Disability Insurance: Time for a Review
Ron Cohen, RHU, RR
No, it’s not just the economy most physicians are concerned with, nor the current balance in their pension plans. It’s more about the future, not only theirs, but medicine in general. Those docs who have paid off their homes and were fortunate enough to put away enough money for retirement, now become the elder statesman and teachers of the young.
Have a conversation with one and you might be surprised to hear them say;
“Make sure you have enough disability insurance before you do anything else!”
They understand what can happen and after all, most of the medical profession is indeed, based upon patients who are ailing. So, who should know more about what can happen as a result of a sickness or an accident? Exactly…. “Doctor, heal thyself!”
The reality of life is rather simple. You can’t live everyday worrying about what will happen. The best we can do is to prepare for the unknown and that alone brings about peace of mind. Most of life is out of our control and our hands. So, we do the best we can. Simple enough. The old saying, “Bad things happen to good people” remains true, but even bad people fall victim to bad things. When it comes to being disabled we are all thrown into the pot. Odds are odds and I for the life of me cannot relate to them…so forget’em. They don’t matter. You will or you won’t be disabled and that’s it in a nutshell. The point is, DO YOU WANT TO GAMBLE EVERYTHING YOU WILL EARN and possibly everything you have or will ever have?
I said it before a 1000 times. Keep it simple. Disability insurance should be viewed as a policy which you own and control. The total premiums you will pay to an insurance company to age 65 will usually be less, than the monthly benefit you will receive for a 1 year claim! Simple enough. Let’s put that into prospective.
If you were disabled a week from now, what would your concerns be? The future of medicine or your family? The stock market or your monthly disability benefits?
Your mortgage payment or the government’s recovery program? Putting food on the table or the nightly news? That’s the real world of being disabled. I know, I have been disabled 3 times and in a heartbeat, the world get’s awfully small and all too real.
I would suggest it might be time for a review of your disability insurance. Peace of mind comes with preparation….the future however remains unknown.
Thursday, March 5, 2009
Wednesday, February 4, 2009
The Only Thing We Have
The Only Thing We Have
Ron Cohen, RHU
Last night, I was watching the evening news and was fascinated by one of the key stories which related a one word phrase most Americans are familiar with.
The report focused on one individual and his family during the past couple of years. Why? It was a story relative to many Americans and their current situations.
This individual lost his job two years ago and took 4 days to finally get up the courage to tell his wife. She was a stay at home mom who then realized, things were about to change for her entire family.
When they asked the husband what the greatest obstacle he had to overcome was, his response was simply: “Fear!”
Roosevelt said it best with his famous speech, “The only thing we have to fear is fear itself.” It seemed to comfort many Americans at the time and yet for most unemployed Americans nowadays, fear is quite overwhelming to say the least.
Protecting our families is a priority which most individuals readily accept. Yes, I would agree, the maternal instinct is even greater than the male ego when it comes to protecting children. Some might disagree, but nonetheless, being placed in a position of uncertainty as it relates to not only you, but your entire family’s future is definitely anxiety provoking.
As my business relates to the removal of fear and protecting one’s family, I could not help but see the similarities between being unemployed and becoming disabled. Both result in an unknown future and a loss of income. Yes, both result in fear.
Being unemployed might be resolved in several ways and these solutions are now being discovered by many American families. To put it simply, not having a job is not as bad as “not being able to work due to a sickness or accident”. Being disabled is totally out of one’s control. The duration or length of disability as well, is unpredictable.
What I find interesting nowadays, is how these two situations are actually linked. One carrier’s disability insurance policy actually has an unemployment waiver. Why? They realize that individuals do lose their jobs and premium payments during these periods become a burden to say the least. How many producers know about that? Some, I am sure. How many people? Not many.
With regard to being unemployed, many individuals are now being forced to reinvent themselves. They are entering into areas they never dreamed capable of pursuing. Many are now starting their own businesses and some are working from their homes taking advantage of the computer’s new found potential to earn a living.
Once again, there is a link here. Many disabled individuals, are unable to perform the duties of their regular occupations, yet that does not mean they are unable to work. Thus, the disability policies pay them total disability benefits even though they as well, have reinvented themselves.
Disability insurance is not only a product; it is the vehicle by which one can remove the element of fear. Imagine that! It is also a product which will protect your family and your greatest asset; “Your ability to earn an income”. The only link I see now between being unemployed and disability insurance is simply this;
You can prepare for one now….and remove the fear!
Ron Cohen, RHU
Last night, I was watching the evening news and was fascinated by one of the key stories which related a one word phrase most Americans are familiar with.
The report focused on one individual and his family during the past couple of years. Why? It was a story relative to many Americans and their current situations.
This individual lost his job two years ago and took 4 days to finally get up the courage to tell his wife. She was a stay at home mom who then realized, things were about to change for her entire family.
