Lawyers Journal

Disability income insurance: What every attorney needs to know

You know how it feels when a client ignores your advice — well-founded advice, based on years of experience … advice that could stave off years of serious trouble or personal disaster. Frustrating, isn’t it?

But in your financial life, you may be doing something similar, perhaps without being aware of it. The truth is there’s one valuable precaution that you may not have taken seriously enough — and that is to make sure you’ve got the correct disability income insurance (DI) coverage for your profession. Perhaps you believe that you are fully covered by a group policy your firm has purchased. However, the truth is that while group DI is often relatively inexpensive and easy to administer, it can also fall short just when you need it most — leaving you in for some unpleasant surprises when it’s too late to correct the situation.

Furthermore, disability may be far more common than you imagine. Even if you’re young and careful, it could happen to you — through an accident, an injury or a lengthy illness. And in fact it does happen — probably much more often than you might think.

According a Gallup survey conducted for UNUM Corporation (508 respondents ages 30 to 65), reported by Best’s Review, most people believe they have only a 16 percent chance of becoming disabled during their working years. The startling reality is, according to the “Why Disability” booklet, published by National Underwriter:
  • If you’re under age 35, chances are one in three that you will be disabled for at least six months during the course of your career.
  • Men have a 43 percent chance of becoming seriously disabled during their working years. Women have a 54 percent chance.
  • At age 42, it is four times more likely that you will become seriously disabled than that you will die during your working years.
Want to be better prepared? Consider the following:

High-quality policy features
The right disability income policy can help you keep your household going, even if you suffer a long-term disability. But before you go shopping for a DI policy, you need to know what features to look for.  A high-quality policy will have the following features available:
  • Non-cancellable: non-cancellable and guaranteed renewable to age 65 — with premiums also guaranteed until age 65.
  • “Own-occupation”: Own-occupation coverage defines “totally disabled as being unable, due to sickness or injury, to perform the material and substantial duties of your own occupation even if you are at work in another capacity.
  • Residual disability coverage: provides you with protection against the income loss you may suffer as a result of partial (residual) disability.
  • A choice of “riders”:  Riders offer optional additional coverage such as Future Increase Options, Automatic Increase and Cost of Living Adjustments, or “COLA.”
Protecting your business, as well as yourself
You must also protect the source of your income — the firm you’ve worked so hard to establish and grow:
  • Overhead expense helps meet the expenses of running the office while you are disabled. Benefits reimburse your practice for expenses such as rent for your office, electricity, heat, telephone and utilities, as well as interest on business debts and lease payments on furniture and equipment.
  • Disability buy-out is essential for lawyers who are partners in a group. The plan is designed to fund the healthy partners’ purchase of the disabled partner’s share of the business.

Take the time to consider upgrading your DI coverage today. Having the right DI coverage could be vitally important to your economic well-being in the future — and help protect one of your most valuable assets: the ability to earn an income by practicing law.

In the case of DI protection, as in your legal work, a little extra planning and research in advance could prove invaluable at a later date. The truth is, successful professionals often need far more complete DI coverage than is provided through their firm’s group policy or through association coverage.

How does your coverage stack up?
To find out, contact me or Mecheal Hamilton for a free consultation — specifically to help you compare your present coverage to an individual own-occupation policy for professionals, tailored to suit your individual needs. As the MBA-endorsed insurance provider, MB Insurance, Inc. welcomes the opportunity to work with you in assessing your needs and existing coverage.

For a free consultation, call (800) 749-2118 or e-mail [e-mail mhamilton]. You may also visit the Web site at:  www.massbarinsurance.com/health-life-disability.

©2014 Massachusetts Bar Association