Accelerated Benefit Disability Insurance
High-limit disability insurance is the cornerstone of sound financial planning for high-net-worth clientele. Life insurance, estate planning and retirement planning are certainly important, but without sufficient protection of one’s income, the entire strategic game plan fails and families are left financially at risk. Earned income is our most crucial asset as it supports most of life’s daily endeavors. It must be protected.
High-limit DI can be achieved in various ways of differing benefit ideologies and definitions. Traditional carriers of group and individual long-term disability insurance employ level monthly benefit periods to age 65 or 67 (and in rare instances 70) of the insured person with the intent of providing income replacement until that insured person hits usual retirement ages. The secondary and specialty DI markets allow for higher limits of excess or supplemental DI coverage, providing benefits on-top of traditional insurance. But due to underwriting flexibility and the higher-risk allowances of the secondary markets, benefit periods are more limited than those of traditional carriers.
Benefit periods are commonly limited to 60 to 120 months by high-limit DI carriers. Petersen International frequently employs the additional use of lump sum disability benefits in combination with monthly benefits to best simulate the longer benefit periods of non-cancellable disability policies offered in the domestic market. This model of a limited-duration, specialty-specific, “own-occupation” monthly benefit followed by a robust lump sum payout has served the high-net-worth market well for decades.
In that successful benefit platform, the shortcoming of the lump sum benefit is that the trigger for disability is based on a permanent total disability definition. If we examine the wording more closely and focus on the “permanent” portion of the definition, we discover that the insured must have no chance of recovery in his or her occupation to be deemed permanently disabled and be eligible for the benefit.
Petersen International has developed a solution to the permanent total disability definition dilemma with the creation of the Accelerated Benefit excess disability program. The Accelerated plan is unlike any supplemental disability policy that came before. It is “top of the line.” Instead of the common permanent total disability definition, the product provides a temporary total disability definition on both the monthly and lump sum benefits. By improving the benefit definition to temporary total disablement, Petersen International has allowed the insured to collect the additional lump sum benefit without having to meet the more stringent guidelines associated with “permanent disability” insurance. Practically speaking, after the insured has received 120 months of disability benefits, the remaining aggregate monthly benefits, payable to age 65, 67 or 70, will be paid to the insured in a single accelerated sum.
Contact Petersen International today at (800)345-8816 to receive more information about supplemental disability insurance policy definitions and the Accelerated Benefit disability program.