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The case for disability insurance

March 1, 2012
At times, the stars are simply aligned more perfectly for some than others. For Jean Rockwell, it seemed that the stars were not aligned ...
Protecting your career

By Colene W. House, RDH

At times, the stars are simply aligned more perfectly for some than others. For Jean Rockwell, it seemed that the stars were not aligned for anything but disaster when she was forced to hang up her scalers for the last time in 2009. A year earlier, she had been diagnosed with carpometacarpal (CMC) arthritis, which affects the joint at the base of the thumb. Her doctor explained that if she didn’t stop working as a clinical dental hygienist, he would have to rebuild her CMC joint within five years.

Jean was devastated. She had to leave her job of 23 years. Co-workers had become close friends, her boss had been her mentor and friend, and long-time patients were like family to her. Understandably, she was lonely and disoriented. Jean felt that her days were empty and incomplete, and she struggled to find a new direction.

Despite the bad news, Jean’s stars were realigning in a way that she would never have expected.

First, let’s look back in time a bit. Shortly after Jean graduated from dental hygiene school in Pensacola, Fla., she moved to California. She began to attend meetings at the local professional dental hygiene association. Craig Gussin, the owner of a local insurance agency, spoke at one of those meetings. He made a strong case about the importance of self-owned disability insurance for dental hygienists, and explained the important aspects of different types of disability coverage.

One of the most compelling facts to understand is that benefits received from an employer-paid group policy are always taxed. Self-owned policy benefits are tax free. Craig made such a strong impression on Jean that she purchased a policy that would ensure financial stability in the event of disaster.

“It just made sense,” Jean once told me.

At times, Jean wondered about the wisdom of putting out the money month after month. She was single at the time, and there was no one else around to take care of her if she became unable to work. However, Jean never dreamed that 29 years of practicing clinical dental hygiene would eventually take such a devastating toll on her most valuable asset — her hands.

Because of that chance meeting 25 years earlier, Jean was able to breathe a little easier after her diagnosis of CMC arthritis. She knew that her disability policy created a financial safety net. Even with that financial help, Jean realized that she would not be living in the lap of luxury. She would at least be able to pay the bills, and she would not lose the home she loved so much.

In an effort to work just a bit longer, Jean cut her workweek from four days down to three for a year before she quit completely. Ah, wouldn’t it be nice to have a romantic picture of Jean walking off into the proverbial sunset? Or perhaps you might see her lounging on the beach or by the pool, sipping a nice glass of iced tea, sunglasses perched on her nose, enjoying a mystery novel.

Yet another matter was affecting her. She was suffering from separation anxiety. Dental hygienists are a different breed. We really love what we do, day in and day out. Patient care is an important source of fulfillment and accomplishment for us. It is who we are. Being a dental hygienist gets woven into the very fiber of what we are — not just as clinicians, but as human beings. We love our patients, as well as the personal connections we have established with them. The loss of those relationships created a huge rift in Jean’s universe.

Jean worried that her patients would not be cared for when she no longer could do it herself. She worried that the office would not run as smoothly without her. They were, and it did — and that made it worse. She felt as if no one needed her.

Her insurance agent, Craig Gussin, stepped in. Craig had become a friend, and helped her through the process of filing her disability claim. However, he didn’t stop there. Craig wanted Jean to come with him to speak to other dental hygienists and dental hygiene students. He wanted her to tell them her story, and hoped that they would also see the wisdom of investing in their financial futures.

Jean and I had become acquainted after she read my article about my own experience following a diagnosis for CMC arthritis. At one point, she contacted me in a panic. No way could she get up and speak to a bunch of strangers!

“Just tell them your story, Jean,” I told her. “Pick out one person, and start telling her your story. Before you know it, you will include everyone else in the conversation.”

That’s when the stars finally slipped into their final alignment. Jean found a new direction. She became licensed as an insurance agent, which is not an easy task. She now speaks to groups of dental hygienists about investing in themselves, and in their futures. Jean has found other retired colleagues and has established a new family of friends. She loves her new life, as well as her new direction. Once again, Jean has become instrumental in helping others. She has become a valuable resource and role model for those of us who haven’t yet seen the light.

