Session One:

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Session One INDIVIDUAL DISABILITY INCOME
PROTECTION Presented by Benjamin K.
Perez Disability Resource Group,
Inc. 800.945.9719 www.drgdi.com
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• The Three Major Points of Discussion
• The Need
• The Reality
• The Solution

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The Need

• How long can you survive without an income?
• Where will the money come from?
• How long will that money hold out?
• What will be sacrificed by using that money?

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What will happen to your Dreams and
Prioritieswithout an income?

• Personal
• Business Assets

• Business Ownership
• Retirement / Investments

Auto Home
Property
Life
Health

INCOME
Foundation
Disability Insurance
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When disability strikes, your financial picture
changes
Disability
Debt
Savings Depleted!
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What is your most important asset?
Income
Home
Automobile
Retirement
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Protect Your Most Valuable Asset
Average Income to Age 65
Current Age 25,000 35,000 50,000 60,000 100,000 125,000 150,000
30 875,000 1,225,000 1,750,000 2,100,000 3,500,000 4,375,000 5,250,000
35 750,000 1,050,000 1,500,000 1,800,000 3,000,000 3,750,000 4,500,000
40 625,000 875,000 1,250,000 1,500,000 2,500,000 3,125,000 3,750,000
45 500,000 700,000 1,000,000 1,200,000 2,000,000 2,500,000 3,000,000
50 375,000 525,000 750,000 900,000 1,500,000 1,875,000 2,250,000
55 250,000 350,000 500,000 600,000 1,000,000 1,250,000 1,500,000
60 125,000 175,000 250,000 300,000 500,000 625,000 750,000
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Disabled? Me? Never! No one ever thinks they
are going to become disabled, which in
their minds means
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The Reality

• 30 of all people 35 to 65 will suffer a
  disability for at least 90 days and one in seven
  will be disabled for five years.
• There is a disability caused by a motor vehicle
  crash every 30 seconds.
• One out of every two Mortgage foreclosures is due
  to a disability.

Health Association of America The New York
Times, 02.02 National Safety Council Accident
Facts, 02.02 National Safety Council Report
On Injuries, 01.01
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The Good News and Bad News
Bad News Diseases that used to cause death are
now leaving people disabled.
Good News People are living longer.
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Disability On the Rise
100
80
60
40
70
55
44
20
36
36
Death
0
Disability
-27
-29
-32
-20
-48
Diabetes
Heart Diseases
-73
-40
All Four
Cerebrovascular
-60
-80
Hypertension
-100
Source National Center for Health Statistics -
1999
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The Solution
Income

Disability Income
Savings

Expenses
X Disability
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COMPLETE PORTFOLIO OF DISABILITY PRODUCTS AND
SERVICES
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COMPLETE DISABILITY PRODUCT PORTFOLIO

• Individual Coverage
• Business Overhead Expense
• Buy-Sell

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COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

• Residual/Recovery Benefits
• Retirement Completion
• Catastrophic Benefit
• Return of Premium
• To Age 67, 70, Lifetime Benefits

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COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

• Mortgage/Loan Protection
• Long Term Care Purchase Options
• Home Based Business
• Newly Self-Employed
• Government Employees

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COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

• Impaired Risk
• High Limit
• Professional Athletes/Entertainers
• Blue Collar
• Police and Armed Forces

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COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

• Young Professional Limits
• Qualified Sick Pay
• Group Supplement / Conversion
• Executive Carve Out
• Key Person

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COMPLETE DISABILITY PRODUCT PORTFOLIO CONT.

• Spousal /Multi Life Discount
• Association Programs
• Work Site Marketing Plans
• Simplified Underwriting
• Guaranteed Standard Issue

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Defining Disability

• What does Totally Disabled mean ?
• What does True Own Occupation mean?
• What does Partially Disabled mean?
• What is Transitional Own Occupation ?

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Basic Definitions

• Unable to perform the material and substantial
  duties of your occupation.
• Unable to perform the material and substantial
  duties of your occupation and not working in any
  other.
• Unable to perform the material and substantial
  duties of any occupation based on education,
  training and experience.