When they asked the husband what the greatest obstacle he had to overcome was, his response was simply: “Fear!”
Roosevelt said it best with his famous speech, “The only thing we have to fear is fear itself.” It seemed to comfort many Americans at the time and yet for most unemployed Americans nowadays, fear is quite overwhelming to say the least.
Protecting our families is a priority which most individuals readily accept. Yes, I would agree, the maternal instinct is even greater than the male ego when it comes to protecting children. Some might disagree, but nonetheless, being placed in a position of uncertainty as it relates to not only you, but your entire family’s future is definitely anxiety provoking.
As my business relates to the removal of fear and protecting one’s family, I could not help but see the similarities between being unemployed and becoming disabled. Both result in an unknown future and a loss of income. Yes, both result in fear.
Being unemployed might be resolved in several ways and these solutions are now being discovered by many American families. To put it simply, not having a job is not as bad as “not being able to work due to a sickness or accident”. Being disabled is totally out of one’s control. The duration or length of disability as well, is unpredictable.
What I find interesting nowadays, is how these two situations are actually linked. One carrier’s disability insurance policy actually has an unemployment waiver. Why? They realize that individuals do lose their jobs and premium payments during these periods become a burden to say the least. How many producers know about that? Some, I am sure. How many people? Not many.
With regard to being unemployed, many individuals are now being forced to reinvent themselves. They are entering into areas they never dreamed capable of pursuing. Many are now starting their own businesses and some are working from their homes taking advantage of the computer’s new found potential to earn a living.
Once again, there is a link here. Many disabled individuals, are unable to perform the duties of their regular occupations, yet that does not mean they are unable to work. Thus, the disability policies pay them total disability benefits even though they as well, have reinvented themselves.
Disability insurance is not only a product; it is the vehicle by which one can remove the element of fear. Imagine that! It is also a product which will protect your family and your greatest asset; “Your ability to earn an income”. The only link I see now between being unemployed and disability insurance is simply this;
You can prepare for one now….and remove the fear!
Saturday, January 17, 2009
What Every Financial Advisor Should Know
What Every Financial Advisor Should Know
Ron Cohen, RHU, RR
Yes, a financial advisor’s job is to protect one’s accumulated assets, but how many prepare their clients for the uncertainties of life? In other words, protecting one’s greatest asset, “the ability to earn an income” might just take precedence in proper financial planning.
As 70% of the wealth in the United States is controlled by people over age 50, the word insurance has taken a backseat to the term “financial”. Many insurance companies have incorporated the word into their names and thus, disability insurance has become a topic left in limbo. Terms like Asset Protection and Wealth Accumulation have moved to the forefront in the last 10 years, naturally, retirement has become an issue of concern for most Americans. Well, here it is short and sweet, reality!
Being disabled is an eraser. All those numbers financial planners forecasted must now be changed. Yes, perhaps your kid’s college education, as well as your mortgage payments, pension plan contributions (they stop!) and you might even have to start selling off assets that you have accumulated just to survive. I’ve seen it happen all too many times and I am certain, I will see it happen again. Why?
People are trying to protect their futures, yes, but they are going about it in the wrong way. When you build a home, what’s the first thing you do? Lay the foundation and that is exactly what disability insurance does. It should become the bedrock of any individual’s financial plan. Yet, as you can well imagine, many financial planners find the topic confusing and do not wish to sacrifice ongoing income for the relatively small dollars involved in disability insurance sales. Yes, they would have to become licensed and continuing education courses prove to be too time consuming to justify the end result. The mindset is simple in most cases. If one receives a percentage of the assets accumulating in your portfolio each year, why bother with a few hundred dollars and risk losing the client. In other words, it’s an area few financial advisors see worth pursuing.
Years ago, I had a phone call from a financial advisor. Someone gave him my name and as I was a third party in this particular case, he felt I would give an honest opinion. He was reviewing three proposals a client had given him to review. All and all, three different companies, three different agents and he had no clue what he was looking for. The only thing he said was, “This seems very expensive!” (Note as well, this advisor was also a CPA.)
My reply, “Not really and I will show you why.” What I then told him, is actually what I have been telling individuals for 40 years. “John, let’s remove the issue of becoming disabled permanently, as most individuals just cannot see that happening to them.” I continued; “Can you see the possibility of a sickness or accident resulting in a loss of income for one year?” “Certainly”, he said. I continued; “If you look at the total premiums your client will pay all the way to age 65, you will notice something very unique, as the total will be less than the your client would receive in benefits for a 1 year claim!” “If by chance, your client is disabled permanently, well, you see the value of benefits paid could amount to 3 million dollars….” He stopped me there. “I understand”, he said. How much money did he make from that conversation? Nothing, yet how much did he learn about the value and reality of disability insurance? Enough to become a client, after suggesting his client contact me directly.
