Two Disability Policies?

HealthGuy

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Recently was speaking with a beautician who owns a shop...She said something to the effect that she has two disability policies - one that pays her bills in the event of her disability and one policy that pays her storefront's bills in the event she is disabled? This seemed like a wierd statment? Do beauticians who own their own storefront business often have two disability policies in effect, and how does that work? And if two are in effect, and she becomes disabled, would both policies pay at the same time, or only one policy pay until the other is exhausted? I didnt know you could potentially have TWO disability policies, but maybe you can - like having multiple life policies???
 
Business Overhead coverage....It can be very important for a business with only the owner as employee to be able to continue to pay the expenses for the business upkeep while the owner is disabled.....

So she has 1 policy that pays a percentage of her net income and 1 policy that pays business expenses
 
Also, excluding the BOE policy, anyone can have more than one personal policy.

The guidelines relate to income and occupation. Certain occs can buy higher percentages of income replacement, usually white collar, while blue collar are limited to less than full replacement, sometimes 60%, 75% and so on.

If a person has 60% income replacement occ, they can buy as many DI policies as they like as long as the combined DI benefits from all of the policies don't exceed the 60% total income replacement. It is not the best way but can be done.

Example:

Client has $6,000 income per month at 60% replacement, so they are eligible for up to $3,600 of DI personal coverage.

They can buy the $3,600 from one carrier or from multiple carriers, so long as the total of all DI policies does not exceed the $3,600.
 
This forum is a great resource. It's only natural to have lots of questions when you first start. Glad to see you're out there talking to business owners.

Many answers to your question lie in old threads. I suggest you take some time and go through them. In the life forum, you will find some great insights from agents who no longer post on this sight. Go read everything James wrote.

If you really want to get a handle on DI, go check out the DI website.

Avoid the health insurance forum. It's filled with crackers and jackasses and those who got their license from a crackerjacks box!:D:goofy::1tongue:
 
Also, excluding the BOE policy, anyone can have more than one personal policy.

The guidelines relate to income and occupation. Certain occs can buy higher percentages of income replacement, usually white collar, while blue collar are limited to less than full replacement, sometimes 60%, 75% and so on.

If a person has 60% income replacement occ, they can buy as many DI policies as they like as long as the combined DI benefits from all of the policies don't exceed the 60% total income replacement. It is not the best way but can be done.

Example:

Client has $6,000 income per month at 60% replacement, so they are eligible for up to $3,600 of DI personal coverage.

They can buy the $3,600 from one carrier or from multiple carriers, so long as the total of all DI policies does not exceed the $3,600.

I think that you should be aware that she has the ability to throw on a group disability policy to supplement the individual disability. Group disability insurance does not offset individual disability insurance. To my knowledge, at the time individual disability is implemented the application asks if any group DI is in place. If none is in place, then IDI does not acknowledge group if written after the fact. Check with your individual disability carrier to make sure. Also note that you are overinsuring your client and that there is no incentive to come back to work, which is frowned upon (by insurance carriers).
 
True. One can cover her individual income so she can put food on the table for her kids when disabled. The other covers fixed operating costs so that the fact that your disability has caused expenses to rise over your now lower accounts recievable does not force you to close. You can retain the value of your business to buy time to recover, or decide to sell if you can not recover.

Types of disability insurance include: (get ready...)

Individual Income
Business Overhead Expense
Business Buy Sell
Business Loan Indemnification
Keyman Disability
Severence Pay Disability
Unemployed Disability
Mortgage Disability

(did I miss one? It's a wild world...)
 
You can have as many DI policies as the carrier's participation tables allow, the last one to issue, looks at the one's already in force..however, that being said it sounds like she has an individual and a business overhead policy, each doing a different job!
Larry
 
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