INDIVIDUAL DISABILITY INSURANCE

Disability Insurance Crash Course 1 AN INTRO TO INDIVIDUAL DISABILITY INSURANCE

Disability Insurance Crash Course 2 AN INTRODUCTORY GUIDE TO HOW INDIVIDUAL DISABILITY INSURANCE POLICIES WORK, AND WHY YOU NEED ONE. PUBLICATION OF:

Disability Insurance Crash Course 3 TABLE OF CONTENTS INTRODUCTION // 2 WHAT IF YOU COULDN T PRACTICE MEDICINE // 4 KNOW THE FACTS ABOUT YOUR DISABILITY OPTIONS // 9 INDIVIDUAL DISABILITY INCOME INSURANCE POLICY HIGHLIGHTS // 19

Disability Insurance Crash Course 4 CHAPTER 1 What if You Couldn t Practice Medicine?

Disability Insurance Crash Course 5 Did you know there are thousands of illnesses and conditions that can cause a disability? Just look at this breakdown: The impact disabilities have on individuals varies for some it s a short-term adjustment, but for others it s a new way of living, perhaps for the rest of their lives. Have you thought what would happen to your lifestyle if you became too sick or hurt to practice medicine? What would happen to your income or your dreams for retirement?

Disability Insurance Crash Course 6 Help Protect Your Income Today Individual Disability Income (DI) insurance helps protect your ability to work and earn an income. If you have a qualifying disability, this policy pays a monthly benefit to help cover daily living expenses so you don t have to dip into your hardearned savings. As a physician, you are eligible to purchase up to $15,000 per month in benefits. Most Individual DI insurance policies are non-cancelable and has guaranteed premium rates to age 65. The policy has a Your Occupation definition of disability. This type of policy helps protect you if you are unable to work in your occupation(s) the one you are actively working in at the time of your disability until the end of your benefit period, which means you are not required to work in a new occupation. Benefits are payable (after satisfying your policy s Elimination Period) to the end of your benefit period as long as you remain disabled.

Disability Insurance Crash Course 7 Policy Features Many optional policy riders are available that will customize the policy, such as: Future increase opportunities These may be available automatically to help keep your policy up-to-date without requiring additional medical underwriting. Residual Disability benefit2,3 Even if you are not totally disabled and you have a loss of earnings, you may receive partial benefits if certain requirements are met. Regular Occupation rider2,4,5 If you have a qualifying total disability from your occupation and choose to work in another occupation, you ll receive full benefits, regardless of the income you earn from the other occupation. Transitional Occupation rider2,3,4 You can continue to receive disability benefits if you become totally disabled in Your Occupation, but are working in another occupation. Cost Savings A 20 percent Multi-Life Discount (based on gender-neutral rates) is available when three or more employees with a common employer purchase coverage. Portable Policy Your policy is fully portable, including any applicable discounts if you leave your practice.

Disability Insurance Crash Course 8 Protection for Many Needs We understand the many needs of physicians. That s why we also offer coverage to help you continue saving for retirement if you have a qualifying disability. If you own your practice, we can help protect that, too. 1. Principal Life will participate with group long-term disability insurance up to $25,000 per month. 2. These riders are available at an additional cost. 3. If your policy has both a Residual Disability benefit rider and the Transitional Occupation rider, benefits are not paid out under both riders at the same time. If you meet the definitions and terms of both riders, the monthly benefit you receive is the greater of either the Residual Disability benefit or Transitional Occupation benefit. 4. The Regular Occupation rider and the Transitional Occupation rider cannot be issued on the same policy. 5. This rider is only available to 5A, 5A-M, 4A and 4A-M occupations. The Mental/ 6. Nervous and Substance Abuse Disorder rider is required for 5A-M and 4A-M occupations using the Regular Occupation rider. It is not available for 5A-M and 4A-M occupations in Vermont.

Disability Insurance Crash Course 9 CHAPTER 2 Know the Facts About Your Disability Options

Disability Insurance Crash Course 10 Understanding the Need for Income Protection You may be wondering if you really need income protection. Before you decide to purchase or not purchase individual disability income insurance, know the facts.

Disability Insurance Crash Course 11 Why would I need individual disability income insurance? There are many components to financial security, but your income makes everything else possible. Consider how much you could earn over the years and what your life would be like without that income. If you became too sick or hurt to work, you could lose your: Standard of living Home Dreams for the future Credit rating Retirement savings/other assets Peace of mind

Disability Insurance Crash Course 12 It won t happen to me I expect to stay healthy. One in 10 Americans between the ages of 18 and 64 have a disability. In the home a fatal injury occurs every four minutes; a disabling injury, every second. I can buy disability insurance later/it costs too much. The average annual cost of individual disability income insurance is one to three percent of what you earn. As for waiting, people usually don t get healthier as they grow older, and coverage will cost more.