Granted, financial advisors have a key role in protecting one’s assets and I suppose Wealth Preservation and Asset Protection will continue to take precedence in our Society and yet, what are you thinking about now? Protecting your family and your greatest asset, “your ability to earn and income”, in the event of a disability caused by a sickness or accident. Yes, there is urgency here and preparing for the future does result in peace of mind. I suggest you build your house accordingly and your Financial Planner use the proper blue print during construction.
“One thing is certain….change. It is the preparation that makes all the difference.” Ron Cohen, RHu
Ron Cohen, RHU, RR
Yes, a financial advisor’s job is to protect one’s accumulated assets, but how many prepare their clients for the uncertainties of life? In other words, protecting one’s greatest asset, “the ability to earn an income” might just take precedence in proper financial planning.
As 70% of the wealth in the United States is controlled by people over age 50, the word insurance has taken a backseat to the term “financial”. Many insurance companies have incorporated the word into their names and thus, disability insurance has become a topic left in limbo. Terms like Asset Protection and Wealth Accumulation have moved to the forefront in the last 10 years, naturally, retirement has become an issue of concern for most Americans. Well, here it is short and sweet, reality!
Being disabled is an eraser. All those numbers financial planners forecasted must now be changed. Yes, perhaps your kid’s college education, as well as your mortgage payments, pension plan contributions (they stop!) and you might even have to start selling off assets that you have accumulated just to survive. I’ve seen it happen all too many times and I am certain, I will see it happen again. Why?
People are trying to protect their futures, yes, but they are going about it in the wrong way. When you build a home, what’s the first thing you do? Lay the foundation and that is exactly what disability insurance does. It should become the bedrock of any individual’s financial plan. Yet, as you can well imagine, many financial planners find the topic confusing and do not wish to sacrifice ongoing income for the relatively small dollars involved in disability insurance sales. Yes, they would have to become licensed and continuing education courses prove to be too time consuming to justify the end result. The mindset is simple in most cases. If one receives a percentage of the assets accumulating in your portfolio each year, why bother with a few hundred dollars and risk losing the client. In other words, it’s an area few financial advisors see worth pursuing.
Years ago, I had a phone call from a financial advisor. Someone gave him my name and as I was a third party in this particular case, he felt I would give an honest opinion. He was reviewing three proposals a client had given him to review. All and all, three different companies, three different agents and he had no clue what he was looking for. The only thing he said was, “This seems very expensive!” (Note as well, this advisor was also a CPA.)
My reply, “Not really and I will show you why.” What I then told him, is actually what I have been telling individuals for 40 years. “John, let’s remove the issue of becoming disabled permanently, as most individuals just cannot see that happening to them.” I continued; “Can you see the possibility of a sickness or accident resulting in a loss of income for one year?” “Certainly”, he said. I continued; “If you look at the total premiums your client will pay all the way to age 65, you will notice something very unique, as the total will be less than the your client would receive in benefits for a 1 year claim!” “If by chance, your client is disabled permanently, well, you see the value of benefits paid could amount to 3 million dollars….” He stopped me there. “I understand”, he said. How much money did he make from that conversation? Nothing, yet how much did he learn about the value and reality of disability insurance? Enough to become a client, after suggesting his client contact me directly.
Granted, financial advisors have a key role in protecting one’s assets and I suppose Wealth Preservation and Asset Protection will continue to take precedence in our Society and yet, what are you thinking about now? Protecting your family and your greatest asset, “your ability to earn and income”, in the event of a disability caused by a sickness or accident. Yes, there is urgency here and preparing for the future does result in peace of mind. I suggest you build your house accordingly and your Financial Planner use the proper blue print during construction.
“One thing is certain….change. It is the preparation that makes all the difference.” Ron Cohen, RHu
Tuesday, January 6, 2009
The Essence of Disability Insurance
Ron Cohen, RHU
The holiday season can be quite chaotic for many. The traveling alone, well, you get the picture. If you are one of those who wandered through the airports checking flight schedules and baggage, the word anxiety comes to mind. All and all, still a great time of the year!
I noticed something very interesting during my run through the crowds, standing in lines, sitting and waiting for the plane to board and then again, during the flight. We have become a Society dependent upon electronics. Cell phones, PDA’s and computers were everywhere! The minute the stewardess requested the passengers turn off their electronic companions, I am certain, many felt helpless and out of touch with the world!
At this point, many purchased the movie, read, or just went to sleep. In other words, few began communicating with one another. That’s the point here. Interaction, where have you gone?
During the last hurricane (Ike), many of us lost power and were forced to shut down our businesses for weeks. Some lost their businesses entirely, as well as their homes and some, even lost their lives. Nature and life are indeed unpredictable.
Information has become a chosen commodity. In other words, the TV station you watch, the radio stations you listen to, the movies you view, the books you read, the websites you visit, all are by choice. Now, turn off the power and your access to information is lost and you remain in the dark….for how long? Until somebody comes and fixes your power lines, you will be helpless. Again, the word anxiety comes to mind.
