versed in the American Medical Association Plan. Competitive information is available at www.berkshirelifetools.com.
Individual disability insurance may offer the most generous level of benefits, plus a broad array of policy options to tailor coverage to fit your specific needs. The policy is owned by you, which means that you can take the coverage with you, regardless of where you practice. You must qualify financially and medically for an individual disability insurance policy.
There are differences among individual DI policies. The best policies are: Non-cancellable and guaranteed renewable. This means that the coverage cannot be cancelled or modified for the term of the contract (typically age 65) as long as you continue paying the premiums. (The policy can be renewed after age 65 if you are working full time.) Additionally, your premiums are guaranteed. The key word is “non-cancellable.” If a policy is not “non-cancellable,” then premiums are subject to change by the insurer. True “own-occupation” protection with specialty language for medical professionals. The policy’s definition of total disability determines when benefits will become payable. Under the true “own-occ” definition of disability, an individual is considered totally disabled if, solely due to injury or sickness, he or she is unable to perform the material and substantial duties of his or her occupation, even if gainfully employed in another occupation. You may hear about policies that have a “modified own-occupation” definition of total disability. Under this definition the insured will not be considered totally disabled if he or she is working in another occupation.
When tailoring an individual disability policy to meet your requirements these are the details you must consider. Note to Presenter: Discuss these questions and how policy features work. How long do I want to wait before benefits begin? (Elimination period) How long do I want benefits to last? (Benefit period) How much benefit can I get? (Monthly benefit) (Continued on next slide)
Discuss these questions and how policy features work. Am I protected if I am partially disabled? (Stress the importance of coverage for partial or residual disabilities.) What happens when I recover, but continue to have a loss income? As my income rises, can I guarantee my right to increase coverage in the future, without medical underwriting? (Future Increase Option) Will my benefit keep pace with inflation when I’m disabled? (Cost of Living Adjustment Rider)
Lastly, it makes sense to obtain individual coverage now. Why is that? First, individual disability insurance, with its fairly strict medical underwriting requirements, can be difficult to qualify for. It is far easier to obtain coverage when you are young and healthy. It makes sense to leverage your good health. The cost of coverage is based on your age at the time a policy is issued. Generally, the younger you are, the lower the premium. Your income in the future will rise dramatically. By obtaining a policy now, and adding a future increase option, you can guarantee your right to obtain maximum coverage in the future with no medical requirements.
As a medical resident you have the opportunity to apply for a policy right now with monthly coverage of up to $5,000 and a monthly catastrophic disability benefit of $5,000, regardless of your income. You can also purchase the right to increase coverage in the future as your income rises. In fact, you can lock in up to $11,000 per month of future coverage. With potential coverage of $16,000 of base monthly benefit, the most we offer, you would never need to submit evidence of good health again. In addition to these limits you can apply for our Catastrophic Disability Benefit Rider for up to $5,000 per month. This rider gives you extra protection in the case of certain severe disabilities: cognitive impairment or the loss of two or more Activities of Daily Living. Note: These are the special issue limits for 3 rd and 4 th year residents. For those in the first two years of residency the amounts are: Monthly benefit: $4,000 Future Increase Option: $12,000 Monthly Catastrophic Disability Benefit: $5,000
Explain the steps in the process of obtaining disability protection: completing an application, being underwritten by the insurer. The process takes a few weeks. Reiterate that not everyone qualifies for coverage and that it is advantageous to apply while relatively young. Take any final questions. Thank the residents for taking a few minutes to discuss the critical topic of protecting their income potential.
I I hope that the few minutes we’ve just spent together have helped you appreciate the impact a disability could have on both your current lifestyle and your plans for the future, and the importance of protecting your income. Conclude by saying that you are available for individual consultations to discuss further and help get the process started. You can use the Seminar Evaluation form for attendees to give you their contact information and indicate if they want to discuss the topic further. Thank them for coming. Suggestion: Move to the back of the room to collect the surveys, so that you can be assured of speaking personally with each attendee.
