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You realize that it is essential to purchase disability insurance coverage as soon as possible, even before you’ve finished your training. But what happens when your income starts to increase, and the policy you have would no longer cover your expenses in the event that you couldn’t work.

In today’s episode, Billy discusses the best way to make sure your policy will grow along with your career, how to maintain the proper coverage definitions, and how to increase your benefits, even if your health has declined.

Highlights from this episode include:

  • Why the government hates disability income insurance benefits (1:52)
  • This helps you maintain your original discounts, no matter what changes in your life (4:07)
  • How to get increased disability coverage guaranteed, even if your health gets worse (4:36)
  • How to protect your financial well-being when the insurance company won’t let your purchase this coverage (6:16)

To ask questions on insurance coverage or to get a quote, please don’t hesitate to call us anytime at 704-270-2376, and I’d be glad to discuss your specific situation with you.

Read Full Transcript

Hi, I'm Billy Gwaltney and this is the CYA podcast. This show is for the physician who understands the importance of protecting everything you've worked so hard to achieve. Each week I'll bring you tips and advice to help you cut through the clutter and misinformation and show you exactly what you need to preserve your income and way of life. If you're ready to achieve the peace of mind that only financial security can bring. Let's get started.

Welcome to today's episode of the cover your assets podcast. The title of today's program is what is the future insurability option when it comes to specialty disability coverage? And do I need it on my policy? That's a great question. I love answering these kinds of questions. In short, if you can get the future insurability option, you should probably have it and I'll explain why during our program today. Glad you're with me and glad to be with you.

(00:58): Let me start by describing what the FIO rider or future insurability option rider is as a rider on your policy that allows you to increase your specialty disability coverage over time as your income increases. As a trainee, most start out in the 5,000 a month range of coverage. The future insurability option, again, if you're with the top [inaudible] companies and there are only a handful of those companies, they would offer you the ability to increase up to either 15 or 20,000 per month of coverage. I remember this benefit is non-taxed assuming you don't deduct the premium. And so if you did have 5,000 or 20,000 a month of coverage and you restore disabled and received that benefit, you would be able to spend all of it. You wouldn't know the government, any audit. And so this writer is very important to help you keep pace with where your income hopefully goes over time.

(01:59): And so there are three reasons why having the rider on your policies is important compared to just getting a policy and then delivering and then dealing with any additional coverage you might need down the road by just starting over. So three reasons. The first reason is, again, if you're with the top tier companies, the same true specialty definitions that are included in your original base policy are guaranteed to be included on the future insurability amounts that you add down the road. That's really important, so even if a company gets out of the true specialty marketplace, which has happened before, that's certainly possible. If that happens and you have a policy with a company where that happens. If your future insurability option is worded correctly, then you would be able to increase coverage and have the true specialty definitions on your policy, on your increased amounts. Even though that company no longer offers that definition.

(02:58): A new policy holder, again, there are exceptions to that, so the, the, the devil's in the details as far as whether or not that language is in the future insurability option that we're talking about. There's one top tier company in particular. They're legendary. You've been around forever. I don't, I'm not going to mention them by name on the show, but I tell clients when I work with them that this is something they need to be aware of with this particular company, that if they do change, which they have done, if they change the definitions, then you would be subject to take whatever definition that they have available at that time when you go to increase. But generally speaking, the primary benefit or one of the primary benefits is that these definitions are guaranteed to be included on your increased amounts. The second reason to have a future insurability option on your policy is that the same discounted rate that is applicable for the original purchase amount is also applicable for the future.

(03:56): Increase amounts. So if you have a 20% discount or a 30% discount or a unisex discount on your original base policy, then that discount would be applicable to the increased amounts regardless of whether or not you're retraining. When you make the increase. Of course if you're an [inaudible], most people don't make their increases until their attendings and so you know, having the, that discount be applicable down the road is really important and that is written into a properly worded future insurability option. The third reason that it's important to have a future insurability option is that your medical situation at the time of the increase does not factor in. That is a big, big deal. Whether you've had back treatment or changing, you know your cholesterol and all those kinds of things that people might see as impacting their ability to get the definitions and the terms and the rate that they want.

(04:52): That doesn't factor in. If you took care of the coverage when you were in training, when you were healthy and you got a future insurability option on your policy, then down the road when you increase coverage, your health in that time doesn't matter. Again, these are hugely valuable. I've seen situations where clients for any number of situations did not have a future insurability option on their policy or they waited or there are certain cases when you go through medical underwriting, we're a top tier company. We'll give you a policy, but they won't allow it to have the future and share-ability option on the policy because there's something in the medical history that causes them to want to just confirm that everything is stable when you go to increase. Now, what I tell clients in those situations is don't throw the baby out with the bath water.

(05:44): When a top tier disability company is issuing you a specialty disability contract that has all the terms that you would want to have the true specialty, own occupation, definition of disability, the long term residual benefit, the long term recovery benefit. If those features are in the original policy or the base policy, take that policy even if they won't give you the future of curability option because it's better to have some than none. And so if you wait to just say, well, I'm not going to mess with it until I want to buy the big policy in the future, any number of things can change in the meantime from a health standpoint, from a definition standpoint, from a cost standpoint, from a discount standpoint. And so if you lock in that coverage anytime you are in the process and approved for coverage, it's important to get it.

(06:38): Again, if you can get the future insurability option on your policy, if your medical history allows it to be on the policy, you would find that to be worth having. As I mentioned earlier, there are a couple of companies that have wording in their future insurability option that allow them to change the definitions and the rate structure. And so if you have one of those policies and you go to increase coverage in the future and they've changed their definitions or the cost for those definitions is a lot higher than it used to be, you would be subject to those new term. And so one of the biggest in the business has that wording in there future insurability option rider and you just want to make sure that you understand that and, and that that's in your policy. It's important to know even if you don't expect to have an income high enough to support a $15,000 a month benefit or a $20,000 a month benefit, it's still important to have at least some future insurability option because you never know if you're going to end up in a situation where there's no employer provided group LTD, which LTD by that I mean long term disability, which would allow you to have a lot more personal private coverage, which is better anyway.

(07:59): I've seen my previous podcasts or other podcasts on the, the downside to group long term disability policy from a coverage quality standpoint. And so having options, having the ability to increase coverage is important. Yes. The future insurability option typically costs something to have on your policy. Not always, but a lot of the times, most of the time it does cost, but it's worth paying that extra few dollars or 15 bucks a month or whatever it is to have that flexibility there in case you need it down the road. We've just seen cases where, you know, again, statistically speaking at a time of claim expenses go up. We've had clients on claim. The only complaint we've ever gotten from a client on claim was, and I'm thinking of one in particular, she wishes she had purchased the maximum she could have gotten. She didn't get maximum.

(08:55): So she had the future insurability option in her policy. She didn't exercise it and so our income went up and she kept her benefit at the training level and then she got disabled and she regretted that. And so she did it gratefully. She recovered and came back to work and one of the first things she did was she exercise the future insurability option because again, because she had purchased it on her policy originally, she had the ability to increase it once she went back to work and resumed paying the premium on her policy. Even though she had the medical condition that caused her to be disabled to begin with, even though that was in her history, they still had to give her that additional coverage through this option is very valuable. Please feel free to text me anytime the terrain's a conversation or if you have questions, I'd be happy to go over those with you. My number is (704) 270-2376 again, that's (704) 270-2376 again, I'd be glad to discuss your particular circumstances. Happy to do that and until next time, this is Billy Gwaltney. Thank you. As always for carving out a few minutes. I'm grateful for that. Have a great rest of the day. Talk to you soon.

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