Disability Insurance Glossary
If you’re anything like the average person walking on this Earth, you’re likely in over your head with all the disability insurance terminology. Maybe you’re familiar with general insurance terms, but lacking in the disability-specific jargon. Either way, you’re in good hands. Refer to this comprehensive list of key words and terms! It’s in alphabetical order– you’re welcome :)
definition of disability. The most common disability definition, usually found in employer group plans and low-cost individual policies. You’re only considered disabled if you can’t work in any occupation that you could be considered reasonably suited for based on education, training, or experience.
noun. The amount of money that an insurer will pay to a person who experiences the disabling event. Generally, your benefit amount will represent about 60% of your income.
noun. The length of time during which an insurance policyholder or their dependents may file and receive payment for a covered event.
noun. The “Big Six” are the six insurance carriers that we chose to work with. They are the only affordable companies that offer what physicians need: individualized true own-occupation disability insurance. The “Big Six” are Ameritas, Guardian, MassMutual, Ohio National, Principal, and Standard!
noun. An insurer; an insurance company. The carriers we work with at Pattern are also known as the “big six” which include: Ameritas, Guardian, MassMutual, Ohio National, Principal, and Standard! There are several carriers out there, but these are the only six who offer affordable individual, true own-occupation disability insurance.
type of rider. This rider provides additional benefit to your base benefit should you become catastrophically disabled. The definition of a catastrophic disability is the inability to perform two or more of the Activities of Daily Living (ADLs). If you are disabled to this extent, your increased cost of living (due to things like added healthcare expenses) may use a large portion or all of your base benefit, leaving you with very little or nothing to live off of.
noun. A request for your insurance company to pay for something your insurance covers. In this case, a disability.
Cost of Living Adjustment (COLA)
/kôst əv ˈliviNG/
type of rider. The Cost of Living Adjustment rider increases your income from the policy each year that you are on the benefit in order to help your income keep up with inflation.
noun. A type of insurance that provides income in the case that you are unable to work due to an injury or illness. It is important because a disability ranging from a long-term illness to a disabling accident could take your career and your financial stability.
plural noun. If you’re still in training, our agents can get you up to 40% off for the lifetime of your policy. Once you’re graduated and out of training, you are no longer eligible for training-specific discounts. Get them while you can! Various other discounts exist such as the mental nervous rider and association, and our agents will stop at nothing to make sure you get all you’re eligible for.
noun. All long-term disability insurance policies have an elimination or waiting period to receive the benefit. The most common elimination period is 90 days, but it can range from about 60 days to 365 days. This waiting period means that you must be disabled for the specified length of time before the policy will begin paying your benefit.
noun. Exclusions are things that aren't covered under your policy. A common exclusion we see in underwriting is called mental/nervous. If you have a history with ADHD, it’s more than likely that the carrier will add a mental/nervous exclusion to your policy. This means that if you develop any other mental/nervous disorder that leads to a disabling event or condition, your benefit won’t pay out. Essentially, in the carrier’s eyes, the “pre-existing condition” predisposes you to more issues in the future, which they don’t want to be liable for.
Future Purchase Option
/ˈfyo͞oCHər ˈpərCHəs ˈäpSH(ə)n/
type of rider. A future purchase option lets you keep the option to increase your benefit without having to worry about going through the process of getting a whole new policy. It allows you to increase your coverage, based on your increased income, without going through any medical underwriting. It basically guarantees you the right to increase your coverage regardless of what happens to your health over time. There are one-year and three-year increases. For a one-year increase, you will have to pay extra for the rider, or ability to increase every year without medical underwriting each time. For the three-year increases, you don’t have to pay extra for the ability to increase your benefit amount. It is free to do every three years, also without all the medical underwriting. You are also able to increase before three years, only once, if you experience a huge increase in income or something of the like, which would be called an advanced increase.
noun. Group disability insurance is disability coverage offered by employers, usually at little or no cost. If an illness or injury keeps you from working, group disability pays out a benefit to replace some of your lost income.
type of rider. The guaranteed renewable rider prevents the disability insurance companies from changing your policy terms (like the benefit amount) or canceling the policy itself, as long as you continue with your payments.