Disability Insurance Crash Course 13 I have enough disability coverage through my employer. Group long-term disability insurance is a great start. Most plans cover 60 percent of your gross income and the benefits are usually taxable. But, could you survive a 58 percent pay cut (after taxes) if you became disabled? What would happen if you lost your group disability benefits? It may make sense to purchase an individual DI insurance

Disability Insurance Crash Course 14 Social Security or Workers Compensation will take Only 35 percent of the 2.8 million workers who applied for social Security Disability Insurance were approved in 2009. Also, the benefits may not be enough to maintain your lifestyle. For example, the maximum benefit for someone earning $100,000 a year is only $16,800 a year. Workers Compensation benefits are limited to only occupational Diseases or injuries arising out of or in the course of employment.policy now rather than later when it can be more expensive or not an option for you due to health reasons.

Disability Insurance Crash Course 15 I can rely on my savings or my friends and family will Chances are you re not saving for a disability you re saving for your dreams for the future, such as a new home, retirement, your children s college education or travel. Even if you save 10 percent of your salary, a one-year disability could eliminate many years of savings. Would you want to put that burden on your family? How long could they support you?

Disability Insurance Crash Course 16 Would I even have a disability that would be covered? You d be surprised at the many different types of illnesses and injuries that leave people disabled and unable to work. The most common insurance company claims are caused by: Back Problems Cancer Cardiac Illnesses Injuries Mental and nervous disorders Nervous system disorders

Disability Insurance Crash Course 17 My financial needs change so fast, what policy could keep up? Individual Disability Income insurance is very flexible. For example, Principal Life offers riders that allow you to increase coverage without having to prove evidence of good health allowing you to keep your benefits up-to-date with your changing life. Plus, the policy is fully adjustable with underwriting.

Disability Insurance Crash Course 18 I hear that the underwriting process is long and difficult. Not always. If you qualify for a Simplified DI Program, there is a quick and simple application process with no routine medical requirements. Plus, you get an underwriting decision within 48 hours after your application and telephone medical interview are received in good order. The causes of disability may surprise you! Here s a breakdown (by percentage of claims) of some typical reasons an individual may become disabled:

Disability Insurance Crash Course 19 CHAPTER 3 Individual Disability Income Insurance Policy Highlights

Disability Insurance Crash Course 20 We re dedicated to helping you protect your most valuable asset your ability to work and earn an income. If you have a qualifying disability, an Individual Disability Income (DI) insurance policy can help you pay for necessary living expenses. The policy is non-cancelable and has guaranteed premium rates to age 65. This means the insurance company cannot change or cancel your policy, except for nonpayment of premiums, or increase your premium before you reach age 65, regardless of changes in your income, occupation or health. After age 65, you may conditionally renew your policy annually for the rest of your life as long as you are working full-time and meet the requirements. If you conditionally renew your policy, your premium will change based on your age at renewa

Disability Insurance Crash Course 21 How Your Policy Pays The maximum monthly total Disability Benefit and Social Insurance Substitute (SIS) Benefit will issue you is based on your current income and occupation when you purchase your policy. Total Disability means during your occupation period: You are unable to perform the substantial and material duties of your occupation and You are not working. After the Your Occupation Period, you must be unable to work in any occupation you are reasonably suited to by your education, training and experience. If you select the SIS Benefit for your policy, it is payable in the same proportion as your policy s Disability Benefit. The SIS Benefit is paid when no Social Insurance is paid. One- third of the SIS Benefit is paid when only one of the Primary Insurance Amounts under Social Security, Workers Compensation or Railroad Retirement is paid. No SIS Benefit is paid when two or more Social Insurances are paid, or when you receive retirement benefits from Social Security or Railroad Retirement.

Disability Insurance Crash Course 22 Receiving Your Disability Benefits Once disabled under the terms of the policy, you must satisfy your policy s elimination period before receiving benefits. Upon a qualifying disability, you will receive benefits one month after the elimination period is satisfied. If you remain disabled, you will receive disability benefits through your policy s benefit period once you have satisfied your elimination period. The benefit period is the length of time you ll receive benefits if you are disabled under the terms of the policy.

Disability Insurance Crash Course 23 Individual Disability Income insurance benefits These benefits are automatically built into your Individual DI insurance policy: Rehabilitation Benefit If you are disabled under the terms of the policy and want to pursue a rehabilitation program to return to work, an extra benefit may be available to help you pay for the cost of the program. Death Benefit A lump-sum benefit of three times your maximum monthly benefit is paid to your beneficiaries if you die after satisfying your elimination period while receiving disability benefits. This benefit is payable in addition to any other benefit of the policy. Waiver of Premium Benefit After you re disabled for the lesser of 90 days or the elimination period, we ll waive all premiums that become due during your Continuous Disability.

Disability Insurance Crash Course 24 Customizing Your Disability Policy In addition to the benefits automatically built into your policy, you may be eligible for a variety of riders to further customize your policy. No Cost Riders If you meet the current underwriting guidelines, for no additional cost, the following riders on the next page can be added to your policy.

Disability Insurance Crash Course 25 Cost Riders If you meet the current underwriting guidelines, for an additional fee, the following riders on the following page can be added to your policy.

Disability Insurance Crash Course 26 Call to Discuss Your Options Today Physician s Disability Insurance Agency, LLC 800.518.1190 We re an independent brokerage that works with top insurance companies to obtain multiple quotes and help you understand your options.