Just one word or phrase can make a huge difference. Whether you're talking with a client, negotiating a deal or focusing on the specifics of a contract, attention to detail is a must. So, why do we rely so much on the quick scan of a spreadsheet to tell the whole story?
Carriers aren't the same. Service isn't the same. And, contracts are most definitely not the same.
In the world of disability coverage, people often believe all contracts function alike when, in fact, that's rarely the case — there are always variations. And that can sometimes translate into shock at claim time, which is the worst time for a surprise.
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So, in the spirit of Disability Insurance Awareness Month, I've summarized a few thoughts pertaining to the definition of disability. I chose this item because it just might be the single most important provision in a group disability contract. Therefore it's a critical consideration when evaluating the full scope of a policy. Consider these real-life scenarios.
Does the policy recognize unique pay structures? Billing out services and earning commissions are forms of compensation that are more common than you might think. If the contract requires a 20 percent loss of income to meet the definition, an actual loss of income might not be realized on paper for several months.
Tip: Some policies evaluate a claimant's "inability to earn income" versus actual loss of income. A policy with this definition recognizes the immediate impact of an employee's inability to earn an income at the moment when the disability occurs.
What if the claimant returns to work but still has an earnings loss? The impact of a disability on income can last well beyond when the disability ends because it often takes time to re-build a client base, cultivate sales and bill for services.
Tip: Look for a policy that pays a benefit as an employee re-builds their client list. This can be written within the definition of disability or as a separate benefit commonly known as Extended Earnings Protection.
Does the policy have enough flexibility to allow the claimant to return to work full-time and still be considered disabled? Disability coverage is typically structured to encourage people to go back to work as soon as possible. In some situations, an employee can go back to work but in a different role and, as such, may have to take a cut in pay.
Tip: Recommend a policy where the definition allows an employee to work full-time in a different occupation (usually for up to two years) provided they are making less money (usually earning less than 80 percent of pre-disability income). This encourages the employee to stay in the work force, and helps them maintain their standard of living.
It's virtually impossible to tell the difference between disability offerings at a carrier level unless you delve into the policy provisions just a little. So, look beyond the spreadsheet. Ask for sample contracts from carriers. Take notes. Ask questions. Be confident in what you're selling and sell the value of the contract. Price alone will never tell the whole story.
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