Long-term Disability (LTD)
/lôNG tərm ˌdisəˈbilədē/
noun. Long-term disability insurance replaces your income if you can’t do your job duties due to an injury or illness. It normally covers you until 65, which means it will make sure your income is still being replaced until normal retirement age.
Maximum Benefit Period
/ˈmaksəməm ˈbenəfit ˈpirēəd/
noun. Most disability insurance policies have a maximum benefit period which is set when you get your policy, and it’s measured either in years or until you reach a certain age. You can choose benefit periods from two to 10 years, or set the benefit period to expire at age 65, 67, or 70. Longer benefit periods are more expensive. Most policies are set up with a maximum benefit period of age 65 so that your benefit income ends around the same time that other programs (like Social Security) increase assistance to the retired and disabled.
noun. Medical underwriting is the process of evaluating an application for insurance coverage by examining the applicant's medical history. The underwriter assesses your job, income, and personal information (age, gender, health, and hobbies). This is the point where necessary exclusions would be determined due to risky hobbies such as scuba diving, bad habits like smoking, or pre-existing conditions and prescription history.
/ˈmɒdɪfaɪd ōn ˌäkyəˈpāSH(ə)n/
definition of disability. According to this definition, a person receives benefits when they can’t work in their own-occupation and are totally disabled. However, benefits do not continue if that person chooses to work in another profession.
type of rider. A non-cancelable rider makes sure that the disability insurance companies can’t raise your premiums as long as you are paying them. This ensures that your premiums will be locked in and can really help save you money. Sometimes the non-cancelable rider is included within your policy. However, if it is not included you can add it on as a rider.
noun. Your specialty, or occupational class, is one way in which these companies stratify the financial risk they are taking insuring you. As a general rule, procedurally oriented doctors, such as surgeons and dentists, are in a lower (meaning more expensive) occupational class than a non-procedurally oriented doctor.
noun. Pattern is an insurance broker. At Pattern, we make life and disability insurance simple. We know your time is valuable and understand what it's like to get ripped off, which is why so many have trusted us to help them compare and buy insurance! We firmly believe that as doctors and our team make better decisions, lives are changed. All in all, we’re just pretty awesome and we wanna make your life easier!
noun. A document detailing the terms and conditions of a contract of insurance.
noun. A pre-existing condition is a medical issue you have that may influence whether or not you qualify for the insurance coverage you’re trying to get.
noun. The amount you pay for your disability insurance every month. This usually equates to around 1-3% of your monthly income.
noun. A quote is an estimate of premium for the insurance coverage you selected and information you entered. A quote is not an offer for insurance or an insurance contract!
type of rider. If you experience a partial disability, this means you experience a reduction in the number of procedures or hours you can work. This often results in a partial loss of income which would not be recovered without a residual or partial disability rider. This rider allows you to receive a percentage of the benefit equal to the percentage of income you have lost from the partial disability.
noun. A rider is an optional coverage or feature you can add to your life insurance policy, often for an additional cost. Riders can help cover life events that your standard policy does not. Riders can provide benefits for critical illness and more during your lifetime.
Short-term Disability (STD)
/SHôrt tərm ˌdisəˈbilədē/
noun. Short-term disability insurance usually covers you between three and six months, and it will typically replace 50% - 80% of your income for months you have coverage.
/tranˈziSH(ə)n(ə)l ōn äkyəˈpāSH(ə)n/
definition of disability. According to this definition, if you can’t work in your specialty and you start earning an income doing something else, your total net income (including benefits) cannot exceed the total original earned income of your former job. With a Transitional Own-Occupation policy, you can start a new career while still getting your benefit. The difference is that the company will only pay the gap between your old monthly take-home income and your new monthly take-home income.
/tro͞o ōn äkyəˈpāSH(ə)n/
definition of disability. True own-occupation pays you your full benefit if you can’t perform your specific duties or specialty, even if you’re employed somewhere else. Essentially, the true own-occupation definition means that if you can’t work in your medical specialty but are able to work in another area, you’ll still be considered disabled and get your full benefit payout.
noun. The process an insurer takes to examine and determine the risk it will take to insure you. The more risk found, the higher your premiums will be. The major things studied in the underwriting process for disability insurance are your job duties, medical history (including medications taken and doctors seen), and your financial records. Your financial records are examined to ensure that your income matches or reflects the benefit that you are applying for.