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Why would an agent offer DI when you can get CI for a much lower premium without elimination periods and limitations before coverage starts. Or would you bundle both products?
Why DI when CI is Cheaper?
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- 10,325
CI only covers a very limited set of impairments. And all of them are major impairments. With DI it doesnt matter what the impairment is, just as long as you are unable to perform your job.
Some CI policies do cover "loss of independent living". But they require that loss to be permanent and not temporary. (which only covers a minor portion of DI claims)
Also, some CI policies do have elimination periods. The "loss if independent living" almost always has a 180 day elim on it. Some of the more minor conditions do to (or at least you used to be able to price it in with AG, havent quoted one in a couple of year now)
If I remember right, around 40% of DI claims are due to accidents and 60% are due to illnesses. A Critical Illness policy mainly just covers illnesses. There is the exception of paralysis, burns, blindness, and sometimes loss of limbs etc. But that is just a fraction of the possible types of injuries you could have from an accident.
And even the illnesses are a very narrowly defined set of conditions. There are so many that could put you out of work that are not listed.
And CI policies just payout a lump sum benefit. If I had to guess I would say the average CI policy is around $100k, maybe $200k.
But even at $200k, that would only cover 4 years of disability for a $50k/y earner.
In short, DI has a much more comprehensive and higher benefit. It also provides a much broader range of coverage for various ways you can become disabled. CI only pays for a very small list of health impairments.
If you are selling CI and pitching it as a replacement for DI then you are asking for a lawsuit.
DI is income replacement for any type of illness/accident that keeps you from working.
CI is just extra financial help in the face of a specific type of horrific accident/illness.
If you were a factory worker, and you shattered both of your legs in a car accident, and you are out of work for a year. Most CI policies would not pay a benefit for that. But a DI policy would.
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- #3
- 104
Got it! great Info. Thanks a bunch. Quick Question What age do most DI policies pay till age 65 or longer?
- 10,325
You can choose. The max is usually 60 or 65 depending on the product. But you can usually choose from a 2 or 3 year benefit period all the way up to the max.
When selling it you play with the variables to find the best mix of payment period/benefit amount/riders that you can for the premium constraints of the client. I usually show 3 options; Max Benefits, Mid Benefits, Low/Basic Benefits. Usually the deciding factor is how much they can afford.
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- #5
- 104
Do you sell Accident and CI policies bundled with DI to cover elimination periods on DI. Maybe get a cheaper DI policy with 6 months EP . Wouldn't it be cheaper to go that route than with a 30-60 day EP on DI plus more commission and lower overall premium.
- 10,325
No I dont. Again, you are asking for trouble trying to make an accident or CI policy act like a DI, even just for the elim period.
First, I highly doubt that going from 90 days to 180, then adding on an Accident + CI will result in a lower premium. And even if it was slightly lower, the Accident and CI only cover a small amount of the conditions that could cause a disability.
Accident and CI policies are not meant to act as income replacement.
If you want something to cover the elim period there is such a thing as a short term DI policy. You find them mostly in work based voluntary benefits.
Here is the thing. If you sell them Accident and CI and tell them it will cover the elim period you again are just asking for a lawsuit. Those policies have a very strictly defined set of impairments that they will pay benefits for.
Sell the 90 day elim and sleep well knowing that you did the right thing for your client. If they do not have 90 days of expenses saved in the bank then they are not a DI client in the first place.
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- #7
- 104
Okay Got it! Once again thanks. You seem to know better than most
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Which companies do you like for disability accident and CI
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Which companies do you like for disability accident and CI
- 10,325
DI:
Guardian
Ameritas
Ohio National
Assurity
Illinois Mutual
CI:
AG
Assurity
I dont sell accident. Its useless and a waste of money in most cases. If a person could benefit from an accident policy then they do not have adequate savings.
For DI:
Met, The Standard, and Principal are also good additions to your list (in addition to Scagnt83's carriers).
- 10,325
Good catch ray. I meant to add principal. The other 2 are top players too.
