Income Verification

Sep 18, 2008

  1. Chkndinner14
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    Chkndinner14 Super Genius

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    DI Gurus:

    I have a client leaving his job and going independent contractor. What companies would give him coverage? Will most want 2 years of tax returns? Thx
     
  2. bluemarlin08
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    bluemarlin08 Guru

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    If he hasn't left the current employer, have him apply now while employed. However, he may already have group coverage that will limit the amount he can get coverage.
     
  3. somarco
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    somarco GA Medicare Expert

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    Expanding on what Ned wrote, once he leaves, most carriers will require 2 yrs of tax returns (as a self employed) before they will issue DI.
     
    somarco, Sep 18, 2008
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  4. LGilmore
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    LGilmore Guru

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    How soon is he leaving? It might be a very good idea to get his individual (with increase options) BEFORE he leaves, even with the group plan in place (if there).. why? because out of the box he's probably not going to show great numbers (at least if his account is sharp) for his new business.

    What keeps the taxman at bay, doesn't help the DI application.

    Just a thought. After a couple years or so of successful numbers, he can always reapply or use those options.
     
    LGilmore, Sep 18, 2008
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  5. Chkndinner14
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    Chkndinner14 Super Genius

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    Thanks for the replies. What I thought. He is leaving in 2 weeks and at this point, it is a little too late to submit.
     
  6. somarco
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    somarco GA Medicare Expert

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    You could offer a cash LTC plan such as the one through MedAmerica as an alternative.
     
    somarco, Sep 19, 2008
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  7. SportsNut
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    SportsNut Guru

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    I haven't written a DI policy for about 20 yrs, having been away from the biz that long... (kind of like Rip Van Winkle taking a nap...). I wasn't aware that u/w would require tax returns for proof of income for issue of DI to self employed... I always figured they u/w this at the time of a claim, then requiring proof of income... (either I have forgotten or is this a new requirement...?)

    But the real reason that I responded to this is, I am surprised that in todays age of electronics, the ins co would accept a copy of tax returns from an applicant, in lieu of obtaining an IRS Form 4506T. They could easily obtain a transcript from the IRS which deliniates line by line entries on the tax return, (or use of Veri-tax.com), which would eliminate any frudulent claims of income, or dummied up returns, etc.

    Anyway, I just found this interesting and a little surprising...

    Sample veri-tax report below:

    http://www.veri-tax.com/Resources/Documents/ReturnTranscriptSample.pdf
     
  8. somarco
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    somarco GA Medicare Expert

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    DI underwriting is done at the time the application is submitted, not at point of claim.

    You could qualify for $6,000/mo based on a $10,000/mo income at time of application. But if your income had dropped to $5,000/month when the claim was active you would still be eligible to receive $6k. This assumes total & permanent disability.

    If you are looking at a partial disability benefit they do apply an income qualification at time of claim.
     
    somarco, Sep 19, 2008
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  9. SportsNut
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    SportsNut Guru

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    Part of what surprised me about the process was the client submitting their own tax records... this would be analagous to asking the client to obtain their own Drs records... (or make them up on their own), and submit them to the company for medical u/w...

    The tax return submission seems like an archaic way to go about it... Interesting... that is all.
     
  10. somarco
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    somarco GA Medicare Expert

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    Each carrier has their own process.

    If an applicant wants to lie there are several ways to get away with it.
     
    somarco, Sep 19, 2008
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