Sales and Marketing – Information and Ideas
For many people a supplemental High Limit Disability Plan is necessary to Provide an adequate
Disability Financial Plan. It is like having adequate amounts of –
MONEY IN YOUR WALL SAFE
UP TO 5,000 OR MORE
You lock up guaranteed, TAX-FREE-MONEY, for use when you are sick or injured and unable to produce as much income as is necessary to provide for your standard of living.
The features of the policy fix it so no one but you can get to the money. Not even the insurance company that provides the money can reduce or remove the guaranteed funds. Such a policy is like having $500,000, $1,000,000 $5,000,000 or more locked up in a wall safe that is ready for your use at any time it is needed.
This money enables you to be a continuing consumer rather than a deprived person rapidly consuming all that you have been able to accumulate in savings and in assets; borrowing all you can from banks who treat you badly and from relatives and friends who wish they had never known you.
THIS MONEY IS
- INSTANT – you don’t have to accumulate for years.
- TAX FREE – even if you are wealthy this is important
- ALWAYS AVAILABLE – each time you are sick or hurt, not a single fund that once used is gone forever, which is the case with savings or investment accounts.
Missing from this great story is the answer to the question, “Is this $1,000,000 for ALL sickness and accidents the Insured may sustain in a lifetime, or does it mean $1,000,000 for EACH accident, EACH sickness or any recurrence of a previous condition”?
The ALL PLAN means $1,000,000 for ALL claims in the Insured’s lifetime. This is an Aggregate policy, like a Medical Plan that limits benefitson all claims to a lifetime maximum aggregate benefit.
The EACH PLAN means the $1,000,000 benefit is available for EACH accident, EACH sickness and any recurrence of aprevious condition. This is a NON-AGGREGATE PLAN, meaning that the plan contains a Recurrent Clause that regenerates full benefits for each future claim.
According to the respected Merck Manual there are more than 5,000 known diseases that can affect the human body.
If all things were similar except the aspect of Aggregate benefits, which choice would be best?
Aggregate would cover $1,000,000 total for ALL sickness and accidents.
Non-aggregate would provide $1,000,000 for each sickness, each accident or each recurrence.
The words “Aggregate Benefit” are not used in all policies so a careful inspection of the words used to single out the intent of the policy is a good idea.
THE PERSPECTIVE OF THE CONSUMER
Consumers are used to assuming a large number is adequate for their needs. In buying life insurance, the consumer selects a lump sum amount that he/she deems adequate, such as $1,000,000 not realizing the continuing family needs for $10,000 per month will only last 100 months, or 8 years!
Consumers that buy $1,000,000 lifetime maximum medical plan may feel they have adequate coverage not realizing each claim is subtracted from the $1,000,000 making the plan less and less adequate.
| CLAIMS PAID | Benefits Paid | Remaining Lifetime Aggregate Benefit |
Non-Aggregate |
| $1,000,000 | $1,000,000 | ||
| Insured – Open Heart Surgery | $280,000 | $720,000 | $1,000,000 |
| Spouse – Liver Transplant | $190,000 | $530,000 | $1,000,000 |
| *Son – Spinal Cord Severed | $300,000 | $230,000 | $1,000,000 |
| (-70,000) | $1,000,000 |
Claims in these claim dimensions become uninsurable and therefore are limited to the remaining dollar amount in the plan.
PERSPECTIVE CONTINUED
A consumer buying disability insurance is often misled into the belief he/she has adequate coverage. A critical measure is the total net monthly benefit cash flow. Group insurance or any coverage paid by the employer is subject to taxes. A $5,000 per month benefit after tax may be only $3,000.
The next consideration is the adequacy of the benefit period. Two years, five years, to age 65 may sound adequate and statistically it may be on a single claim basis. What must be considered is if the benefit period applies to ALL claims during the life of the policy or it applies to EACH claim.
A financial executive related to an employee of PIU, has missed three years of work. It appears the last of three operations for a brain tumor has been successful. He is back at work, driving his business car and playing golf. It is very possible the tumor could again become active. Should that happen, his accumulated aggregate benefits become a critical matter.
| If insured by Company PF | If insured by Petersen International | |
| Benefit Period | 60 months | 60 months |
| Benefits paid in this case | 36 months | 36 months |
| Nature of plan | Aggregate | Non-Aggregate |
| Benefits available for new claim | 24 months | 60 months |
| Benefits available for recurrence of previous claim | 24 months | 60 months |
Unlike certain competitors High Limit Disability plans, the Petersen International Plans DO NOT IMPOSE THE LIMITATIONS OF AGGREGATE BENEFITS.
Instead we have a desirable benefit seldom discussed, but substantial in value. It is called THE RECURRENT CLAUSE.
The Recurrent Clause fixes it so the policy regenerates itself to it’s original Maximum Benefit Amount. This is of great consumer value for the pattern of disability is seldom one long single period of disability, but instead it is a series of shorter-term benefit periods of disability. We get hurt and recover. We get sick and recover. We get sick again. Each disability qualifies for a full benefit period. In the case of recurrence of a prior condition, there is a fresh full benefit if the person has returned to work for six months and one day.
Policies may have similarities in the policy provisions and look alike, but, if there is no Recurrent Clause, it is an AGGREGATE BENEFIT Policy. A comparison of policy provisions is essential.
A checklist of Comparison Points is frequently handy in selecting a plan for your clients.