There are several important steps to take when comparing disability insurance quotes and selecting the best policy. The most critical step is ensuring that you are comparing apples to apples. Disability insurance can be confusing due to the many variables involved, including riders, occupational definitions, guarantees, benefit periods, and waiting periods. For this reason, price should be the last factor you compare.
When it comes to riders, each carrier has slight variations, but most policies include the same core options: the residual benefit rider, Cost of Living Adjustment (COLA), catastrophic disability rider, and future increase riders. Each of these serves a specific purpose.
Residual Benefit Rider: This rider pays benefits if you are not totally disabled but are still unable to fully perform the duties of your occupation. As long as you experience a qualifying loss of earnings (which varies by carrier), you will receive a portion of your benefit proportional to your income loss.
Cost of Living Adjustment (COLA): While you are disabled and receiving monthly benefits, this rider increases your benefit to help keep pace with inflation. The increase is calculated on a compounded basis based on annual changes in the Consumer Price Index for All Urban Consumers (CPI-U), up to a maximum annual increase of 3%. If the CPI-U change is zero or negative, your monthly benefit remains unchanged.
Catastrophic Disability Rider: This rider provides an additional monthly benefit on top of your base disability benefit if you become catastrophically disabled due to injury or sickness. Benefits may be payable if you:
- Are ADL disabled, meaning you are unable to perform two or more activities of daily living (bathing, continence, dressing, eating/feeding, toileting, or transferring) without assistance;
- Are cognitively impaired, defined as a measurable impairment of short-term or long-term memory, orientation to people, places, or time, or deductive or abstract reasoning that severely limits independent functioning; or
- Are presumptively disabled, such as the total and permanent loss of speech, hearing in both ears, sight in both eyes, or the use of both hands, both feet, or one hand and one foot.
Future Increase Riders: These riders vary by carrier, but generally fall into two categories. The first automatically increases your benefit each year—typically by 3% compounded—without requiring evidence of insurability. You may accept the increase by paying the higher premium.
The second allows you to increase your benefit up to the maximum amount you are eligible for, also without submitting new evidence of insurability at the time of increase. However, you must medically qualify for this rider when the policy is first issued.
With respect to occupational definitions, it is essential to have an own-occupation policy. An own-occupation definition considers you disabled if you are unable to perform the material and substantial duties of your specific role as a veterinarian. Under this definition, the policy will pay full benefits even if you are able to work and earn income in another field. This structure is designed to protect the significant investment made in veterinary education and training.
By contrast, an any-occupation definition is far more restrictive. It only pays benefits if you are unable to work in any occupation for which you are reasonably qualified based on your education, training, or experience. As a result, a veterinarian who can no longer perform clinical duties—such as surgery due to a hand injury—may receive benefits under an own-occupation policy, but could be denied benefits under an any-occupation policy if they are capable of working in a non-clinical or administrative role.
You will also want to ensure that your policy is noncancelable and guaranteed renewable. This prevents the insurance company from changing your coverage, benefits, or premiums without your consent. Association and group plans typically do not offer these guarantees, which is why they are often less expensive initially; however, they should generally be avoided if possible.
Benefit periods typically range from five years to age 65, 67, or 70, depending on the carrier and underwriting guidelines. The longer the benefit period, the higher the premium. Waiting periods work in the opposite manner. Common waiting periods include 30, 60, 90, and 180 days, with shorter waiting periods resulting in higher premiums.
When comparing quotes, it is essential to understand all of these variables and select a policy that aligns with your coverage objectives. Once the policy features match, you can then begin comparing cost. It is always best to use an official illustration from each carrier and ensure that all policy features discussed in this article are consistent. Doing so will allow you to make an accurate and meaningful comparison of price.
