Disability Insurance Brokers

What is disability income insurance? 

Disability income insurance helps protect people from financial losses if an accident or illness renders them incapable of working and receiving regular earned income. EMG Insurance Brokerage offers a broad range of disability income insurance options from the nation’s leading insurance companies.

Who can get disability income insurance, and what does it cost? 

Disability income insurance coverage is dependent on a person’s occupation, age, sex, and usage of tobacco products (smoking, vaping, chewing, etc.) Within a disability income policy, some features, such as elimination periods, benefit riders, and disability definitions, may be customized to fit the individual. These factors may affect the availability and cost of coverage.

What are the primary causes of disabilities?

The most common causes of disability income insurance claims are:

  • Musculoskeletal disorders (joint, back, spine, etc.)
  • Mental disorders (bipolar disorder, depression, anxiety, etc.)
  • Cancers (breast cancer, melanoma, lymphoma, etc.)
  • Cardiovascular disease (chronic heart failure, coronary artery disease, heart transplants, etc.)
  • Chronic illnesses (fibromyalgia, asthma, chronic lung disease)
  • Accidents (car, mountain biking, occupational, etc.)

Can you collect Social Security Disability Insurance (SSDI) and long-term disability income insurance?

Yes, in theory, those whose disabilities adhere to the particular definitions of private insurance carriers, and SSDI, can collect disability income insurance from both.

Social Security disability benefits are notoriously difficult to qualify for and generally replace a small portion of one’s income. Individual policies can pay a higher percentage of one’s earned income, and the definition of disability is more straightforward. The best individual policies consider an insured disabled if due solely to sickness or injury they cannot perform the material duties of their occupation. Social security typically considers you disabled if you are unable to work in any substantial gainful activity.

Individual policies offer SSDI offset options that act as cost-savings mechanisms for insured individuals. 

For example, a person who wants $5,000 per month of disability income insurance can apply for the entire benefit amounts from a private carrier. In this scenario, the individual would receive the full benefit if they become disabled. When an individual also meets the Social Security definition of disability, the SSDI is paid. This amount is in addition to the $5,000 per month from the private insurer.  Alternatively, if they want to reduce the cost of that same $5,000 monthly benefit, they may do so using a social insurance offset rider. A social insurance offset rider pays a benefit only if Social Security benefits are denied or are less than the rider amount. For example, the applicant structures the $5,000 monthly benefits into a $3500 base policy and adds a $1500 social insurance offset rider. Should the individual becomes disabled, they will receive $3500 from the insurance company and whatever benefit they qualify for from Social Security. If the Social Security benefit is less than $1500, the insurance company rider will pay the shortfall to make the benefit from all sources equal to $5000. If the Social Security benefit is $1500 or more, the private insurance policy will pay $3500. This option reduces the risk for the insurance company and results in lower premiums for individuals seeking disability income insurance coverage.

Who should be looking for disability income insurance?

Anyone that depends on their paycheck to support their lifestyle should consider insuring their paycheck with disability income insurance.

There is a 25% chance of a 20-year-old becoming disabled before age 67. (1)

1. Social Security Administration, Fact Sheet, 2022

The types of disabilities that people experience vary greatly and are often more attributed to illnesses rather than accidents. People should be mindful of their need for disability income insurance coverage and seek coverage early on.

Remember: always seek disability income insurance before any issues occur. Typically a policy will limit the coverage provided for a disability caused by a pre-existing condition. Contact EMG Insurance Brokerage today to receive expert advice and explore your options for purchasing disability income insurance.

Rules of Thumb to Remember When Seeking Disability Income Insurance:

  • People should always seek disability income insurance coverage before any issues arise.
  • 60-70% of gross income may often be covered by a disability income insurance policy.
  • Adequate disability coverage may often be obtained for 1-3% of a person’s gross income.
  • Those with fluctuating or commission-based incomes should contact EMG Insurance Brokerage for further information, as these types of financial circumstances are dealt with on a case-by-case basis.
  • According to the Council for Disability Awareness, the average disability claim is slightly under three years, making shorter benefit periods a viable and more affordable option for many. (2) 

Ideally, people should purchase disability income insurance at the beginning of their employment to lock in the lowest possible rate.

2. Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1999 https://www.ssa.gov/oact/NOTES/ran6/an2020-6.pdf, Table A.

Who will not qualify for disability income insurance coverage?

Insurance companies generally will not offer coverage once a person’s net worth is $10 million or more.

Occupations with heavy manual labor, exposure to dangerous environmental elements, and other high-risk circumstances are typically unable to qualify for coverage.

What additional options exist for high-earning individuals who still want to secure disability income insurance?

Coverage from traditional insurance companies is typically capped at $35,000 to $40,000 per month. For high earners, this often results in much less than the ideal replacement income of 60%-70% of taxable income., There are other avenues for high-earning individuals to explore when seeking disability income insurance. EMG Insurance Brokerage partners with these outlets and helps connect high-earners to appropriate insurance carriers.  

What is the process of purchasing disability income insurance?

Fortunately, purchasing disability income insurance is easier than ever before. Underwriting has become less intrusive than ever before. For monthly benefit amounts under $10,000, many carriers do not require a medical exam or detailed tax records. Insurers carefully evaluate the health and financial situation of each applicant. Those evaluations are conducted through less intrusive methods than in the past. 

To purchase disability income insurance, a person must first meet with a licensed disability income insurance agent. The agent, working with the individual, will then determine the monthly benefit amount and structure of the policy. This benefit amount depends on the potential insured’s physical, medical, and financial circumstances. Once the policy structure and benefit amounts are determined, an insurance application is completed and sent to the insurance company for underwriting. DI underwriting consists of reviewing the applicant’s medical history and financial circumstances. Depending on the amount applied for and the carrier underwriting guidelines, there will likely be a review of financial and medical records and a telephone interview. If the amount of coverage is high, usually $10,000 or more, it is possible for a qualified examiner to go to the individual’s home or office to conduct a medical exam. Once all of the pertinent information is reviewed by the insurance company, an offer for coverage is made. The policy is issued, and coverage begins once the applicant accepts the offer. This process usually takes between 30 and 60 days.

EMG Insurance Brokerage represents multiple insurance companies and scans the market for the company that offers the best value to meet an individual’s needs. There are nuances within each insurance company, and EMG Insurance Brokerage takes the guesswork out for the advisor and applicant.

Is income disability income insurance tax-deductible? 

Individuals: Disability income insurance premiums paid by an individual are generally not tax-deductible, and benefits are received income tax-free.

Employers: Conversely, disability income premiums paid for by an employer as a part of an employee benefit plan are generally tax-deductible by the employer. Benefits are considered taxable income when received by the employee. EMG Insurance Brokerage recommends discussing specifics with a CPA for further information.

What are strategies to obtain affordable disability income insurance coverage?

Securing coverage early on is the best strategy to secure an affordable rate for a disability income insurance policy. Age is one factor in determining policy premiums. Typically, a 30-year-old will pay less for coverage than a 31-year-old.

There are a variety of plan designs and features that can be customized to fit individual needs and budgets. Not everyone can afford the maximum level of coverage; however, there are alternative budget options.

Most importantly, remember to obtain disability income insurance as early as possible. Once a disabling illness or accident has occurred, it becomes too late to qualify for coverage.   

EMG can help.

As a brokerage general agency, EMG Insurance Brokerage handles everything from the submission to commission. Our relationships with over 30 carriers enable us to help choose the best product for your client.

Although it is a financial advisor’s responsibility to educate their clients about the consequences of becoming too hurt or sick to work, you do not need to be an expert in disability income insurance. EMG Insurance Brokerage has a dedicated disability income insurance department ready to help throughout the life of a policy. Whether your client is purchasing a policy for the first time or needs support managing enrollments, our team is here to make the process seamless.

Connect with us by phone, online, or in-person to start designing comprehensive solutions, including group disability income insurance, for your clients and grow your business today.

For the disability quote form click here.

Disability Quote Form

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