Preparing for a hurricane might help, having a generator, water, propane tanks and so on, could be beneficial….but many here in Texas realized that after the fact. At a local Loews store, I asked one of the workers how many generators they sold after the hurricane. “At least 1000”, he said. “People want to prepare for the next power outage”, he said. I’m sure that’s right. For those that lost their homes and businesses, not much can be done now.
As many of you might know, my house was hit by a tornado during Ike and helpless is a word that just doesn’t quite express the emotional roller coaster my wife and I experienced. As my wife was also disabled during the storm, it was quite traumatic to say the least.
An unforeseen disability due to a “sickness or accident” is unpredictable, yet the odds are much greater than being victimized by a hurricane. One can prepare for a disability and protect their families from the loss of income that will result. “Protecting one’s greatest asset, their ability to earn an income”, is the essence of disability insurance. Receiving the proper information and purchasing coverage prior to a disability is the preparation one must take before the storm. I wonder how many of those 1000 people who purchased generators from Loews, wished they had purchased them a day earlier. Once the lights go out, all information and communication is lost. Perhaps it’s time to interact with each other again and communicate. You might just find that a one on one conversation is the generator you need now.
Ron Cohen, RHU
The holiday season can be quite chaotic for many. The traveling alone, well, you get the picture. If you are one of those who wandered through the airports checking flight schedules and baggage, the word anxiety comes to mind. All and all, still a great time of the year!
I noticed something very interesting during my run through the crowds, standing in lines, sitting and waiting for the plane to board and then again, during the flight. We have become a Society dependent upon electronics. Cell phones, PDA’s and computers were everywhere! The minute the stewardess requested the passengers turn off their electronic companions, I am certain, many felt helpless and out of touch with the world!
At this point, many purchased the movie, read, or just went to sleep. In other words, few began communicating with one another. That’s the point here. Interaction, where have you gone?
During the last hurricane (Ike), many of us lost power and were forced to shut down our businesses for weeks. Some lost their businesses entirely, as well as their homes and some, even lost their lives. Nature and life are indeed unpredictable.
Information has become a chosen commodity. In other words, the TV station you watch, the radio stations you listen to, the movies you view, the books you read, the websites you visit, all are by choice. Now, turn off the power and your access to information is lost and you remain in the dark….for how long? Until somebody comes and fixes your power lines, you will be helpless. Again, the word anxiety comes to mind.
Preparing for a hurricane might help, having a generator, water, propane tanks and so on, could be beneficial….but many here in Texas realized that after the fact. At a local Loews store, I asked one of the workers how many generators they sold after the hurricane. “At least 1000”, he said. “People want to prepare for the next power outage”, he said. I’m sure that’s right. For those that lost their homes and businesses, not much can be done now.
As many of you might know, my house was hit by a tornado during Ike and helpless is a word that just doesn’t quite express the emotional roller coaster my wife and I experienced. As my wife was also disabled during the storm, it was quite traumatic to say the least.
An unforeseen disability due to a “sickness or accident” is unpredictable, yet the odds are much greater than being victimized by a hurricane. One can prepare for a disability and protect their families from the loss of income that will result. “Protecting one’s greatest asset, their ability to earn an income”, is the essence of disability insurance. Receiving the proper information and purchasing coverage prior to a disability is the preparation one must take before the storm. I wonder how many of those 1000 people who purchased generators from Loews, wished they had purchased them a day earlier. Once the lights go out, all information and communication is lost. Perhaps it’s time to interact with each other again and communicate. You might just find that a one on one conversation is the generator you need now.
Saturday, July 5, 2008
Disability Insurance - Forget the Odds: Experience Speaks Volumes
By Ron Cohen, RHU, RR
At the Inaugural Meeting of the International DI Society in Tampa, on October 7th, 2005, I made a statement which seemed to amaze the audience.
"My father, mother, sister, wife, both of my sons, mother-in-law, father-in-law, sister-in-law, brother-in-law and yes, even me, all had one thing in common. All of us had been disabled. Ironic? Horrifying is more like it.
Agents and home offices, brokers and articles, odds and salespeople can all tell you different stories, yet, personal experience speaks volumes. My view is simple. The odds of a disability happening to you are irrelevant. The reality of a disability destroying your life, been there, done that.
The last thing a disabled person should be concerned with is money. Plain and simple, disability insurance removes that problem. Is it needed? It can save a family and maintain the dignity of the disabled person who, (and I can tell you first hand,) feels "worthless" and "non-productive".
A disability normally follows patterns and stages.
Stage One:
The first stage is obviously being disabled. If it is permanent in nature, or terminal, the effects will be felt by those closest to the disabled person. It becomes an emotional rollercoaster that gets out of control. Personal feelings must be kept from the disabled person. Each person involved seems to go it alone. Thoughts run through each family member’s mind without stop. It is overwhelming! The burdens are not only emotionally and physically draining, but economically draining as well.
