Sharing Disability Insurance Knowledge

As a former disability insurance salesman for 30 years and a consultant in this area for the past 10 years, I'd like to share some knowledge I've gained by working with thousands of doctors.

First, I have witnessed a significant market shift. Until the mid-1990s, more than 100 carriers tripped over themselves for disability insurance market share and offered very broadly worded disability contracts in the individual marketplace. Guaranteed premiums and lifetime benefits prevailed.

Today, there are less than a dozen carriers offering disability policies and the contractual wording has become much more restrictive. Still, there are products that can provide a "your occupation" definition and pay benefits to at least age 65. Lifetime benefits are just about gone.

Because of the seller's market, working with a broker with disability insurance expertise is important. Don't fret about price. Value is what you want--along with proper guarantees. And if you ever need to make a claim (partial or total disability), seek out advice so that your benefits are paid and continue to be paid.

Here are three specific tips:

1.Prepare for the insurance company independent medical examination. Check out the examining physician beforehand on the Internet to see if you can find anything of value. Go beyond the basic claim forms to prepare a history narrative of your medical problems and your job duties for the examining physician. Be a good observer during the examination. Watch if the examining physician just "flicks through your file" and lets you finish the answers to questions.

2. Don't do anything in conflict with your symptoms. Insurance companies use video surveillance to determine if you don't "meet the smell test." For example, if your claim is related to major depression because you can't deal with patients, don't be out three times a week dancing at the pub. If you claim cervical and thoracic problems prevent you from practicing as a surgeon, playing golf three times a week is not advisable. Both are grounds for the insurance company to terminate your claim.

3. Always pay your premium with personal funds. If you are a corporation and pay the premium through the corporation, make sure you reimburse the corporation for the premium and the corporation does not deduct the premium as a business expense. Better to get 100 percent tax-free money at claim time, than a tax deduction when you're earning big bucks. Current law says you must pay the premium with personal funds for at least one year in order to get tax-free benefits. If you paid even one premium through your corporation and took it as a business deduction, you come under the ERISA guidelines. This means you can't sue the insurance company for punitive damages or the value of your future potential benefits, and can't appear in front of a jury. In essence, the insurance company gets a legal edge.

Arthur L. Fries, RHU
Disability Consultant, Newport Beach
800/567-1911, www.afries.com