Acquiring disability insurance during voluntary unemployment?

Paul2150

New Member
7
Imagine this uncommon scenario. Someone voluntarily leaves their job. They have enough saved up to live comfortably while they spend 6-12 months spending more time with family, catching up on household maintenance, etc. They are offered jobs by friends and colleagues but not ready to go back to work yet.

However, during this 6-12 months, if they experienced some form of catastrophic injury, it would be horrible because they couldn't go back to work after they were done with their personal items.

Local insurance agents claim that disability insurance isn't possible. Since there's currently no income, there's no "loss of income" to protect, and the candidate wouldn't be eligible for coverage.

If this is in fact true, then to me, this seems like an absurd chicken-and-egg problem within the insurance industry. You need income to qualify for disability insurance. But if you have income, chances are high that it's because you have a job whose employer provides you with a disability policy.

How does someone taking voluntary unemployment for a relatively short period of time get themselves set up with insurance protection so that, should a catastrophic injury happen, they are given income for the remainder of what would have been their working years?
 
If this is in fact true, then to me, this seems like an absurd chicken-and-egg problem within the insurance industry. You need income to qualify for disability insurance. But if you have income, chances are high that it's because you have a job whose employer provides you with a disability policy.

Employer provided coverage is not total coverage. Often, particularly in CA, disability income benefits are coordinated with state coverage until qualifying for SSI, and for higher earning individuals (such as doctors), employer provided coverage isn't nearly enough.

Most often, for lower income jobs, employer provided coverage is a way to keep workman's comp claims and premiums low. After all, if you're injured OFF the job, you could claim that you were injured ON the job to try to get workman's comp to pay out... but if you have a DI policy, then you're still covered without trying to claim workman's comp or a fraudulent charge that you were injured on the job.

If you don't have earned income... you won't qualify for a DI policy, particularly for an "age 65" policy.

In the meantime, you may want to ask your agent about critical illness - where you could be paid a lump sum in the event of a catastrophic illness, such as heart attack, stroke, cancer diagnosis, or other critical illnesses.
 
How does someone taking voluntary unemployment for a relatively short period of time get themselves set up with insurance protection so that, should a catastrophic injury happen, they are given income for the remainder of what would have been their working years?

Have employment... buy an individual policy... then keep paying for the policy when you decide to leave that employment.

Not sure how the claim would work if you file a claim while unemployed.
 
Some carriers will look at previous income if currently unemployed (as long as unemployment hasnt lasted too long and isnt due to disability).

And a person is a fool to rely upon a work based DI policy.

Most work-based policies are watered down pieces of crap that dont even come close to the protection that a high quality individual policy will provide.

Besides that, you just illustrated the problem with work based coverage in general. When/if you leave, you are screwed. And forget the income qualifications, what happens if your health will not qualify for a policy when you leave employment? You are screwed, thats what happens.

An Individual Policy guarantees you will be covered for life no matter what. Even if you are temporarily unemployed and even if your health changes.

It is not an issue of "chicken vs egg" .... its an issue of a cheap crappy policy vs. a high-quality policy.
 
  • Like
Reactions: DHK
I know Guardian does.

Okay, I believe you, but I need to make sure I understand this, because three financial planners and four insurance brokers are telling me different:

Guardian will sell an insurance product to someone _who recently, voluntarily left their job, is currently unemployed, and has no income_. This insurance product offers some form of protection (lump sum payout or recurring monthly payments) that will be paid if the individual runs into some catastrophic illness or injury and subsequently can never work again.

The requirements are:
- The individual has to have recently held employment that generated income (about the level they are looking to protect)
- The reason that employment ended is not due to a disability

If all of that is true, you will have made someone very happy. :) Thanks for any info.
 

Latest posts

Back
Top