When you factor in the "economic loss" (if the disabled person is a bread winner), fear enters the picture. Fear of losing not ONLY the disabled person, but we are all human and human nature finds us fearing the loss of our homes, cars, tuition for the kids college and on and on. That’s what disability insurance takes out of the picture: Fear of economic loss. Having disability insurance lessens the burdens that can befall the entire family. It also allows the disabled person to know, (and this is crucial to understand) that the disabled person must maintain not only their dignity, but their contribution to the family must continue. If it continues by removing the family’s financial fears, the disabled person feels no loss to their role as bread winner and provider.
Stage Two:
Recovery (This stage could take weeks, months or even years.)
If the disability is not terminal or permanent, there usually is a period of recovery needed. During this transition, the family and disabled party find some adjustments to their normal routines and schedules might be needed. Perhaps, driving the recovering person to and from the attending physician or a rehabilitation site might be necessary. At a later stage of recovery, driving the recovering person to and from the workplace might also be necessary. Adjusting schedules again, as in today’s society, most husbands and wives both work. Typically, friends, other family members and neighbors all take part in this process. No one said it was easy and few realize how many people actually get involved. Been there, done that.
Stage Three:
Overcoming the "Worthless" stage and maintaining your dignity. Something happens to all of us when we are not productive. Our self esteem is lost and suddenly, and this is not unusual, suicidal thoughts enter our minds. I have seen it for the past 37 years. It is the most frightening stage of all.
Without personal contribution to our families and loss of ability to do our jobs, our careers gone, we assume the "pity mode" and thus withdraw into a shell of personal worthlessness. In the disabled person’s mind, they have lost their "human life value".
A true disability insurance salesman would say, "Your disability insurance becomes the rose that you can smell during your lifetime". Indeed, it will, indeed it does. It helps. More so than most know and here is why. The most important stage is the transition from helplessness and the feeling of worthlessness (and dependency) to recovery. This is what a good disability policy realizes and provides for. Recovery allows for the disabled person to get back to becoming an income producer and bread winner again.
Typically, disability policies will provide for some type of "partial" benefit and or "loss of income benefit" which pays the insured a percentage of the total benefits normally paid. Therefore, going back to work and trying to recover is in everyone’s best interest. The disabled person wants to go back and the insurance company wants them to as well. Without this provision, malingering (or not wanting to, or prolonging a disability because there is no provision for recovery) could run rampant at claim time.
Stage Four:
Back to work (If you’re lucky.)
At this point, one could be 100% recovered. Or, back to work in a new position, or back to their job working less time and doing less duties or even doing everything they did before but suffer a loss of income as a result of the disability. No one can predict what will happen. Good disability insurance will provide for all these scenarios and more.
The only thing that can be predicted, well, without disability insurance, no matter what the odds, the result is not pleasant. You see, of all the people I mentioned in the beginning, I was the only one to be lucky enough to have disability insurance.
Been there, done that.
Notation
Of those family members mentioned, 5 of the disabilities were permanent and terminal, two almost terminal but recovered within 6 months, three recovered within 90 days, and my own disabilities, well there were three:
One lasting 6 months, one lasting 12 months and one lasting 14 months.
Ron Cohen, RHU, RR: Ron has been specializing in individual disability insurance for the past 37 years.
Ron Cohen, RHU,RRPO Box 298Barker TX 77413-0298
800-398-0571
ron@roncohenrhu.com
http://www.roncohenrhu.com
http://www.internationaldisociety.com
At the Inaugural Meeting of the International DI Society in Tampa, on October 7th, 2005, I made a statement which seemed to amaze the audience.
"My father, mother, sister, wife, both of my sons, mother-in-law, father-in-law, sister-in-law, brother-in-law and yes, even me, all had one thing in common. All of us had been disabled. Ironic? Horrifying is more like it.
Agents and home offices, brokers and articles, odds and salespeople can all tell you different stories, yet, personal experience speaks volumes. My view is simple. The odds of a disability happening to you are irrelevant. The reality of a disability destroying your life, been there, done that.
The last thing a disabled person should be concerned with is money. Plain and simple, disability insurance removes that problem. Is it needed? It can save a family and maintain the dignity of the disabled person who, (and I can tell you first hand,) feels "worthless" and "non-productive".
A disability normally follows patterns and stages.
Stage One:
The first stage is obviously being disabled. If it is permanent in nature, or terminal, the effects will be felt by those closest to the disabled person. It becomes an emotional rollercoaster that gets out of control. Personal feelings must be kept from the disabled person. Each person involved seems to go it alone. Thoughts run through each family member’s mind without stop. It is overwhelming! The burdens are not only emotionally and physically draining, but economically draining as well.
