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INSURERS SCALE POLICIES DOWN

Disability insurers are cutting some chrome from their Cadillac policies and marketing the new models as serviceable economy vehicles.

Some insurers are scaling back on individual "own-occupation" policies, whose market has generally been white-collar professionals. Such policies pay if an injury or illness prevents you from working at your own profession, even if you can work at another job.Until recently, own-occupation policies were frequently offered with noncancelable guarantees, meaning buyers paid a fixed premium throughout the life of the contract. Now insurers, trying to recover from big claims on those products, are dangling policies with premiums that run up to 35 percent cheaper but offer sharply pared-back benefits.

One company phasing out its own-occupation policy is Unum, whose new plan includes incentives to return to work. The traditional noncancelable contracts would have become "prohibitively expensive," a spokesman says.

Mutual of Omaha offers an own-occupation option covering five years, after which you must seek other employment if you're able. For a 40-year-old nonsmoking male earning $50,000 annually, that policy, with a 90-day waiting period, runs about $825 a year.

As states approve the new policies, Provident Life & Accident will sell noncancelable contracts only for policies that protect earnings, not profession: They won't pay a brain surgeon with a disabled hand to stay home, but they will make up some lost income if he or she takes a teaching job.

Such a policy for the 40-year-old male in the example above would cost about $1,080 a year, compared with about $1,320 for an existing noncancelable own-occupation policy.

If you're underinsured for disability (as most people are), the new policies offer a chance to get basic coverage at lower rates.

But if you want to get in on some of the older, benefit-rich policies, do it now: Unum, for example, is still selling them while applying for state approval of the new policies, a transition that should be completed within a year or so.