How to Insure Your Income: A Step by Step Guide to Buying the Coverage You Need at Prices You Can Afford (How to Insure...Series)

322 Pages·1998·0.75 MB·English

by  The Silver Lake Editors

How to Insure Your Income : A Step By
Step Guide to Buying the Coverage You
Need At Prices You Can Afford Including
title:
Disability Income Insurance, Social
Security, Workers' Compensation,
Accelerated Benefits
author:
publisher: Silver Lake Publishing
isbn10 | asin: 1563431483
print isbn13: 9781563431487
ebook isbn13: 9780585044224
language: English
Insurance, Disability--United States,
subject
Workers' compensation--United States.
publication date: 1997
lcc: HD7105.25.U6 H69 1997eb
ddc: 368.973
Insurance, Disability--United States,
subject:
Workers' compensation--United States.
Page i
How to Insure Your Income
A Step by Step Guide to Buying the Coverage
You Need at Prices You Can Afford
Including:
Disability Income Insurance
Social Security
Workers' Compensation
Accelerated Benefits
The Merritt Editors
MERRITT PUBLISHING
A DIVISION OF THE MERRIT COMPANY
SANTA MONICA, CALIFORNIA
Page ii
How to Insure Your Income
First edition, 1997
Copyright © 1997 by Merritt Publishing
Merritt Publishing
1661 Ninth Street
Santa Monica, California 90406
For a list of other publications or for more information from Merritt
Publishing, please call [phone]. Outside the United States and
in Alaska and Hawaii, please call [phone].
All rights reserved. No part of this book may be reproduced, stored in
a retrieval system or transcribed in any form or by any means
(electronic, mechanical, photocopy, recording or otherwise) without
the prior written permission of Merritt Publishing.
Library of Congress Catalog Number: 97-075913
The Merritt Editors
How to Insure Your Income
A Step by Step Guide to Buying the Coverage You
Need at Prices You Can Afford.
Includes index.
Pages: 274
ISBN: 1-56343-148-3
Printed in the United States of America.
Page iii
Acknowledgments
The Merritt Editors who contributed to this book include Sander
Alvarez, Debora Chan, Cynthia Davidson, Sue Sink, Mimi Tennant,
Megan Thorpe and James Walsh. Thanks to Kathy Franklin and
Ginger McKelvey for their production assistance. Thanks also to
Kimberly Baer Design Associates, Cynthia Chaillie and Chrissy
Jessee.
Some of the material that appears in this book is based on information
taken from Merritt Professional Publishing's 1996 Life & Health
Sourcebook, a textbook for insurance agents.
How to Insure Your Income is the fourth book in Merritt Publishing's
How to Insure . . . series.
The other titles in the series are:
How to Insure Your Car,
How to Insure Your Life, and
How to Insure Your Home.
Upcoming titles will include How to Insure Your Possessions and
How to Insure Your Health.
Because these books are designed to make the concepts and theories
of insurance understandable to ordinary consumers, the Merritt
Editors welcome any feedback. Please fax us at [phone] or call
[phone] during regular
Page iv
business hours, Pacific time. More information is available from
Merritt Publishing on the Internet at http://www.merrittpub.com/.
Page v
Table of Contents
Chapter 1 Why You Need to Insure Your Income 1
Chapter 2 Figuring Out How Much Income Insurance You 17
Need
Chapter 3 Key Concepts and Definitions 45
Chapter 4 The Mechanics of Disability Income Insurance 67
Chapter 5 How Insurance Companies Price Disability 85
Coverage
Chapter 6 Social Security as Income Insurance 111
Chapter 7 Workers' Compensation as Income Insurance 139
Chapter 8 Long-Term Care and Life Insurance as Income 159
Protection
Page vi
Chapter 9 Deferred Compensation as an Income Insurance179
Tool
Chapter 10 Personal Umbrella Liability Insurance 197
Chapter 11 Optional Disability Benefits and Riders 209
Chapter 12 How to Make an Income Insurance Claim 223
Chapter 13 Business Uses of Disability Insurance 241
Chapter 14 Current Trends in the Disability Income Field 257
Index 269
Page 1
Chapter 1
Why You Need to Insure Your Income
The concept of disability insurance got its start centuries ago in
ancient China. Chinese laborers paid their doctors as long as they
remained well and were able to work. They stopped paying the
doctors whenever they became ill.
By most historical accounts, it was an effective way to address the
financial hardships incurred when a person became disabled and was
unable to work.
Unfortunately, this concept doesn't appear to be workable in today's
society.
People will insure their home, their cars, their things. But they'll often
forget to insure the asset that pays for all of thesetheir ability to earn
money. The financial problems created by what insurance experts call
economic death due to a disability are very real and distressing to
most people.
Consider the following example:
Bill, age 42, is the owner and president of Acme Inc., a 20-year-old,
small but success-
Page 2
ful manufacturing business that serves the automobile industry.
Acme employs 30 workers and, for the past five years, it has
averaged $18 million in gross sales. Bill has worked hard to
achieve his successand the comfortable lifestyle he and his family
enjoy.
Unfortunately, the day finally comes when Bill has to pay for the
long hours, the skipped meals, the heavy smoking and the stress of
operating his own business. He suffers a stroke, which leaves him
partially paralyzed and unable to speak clearly.
Bill's wife calls their insurance agent to tell him what has happened
and to find out which of the many policies Bill has purchased over
the years will take care of this situation.
Much to her shock, none of them do. Bill has three life insurance
policies with a total death benefit of $800,000. But he's not dead.
He has several business insurance policies, group hospitalization
insurance and other policies covering his family's home,
automobiles and posessions. But he has no disability coverage.
Bill was diligent about protecting his assetsexcept the most
important one . . . the ability to earn an income.
The very thing that enabled Bill to establish a successful business
and acquire his business and personal assets has been left
unprotected. Within two years of Bill's stroke, his savings and most
of the cash value in his life insurance have been exhausted. He's
finally forced to sell his business to a competitor at a substantial
loss.