When you factor in the "economic loss" (if the disabled person is a bread winner), fear enters the picture. Fear of losing not ONLY the disabled person, but we are all human and human nature finds us fearing the loss of our homes, cars, tuition for the kids college and on and on. That’s what disability insurance takes out of the picture: Fear of economic loss. Having disability insurance lessens the burdens that can befall the entire family. It also allows the disabled person to know, (and this is crucial to understand) that the disabled person must maintain not only their dignity, but their contribution to the family must continue. If it continues by removing the family’s financial fears, the disabled person feels no loss to their role as bread winner and provider.
Stage Two:
Recovery (This stage could take weeks, months or even years.)
If the disability is not terminal or permanent, there usually is a period of recovery needed. During this transition, the family and disabled party find some adjustments to their normal routines and schedules might be needed. Perhaps, driving the recovering person to and from the attending physician or a rehabilitation site might be necessary. At a later stage of recovery, driving the recovering person to and from the workplace might also be necessary. Adjusting schedules again, as in today’s society, most husbands and wives both work. Typically, friends, other family members and neighbors all take part in this process. No one said it was easy and few realize how many people actually get involved. Been there, done that.
Stage Three:
Overcoming the "Worthless" stage and maintaining your dignity. Something happens to all of us when we are not productive. Our self esteem is lost and suddenly, and this is not unusual, suicidal thoughts enter our minds. I have seen it for the past 37 years. It is the most frightening stage of all.
Without personal contribution to our families and loss of ability to do our jobs, our careers gone, we assume the "pity mode" and thus withdraw into a shell of personal worthlessness. In the disabled person’s mind, they have lost their "human life value".
A true disability insurance salesman would say, "Your disability insurance becomes the rose that you can smell during your lifetime". Indeed, it will, indeed it does. It helps. More so than most know and here is why. The most important stage is the transition from helplessness and the feeling of worthlessness (and dependency) to recovery. This is what a good disability policy realizes and provides for. Recovery allows for the disabled person to get back to becoming an income producer and bread winner again.
Typically, disability policies will provide for some type of "partial" benefit and or "loss of income benefit" which pays the insured a percentage of the total benefits normally paid. Therefore, going back to work and trying to recover is in everyone’s best interest. The disabled person wants to go back and the insurance company wants them to as well. Without this provision, malingering (or not wanting to, or prolonging a disability because there is no provision for recovery) could run rampant at claim time.
Stage Four:
Back to work (If you’re lucky.)
At this point, one could be 100% recovered. Or, back to work in a new position, or back to their job working less time and doing less duties or even doing everything they did before but suffer a loss of income as a result of the disability. No one can predict what will happen. Good disability insurance will provide for all these scenarios and more.
The only thing that can be predicted, well, without disability insurance, no matter what the odds, the result is not pleasant. You see, of all the people I mentioned in the beginning, I was the only one to be lucky enough to have disability insurance.
Been there, done that.
Notation
Of those family members mentioned, 5 of the disabilities were permanent and terminal, two almost terminal but recovered within 6 months, three recovered within 90 days, and my own disabilities, well there were three:
One lasting 6 months, one lasting 12 months and one lasting 14 months.
Ron Cohen, RHU, RR: Ron has been specializing in individual disability insurance for the past 37 years.
Ron Cohen, RHU,RRPO Box 298Barker TX 77413-0298
800-398-0571
ron@roncohenrhu.com
http://www.roncohenrhu.com
http://www.internationaldisociety.com
The True Value of Your Benefits
What You Need To Know
“The True Value of Your Benefits”
Ron Cohen, RHU, RR
When you receive proposals from an agent or broker, they should be clear and understood. Your understanding, in other words, should also be relative to “the times”. Many life insurance producers offer their prospects $1,000,000 of level term insurance death benefit, without realizing, they may be short changing the individual’s actual “needs” vs. their “wants”. As a consumer, here are some simple thoughts, which might prove very beneficial to you.
“If you died and your (wife or your husband) beneficiary was to receive $1,000,000, what would they do with the money?” Most individuals think their spouses would pay off their homes, but that typically seldom happens, as the money is usually needed for living expenses. Therefore, the beneficiaries normally invest the money in a vehicle, such as a CD.
Let’s assume that you could find a CD at a 5% interest rate. The annual interest your beneficiary would receive would be $50,000. Now, the tax must be paid on that, thus leaving them with an annual income of a lot less than one would believe $1,000,000 is worth. So, let’s use $3500 per month as a figure… (Which is allowing for a 3-5% fluctuation in the CD market?) How much money would your beneficiary actually need to live on? $3500 per month might not be enough.
