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If You Could Only Buy One Insurance?

April 24, 2012 | Comments: 0 | Views: 128

In the mid eighteenth century the first life insurance plans offered were for protection of the widows and orphans of ministers. By 1837 over twenty companies sold life insurance but most had a short life of their own.

A half century later, several companies had made real progress and had established themselves such as, The Mutual Life Insurance Company of New York and Connecticut Mutual. Many plans of the day could not be written on the lives of women and protection could end if a policyholder were to travel to "Indian" country.

Disability coverage began about a century after the first life insurance plans. While designed to cover accidents or catastrophic events indemnity provisions were soon included. Many companies began marketing of disability in the early 1900's. By 1910 Federal Laws required that employers cover an individual hurt on the job.

In 1956 Social Security established payments to those people with a physical or mental handicap as well as defining the conditions that would make a person ineligible to work.

As we entered the 1980's, Disability insurance was now sold aggressively by many companies for personal protection. Categories defined as Blue or White Collar and Short or Long term determined the benefits coverage. Blue collar workers, such as those in manufacturing, trucking, farming, and general labor were offered plans that covered for short durations only, such as one or two years, while white collar professionals, doctors, lawyers and accountants could buy plans that covered five, ten, to age 65 or even for a lifetime of disability payments.

The rush to compete in the middle 1980's brought companies that specialized in the Blue collar market only and those that dealt strictly with White collar clients. Plans were underpriced for either class and a decade later many of these companies had become bankrupt from excess claims. Those that avoided bankruptcy withdrew from the market bruised and battered.

To consider the problem relative to life insurance sold at that time we need to consider the claims potential for each type of insurance. In the mid 1980's the average life policy sold was about $100,000 for a household head of family. In that era, a typical mortgage could be paid off, funeral expenses covered and a child's college funding would be assured. A professional, such as a surgeon may have had 250 to 500 thousand dollars in death benefits.

The same professional in the 1980's, insuring his or her ability to perform surgeries could be covered four or five fold for disability over a death benefit. Earning $90,000 per year he or she would have been able to purchase a $5000 monthly benefit, payable to age 65 or life. If he was 35 at the time of disability and remained so until age 65 the payout would have been in excess of $1,800,000. Inflation adjustments or life benefits would have added considerably to the payout.

Strict underwriting, government pricing regulations, redefined policy benefits and limits to coverage have become guidelines to those companies who remain in business. While these changes help assure a company stays healthy and is there when a policyholder has a claim it should not deter someone from considering disability altogether.

As many struggle in the economy to make ends meet while working full time the perils of not being able to work at all due to an accident or sickness are as devastating as ever.

While individual coverage qualifications are severe, companies such as Colonial Life, a member of the UNUM Group, the nations largest disability provider still allows generous benefits as the premier voluntary worksite marketing company in the U.S.

Disability provided by Colonial Life is a group benefit but issued individually. This allows the policyholder to keep the plan after termination or retirement. Waiver of premium, partial disability, worldwide coverage, and covered "Pre-existing" conditions are unique to the Colonial plans.

The benefits to an employer offering worksite plans such as those by Colonial Life is that they can offer and increase their benefit choices, enhance security for existing employees, attract new people and take advantage of the plans themselves. Employees pick from a menu of plan options and generally pay a low premium, often through a Section 125 Plan. This results in a win win for the employers group. The employee saves on his or her share of the premium and the employer saves in matching FICA taxes based on a lower payroll figure.

The most important insurance coverage today is disability! Individual, single parent, or married couple, the loss of work for a few weeks, months or years can have a devastating impact. If you can only afford ONE insurance plan make it disability!

Terryl Roemer has been providing insurance counseling to Individuals, groups, private companies, cities, counties and State of Idaho workers for over 30 years. A specialist in medical, supplemental and group coverages he has extensive product knowledge. In the realm of disability insurance Roemer is adept at the makeup of the contract language that supports these plans. The adage "The Large Print Giveth And The Small Print Taketh Away" is one that cannot be ignored when it comes to disability insurance. Roemer guides his policyholders in this understanding to help them make their best "buying" decisions.

Source: EzineArticles
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