Consider the important information from Jean (see related article).

Me? I wasn’t as informed as Jean. I should have taken my husband seriously when he jokingly told me to insure my hands with Lloyd’s of London after I had a carpal tunnel release in 1989. What else could possibly go wrong?

I thought I would have no financial worries since I had disability insurance with my employer. But when I had the surgery to rebuild the CMC joint of my right hand in January 2010, I was looking square in the face of financial disaster. With a cap of 60% of my gross earnings on which I would have to pay taxes (since my employer paid the premiums), my safety net was riddled with holes.

Luckily, I have recovered and returned to work full time. The stars aligned for me in a different way. I became “e-friends” with Jean Rockwell. We recovered together — I from the surgery, she from becoming disabled.

In Jean I have found a true friend and compatriot. We both have a strong desire to help others realize the wisdom of investing in the future of their careers by purchasing disability insurance. Because no one knows what tomorrow will bring.

Colene W. House, RDH, is a 1971 graduate of Central Piedmont Community College in Charlotte, N.C., and has devoted the last 40 years to clinical dentistry. Recently, House has discovered a love of speaking and writing about her experiences over the years. She is the owner and moderator of an online support group, for hygienists who suffer from CMC arthritis. She can be contacted at [email protected].

Important features for disability insurance policy

by Jean Rockwell, RDH

The disabling definition is the most important, central part of the disability insurance policy. Most desirable is the Own-Occupation definition (sometimes referred to as True Own-Occ).

Own-Occupation definition — “You are unable to perform the substantial and material duties of your regular occupation, and you are under the regular care of a physician appropriate for your injury or sickness.”

What does this mean? The insurance company will consider your occupation to be the occupation you are engaged in at the time you become disabled. It will pay benefits even if you return to work in another profession. Also, any money you might be eligible to receive from workers’ compensation, SDI or Social Security disability income, etc. will not be deducted from your monthly DI benefit.

• Example: If surgeon Dr. Jones develops a tremor that prevents him from practicing as a surgeon, he can collect disability benefits even if he returns to work as a family practice physician. As a surgeon, he earned $300,000 per year. He had a disability insurance benefit of $180,000 per year. While collecting benefits of $180,000 per year, he can earn an income of $150,000 per year (or any other amount) as a family physician, and his disability benefits will not be affected.

The second most desirable definition is called Modified Own Occupation.

Modified Own-Occupation definition — “You are unable to perform the substantial and material duties of your regular occupation; and you are not engaged in any other gainful occupation; and you are under the regular care of a physician appropriate for your injury or sickness.”

In other words, this means after you become disabled, if you choose to work in another profession, you will be able to get a percentage of your benefit through a partial disability provision that will be based on the percentage of income loss from what you were earning before becoming disabled.

• Example: Once Dr. Jones returns to work as a family practice physician, he can no longer collect full disability benefits. His disability benefit will be based on a percentage of lost income. In this case, his annual benefits of $180,000 would be reduced to $90,000 due to having a 50% loss of income. Remember, his income is now $150,000 instead of his predisability income of $300,000.

The least desirable disabling definition is called the Any-Occupation (often referred to as Any Gainful Occupation).

Any-Occupation definition — “Because of injury or sickness you are unable to perform the material and substantial duties of Your Occupation, or Any Occupation for which you are deemed reasonably qualified by education, training, or experience.”

• Example: The insurance company determines what type of work is suitable for Dr. Jones. If Dr. Jones were deemed suitable for other work due to his prior education, training, or experience, he would not be eligible for any disability benefits. Would the insurance company expect him to flip burgers? Probably not. But, why take the chance?

Partial or residual benefits is the next feature that is extremely important for the dental hygienist to have included in his/her disability insurance policy.