Realizing the Value of Your Disability Policy
Once you understand and realize the “true value” of current dollars and then can compare the life insurance net CD income to a monthly disability benefit, it will become quite clear, how valuable your disability policy really is. In other words, your beneficiary’s $50,000 per year taxable income vs. a $5000 per month non-taxable disability benefit…..which you would receive during your lifetime. It’s easy to understand, using this example, that a $5,000 per month disability benefit (in current times), is worth more than having $1,000,000 invested in a CD!” The lower the country’s CD interest gets the more valuable the monthly disability benefits get. The other extremely important point here is that the disability benefits remain constant. Regardless of the fluctuating interest rates, fed cuts, stock market ups and downs, “If you become disabled, nothing will change your monthly benefits…Except for the fact that they could increase. By adding the Cost of Living Rider, your monthly benefits do indeed increase at the levels which you purchased: 3% or 6%....your choice!
So, if we were to compare benefits: Using age 40
$1,000,000 of life insurance = $3500 per month fluctuating:
Due to the varying interest rate, which your beneficiary will have to shop (and shop again, after each CD period ends) for the “best rates”. When your beneficiary(ies) is or are in this position (using the principal for monthly income), “risk” is typically avoided. Normally, guarantees are more in line with their needs. Yet, recession and inflation dictate the result….the monthly income can be lower, which is presently quite obvious. In other words, there are no guarantees.
Guaranteed Benefits: During Your Lifetime
Comparing “risk to a constant”: Disability Insurance
“The odds of you becoming disabled, are 3 times greater than dying prematurely, professionals understand that and as a result, they try to insure the maximum monthly disability benefit they qualify for!” Ron Cohen
$5000.00 per month of Disability Insurance =$60,000 per year
Payable to Age 65 without COLA = $1,500,000 non taxable
Compared to a taxable benefit: In a 25% Tax Bracket that would be the equivalent of: $2,000,000.
As an individual disability policy premium remains level and guaranteed to age 65, it avoids fluctuation in uncertain times.
The policy will also provide a waiver of premium provision, which eliminates the need to pay premiums during a claim.
(Note: The waiver of premium should also be added to your life policy.)
You should also understand the actual risk vs. cost element of a disability insurance policy. As most people cannot envision themselves as being permanently disabled,
The simplest way to understand the true value of a disability policy would be, by taking the annual premium cost for the disability policy and multiply it times the number of years until you reach age 65:
Example: Age 40 x 25 years (To Age 65) = Total Premiums
Now, take the monthly benefit they will receive if they were to become disabled for 1 year: The example we’ve already seen shows: $5,000 per month x 12 months = $60,000.
Now, compare the 2 figures and you will notice that in most cases, you normally will not pay as much (in total premiums to age 65) as you would receive for a one year disability claim. If in fact, you were to become permanently disabled, the total amount of benefits received, (non-taxable) could easily be in the millions. As life insurance is usually used to protect the “loss of the breadwinner’s income”, so too is the case of disability insurance….Yet, for the insured, it is a rose that you get to smell during your lifetime…….
Life Insurance & Disability Insurance
The face amount of a typical term life insurance policy remains constant. The monthly benefit in a disability policy increase will increase with the addition of the cost of living rider (COLA). Thus, the inflationary factor alone, dictates, that the $1,000,000 dollars of life insurance over time, will decrease in value. Again, another reason to consider greater face amounts.
All in all, understanding the “true value” of money and the “true value of benefits” can prove quite beneficial when considering both your current and future needs.
P.S.
Disability Policies also allow for increases: The Future Purchase Option Rider is worth consideration.
Best Regards,
Ron
Ron Cohen, RHU,RRPO Box 298Barker TX 77413-0298281-492-2295800-398-0571ron@roncohenrhu.com
Ron Cohen, RHU entered the insurance business in 1969 and began specializing in disability insurance. In 1977, he began his own firm, Ron Cohen Insurance, Inc. In 1977, Ron founded the Houston Association of Health Underwriters and is the only president to have served two terms. He is also a board member of the Texas Association of Health Underwriters. In 2005, Ron co-founded the International DI Society. He has been a guest speaker for many insurance companies, societies, clubs, and several Disability Income Training Council meetings. In the past 2 years, Ron has authored over 200 articles advocating disability insurance to the public and the insurance industry. Ron received the National Association of Health Underwriters Lifetime Presidents Achievement Diamond Award.
You can reach Ron at ron@roncohenrhu.com or 281-492-2295.
“The True Value of Your Benefits”
Ron Cohen, RHU, RR
When you receive proposals from an agent or broker, they should be clear and understood. Your understanding, in other words, should also be relative to “the times”. Many life insurance producers offer their prospects $1,000,000 of level term insurance death benefit, without realizing, they may be short changing the individual’s actual “needs” vs. their “wants”. As a consumer, here are some simple thoughts, which might prove very beneficial to you.
“If you died and your (wife or your husband) beneficiary was to receive $1,000,000, what would they do with the money?” Most individuals think their spouses would pay off their homes, but that typically seldom happens, as the money is usually needed for living expenses. Therefore, the beneficiaries normally invest the money in a vehicle, such as a CD.