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Various Definitions Available
N/A to 4A physicians gt 50. N/A to 3A medical
personnel/dentists gt 50.
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Modifiers

• 2 year, 5 year, or To Age 65 True Own Occ Rider
• Transitional Your Occ Rider
• Residual or Extended Partial Riders
• 2 year, 5 year, or To Age 65 Your Occupation
  Period

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Defining Partial Disability

• The inability to perform some but not all of the
  material and substantial duties of your
  occupation.
• The inability to perform the material and
  substantial duties of your occupation, yet
  working in another with a 20 loss of income.

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Residual or Partial Riders

• If you return to work in your own, or a new
  occupation and experience a minimum 20 loss of
  income due to your disability, or if you return
  to work on a part-time basis, after a disability,
  a minimum 20 of your benefit can be paid.

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The Importance of the Residual Rider

• Can change the definition of Disability
• Can provide Recovery Benefits
• Allows you to return to work while still
  receiving benefits
• Especially important for self-employed and
  fee-for-service employees.

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Defining the Disability Contract

• Non Cancelable
• vs.
• Guaranteed Renewable

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Two Types of Contracts

• Non Cancelable
• Premiums are guaranteed level for the life of the
  contract unless benefits are increased.
• Coverage is never cancelled as long as premiums
  are paid.

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Two Types of Contracts

• Guaranteed Renewable
• Coverage is never cancelled as long as premiums
  are paid.
• Company reserves the right to increase premiums
  should they experience unfavorable claims with
  entire occupational class in state of issue.

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Issue and Participation Limits

• 60 of Income Not Necessarily a Rule!
• Max issue up to 15,000 per month
• Max participation to 25,000 per month
• Limits per Occ Class
• 10,000 issue limit for Medical Professions
• Lower limits for certain states
• Taxable vs. Non-Taxable
• High Limit Carriers

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Issue and Participation Limits

• 100,000 income 5,000 non taxable benefit
• (60 of income)
• 100,000 income 6,250 taxable benefit
• (75 of income)
• 100,000 income 5,000 taxable group benefits
• 1,950 in non taxable benefit 6,950 total
• (83.5 of income)

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The Underwriting Process

• Life Insurance General Mortality
• Long Term Care Ability to Perform the Activities
  of Dailey Living
• Health Insurance General Morbidity

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The Three Areas of Disability Underwriting

• Occupation
• Compensation
• Medical Complications

(Past, Recent, Current, or Potential)
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Other Underwriting Factors

• Gender
• Females are 20 more expensive to insure
• Age
• Some benefits may be denied due to age
• State of Residence
• Availability and benefits can vary from state to
  state

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The Importance of Field Underwriting

• Ask about Medical History
• Get details of any Medical Complications and
  Medications taken
• Ask for Height and Weight
• Get an exact description of actual duties
• Ask for details on how they are compensated
• Get as much information as possible before taking
  an application.

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Individual/BOE Proposal Request Form

• Client Name
  M F
• Date of Birth
• Tobacco Use Y / N
• State Lives Works
• Occupation
• Title
• Duties
• Annual Salary Bonus Commissions Unearned
• SELF-EMPLOYED, OR BUSINESS OWNER? Y / N
• NET INCOME (AFTER EXPENSES)
• WORKS FROM HOME? Y / N Of Years As Owner?
• If less than 1 full Year Former Position Former
  Salary
• C- Corp S-Corp Partnership LLC
• of Full Time Employees

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COVERAGE IN-FORCE (check all that apply ) GROUP LTD What of Income Covered Benefit Maximum Premium Payer Employer Employee Income Covered Salary, Overtime, Bonus, Commissions Waiting Period Benefit Period INDIVIDUAL DI Carrier Benefit Amount Waiting Period Benefit Period Taxable Benefits? Replacing? Y/N
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Page 2 Health Problems (Past 5 yrs.), Taking
Medications, Height / Weight?
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Automatic Declines

• Recent Diagnosis of Depression or Anxiety
• Hepatitis C
• Juvenile Diabetes
• Most cases of Rheumatoid Arthritis
• Obesity

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Medications to watch for

• Prozac, Zoloft, Welbutrin, Paxil, Celexa
• Interferon
• Coumadin
• Neurontin
• Methotrexate or Rheumatrex

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Disability Income Protection

• The Need, the Reality, the Solution
• Full Portfolio of Disability Products
• Two Types of Contracts
• Various Definitions Available
• Issue and Participation Limits
• Occupation, Compensation, and Medical
  Complications

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Benjamin K. Perez800.945.9719 Ext.
303bkp_at_drgdi.com