This rider (or in some cases, it is included free in the policy) is essential because in many cases, disabled individuals can work part time, but not full time. The partial/residual benefits rider pays a percentage of monthly earnings if the insured suffers a loss of income of usually 20 percent or more. This benefit can pay you continuously to age 67. This eliminates the “all or nothing” benefit structure. Be careful to read the definition of this rider before you purchase a policy. As a dental hygienist, you want the definition to read that you can be eligible for partial benefits to age 67, prior to going out on full disability.

• Example: In my case, when I was diagnosed with a disability, my physician recommended that I cut my hours. We had hoped that this would help alleviate my pain and give me the ability to continue to work part time. At the time, I was working four days a week.

I cut my hours by one day a week, which gave me a 25% loss of income. Because my partial disability rider was written that I could use this feature if I was partially disabled prior to full disability, I was able to collect a partial benefit (25%) after my wait or elimination period.

I was on partial disability for about 12 months before the pain was too much and I had to go on full disability and retire completely from clinical dental hygiene. This scenario is most common among dental hygienists that are diagnosed with a disability.

Another definition of partial/residual disability is when the insured becomes disabled and is attempting to return to work on a part-time basis. This definition can help facilitate a friendlier, more gradual return-to-work experience. An example of this scenario would be, if I was working full time making $50,000 annually, was disabled, and then returned to work part time earning $25,000 a year, I would have a 50% loss of earnings and I would continue to receive a 50% disability benefit.

Future Purchase Option/Future Increase Option — Another option to consider when searching for a comprehensive disability insurance policy. This option (otherwise known as guaranteed insurability) allows policy holders through age 51 to purchase additional coverage — regardless of health — without the need for a medical exam or blood tests.

Automatic Increase Rider (AIR) — Another rider which is a good option to have when available. This rider increases the monthly benefit for the first five years to keep pace with inflation. The AIR is free to have and can increase the benefit while not on claim.

Cost of Living Rider (COLA) — This applies to those who are disabled for more than one year. It automatically increases the benefit while on claim each year to the end of the benefit period so the benefit keeps up with inflation. Some policies increase by a fixed amount each year while others are indexed to inflation. COLA is of particular value to purchase at ages under 40. For example, a COLA is much more important to someone who was permanently disabled at age 26 than it is to someone who was disabled at age 56.

There are four types of “renewal” provisions to consider when purchasing a disability insurance policy:

• Non-cancelable (most desirable) — This provision guarantees that after a policy is in effect, there will be no changes to the premium or to the policy benefits through age 65 — regardless of the insured’s working status, health or income level.

• Guaranteed renewable (second most desirable) — The insurance carrier cannot change the premium or the benefit for an individual, but it can make a change to the premium for an entire group of policyholders, categorized by state, underwriting class, or policy year. The change would need to be approved by insurance regulators before going into effect.

• Conditionally renewable (less desirable) — This provision is found in group and association plans. It states that the policy is renewable only if the insured continues to meet certain conditions outlined in the policy. The most common condition for renewal is maintaining full-time employment (group) of membership (association). The carrier may increase the premium at the anniversary date or at prescribed age bands, such as five-year increments.

• Optionally renewable and/or cancelable (least desirable) — These provisions allow the insurance carrier to change the terms or cancel the policy at an individual level. This type of policy should be used only if nothing else is available. It provides immediate protection — but no guarantees.

Here are some common terms to know when researching a disability insurance policy.

√ Elimination period — Also known as the “waiting period,” this is the period of disability that must elapse before benefits commence. Typical EPs are 60, 90, or 180 days.

√ Benefit period — This is the length of time that benefits will continue from the date they begin. Typical BPs are two years, five years, or to age 67. The most desirable BP is to age 67.

√ Benefit amount — The benefit amount is typically 60% of gross pay, up to a limit of $15,000 per month.

As you can see, there is a lot of information to consider when looking for a good disability insurance policy. Most of these policies can be customized to fit your needs and budget. Just remember that some coverage is much better than having no coverage at all!

Jean Rockwell, RDH lives in San Diego, California. She is passionate about educating other dental hygienists on the need to protect their futures with disability insurance. She can be reached at [email protected]

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