Let’s assume that you could find a CD at a 5% interest rate. The annual interest your beneficiary would receive would be $50,000. Now, the tax must be paid on that, thus leaving them with an annual income of a lot less than one would believe $1,000,000 is worth. So, let’s use $3500 per month as a figure… (Which is allowing for a 3-5% fluctuation in the CD market?) How much money would your beneficiary actually need to live on? $3500 per month might not be enough.
Realizing the Value of Your Disability Policy
Once you understand and realize the “true value” of current dollars and then can compare the life insurance net CD income to a monthly disability benefit, it will become quite clear, how valuable your disability policy really is. In other words, your beneficiary’s $50,000 per year taxable income vs. a $5000 per month non-taxable disability benefit…..which you would receive during your lifetime. It’s easy to understand, using this example, that a $5,000 per month disability benefit (in current times), is worth more than having $1,000,000 invested in a CD!” The lower the country’s CD interest gets the more valuable the monthly disability benefits get. The other extremely important point here is that the disability benefits remain constant. Regardless of the fluctuating interest rates, fed cuts, stock market ups and downs, “If you become disabled, nothing will change your monthly benefits…Except for the fact that they could increase. By adding the Cost of Living Rider, your monthly benefits do indeed increase at the levels which you purchased: 3% or 6%....your choice!
So, if we were to compare benefits: Using age 40
$1,000,000 of life insurance = $3500 per month fluctuating:
Due to the varying interest rate, which your beneficiary will have to shop (and shop again, after each CD period ends) for the “best rates”. When your beneficiary(ies) is or are in this position (using the principal for monthly income), “risk” is typically avoided. Normally, guarantees are more in line with their needs. Yet, recession and inflation dictate the result….the monthly income can be lower, which is presently quite obvious. In other words, there are no guarantees.
Guaranteed Benefits: During Your Lifetime
Comparing “risk to a constant”: Disability Insurance
“The odds of you becoming disabled, are 3 times greater than dying prematurely, professionals understand that and as a result, they try to insure the maximum monthly disability benefit they qualify for!” Ron Cohen
$5000.00 per month of Disability Insurance =$60,000 per year
Payable to Age 65 without COLA = $1,500,000 non taxable
Compared to a taxable benefit: In a 25% Tax Bracket that would be the equivalent of: $2,000,000.
As an individual disability policy premium remains level and guaranteed to age 65, it avoids fluctuation in uncertain times.
The policy will also provide a waiver of premium provision, which eliminates the need to pay premiums during a claim.
(Note: The waiver of premium should also be added to your life policy.)
You should also understand the actual risk vs. cost element of a disability insurance policy. As most people cannot envision themselves as being permanently disabled,
The simplest way to understand the true value of a disability policy would be, by taking the annual premium cost for the disability policy and multiply it times the number of years until you reach age 65:
Example: Age 40 x 25 years (To Age 65) = Total Premiums
Now, take the monthly benefit they will receive if they were to become disabled for 1 year: The example we’ve already seen shows: $5,000 per month x 12 months = $60,000.
Now, compare the 2 figures and you will notice that in most cases, you normally will not pay as much (in total premiums to age 65) as you would receive for a one year disability claim. If in fact, you were to become permanently disabled, the total amount of benefits received, (non-taxable) could easily be in the millions. As life insurance is usually used to protect the “loss of the breadwinner’s income”, so too is the case of disability insurance….Yet, for the insured, it is a rose that you get to smell during your lifetime…….
Life Insurance & Disability Insurance
The face amount of a typical term life insurance policy remains constant. The monthly benefit in a disability policy increase will increase with the addition of the cost of living rider (COLA). Thus, the inflationary factor alone, dictates, that the $1,000,000 dollars of life insurance over time, will decrease in value. Again, another reason to consider greater face amounts.
All in all, understanding the “true value” of money and the “true value of benefits” can prove quite beneficial when considering both your current and future needs.
P.S.
Disability Policies also allow for increases: The Future Purchase Option Rider is worth consideration.
Best Regards,
Ron
Ron Cohen, RHU,RRPO Box 298Barker TX 77413-0298281-492-2295800-398-0571ron@roncohenrhu.com
Ron Cohen, RHU entered the insurance business in 1969 and began specializing in disability insurance. In 1977, he began his own firm, Ron Cohen Insurance, Inc. In 1977, Ron founded the Houston Association of Health Underwriters and is the only president to have served two terms. He is also a board member of the Texas Association of Health Underwriters. In 2005, Ron co-founded the International DI Society. He has been a guest speaker for many insurance companies, societies, clubs, and several Disability Income Training Council meetings. In the past 2 years, Ron has authored over 200 articles advocating disability insurance to the public and the insurance industry. Ron received the National Association of Health Underwriters Lifetime Presidents Achievement Diamond Award.
You can reach Ron at ron@roncohenrhu.com or 281-492-2295.
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