Talk to your Aloha Insurance agent who sells you your life, health, auto or business insurance — he or
she may either sell disability coverage or will be able to refer you to an Aloha Insurance agent who does.
Make sure that you understand what you are buying. Don’t be afraid to ask your Aloha Insurance agent to
explain exactly what is in the policy.
Key things to look for when you shop around
The definition of disability
Some policies pay benefits if you are unable to perform the customary duties of your own
occupation. Others pay only if you are unable to perform any job suitable for your education
and experience. Some policies define disability in terms of your own occupation for an initial
period of two or three years and then continue to pay benefits only if you are unable to perform
any occupation. "Own occupation" policies are more desirable, but more expensive.
Benefit period
The benefit period is the amount of time you will receive monthly benefits during your life. Experts usually
recommend that the policy you buy pay you benefits until at least age 65, at which point Social Security
disability will take over. If you are young, you may consider buying a policy offering lifetime benefits
because it will still be relatively inexpensive.
A policy that will replace from 60 percent to 70 percent of your total taxable earnings
A higher replacement percentage, if available, is more expensive. Evaluate your other sources of income
before deciding how much disability coverage you need.
Coverage for disability resulting from either accidental injury or illness
An accident-only policy is less expensive but does not provide adequate protection. Ideally, both accident
and illness coverage should be purchased.
A cost-of-living increase in benefits
You are buying a policy today that may not pay benefits for a decade or more. Should you need those benefits,
you will want them to have kept pace with increases in the cost of living. (Some companies also offer "indexed"
benefits, keeping pace with inflation after benefit payments begin.)
A policy paying "residual" or partial benefits
This type of policy is available so that you can work part-time and still receive a benefit making up
for lost income. A standard feature in some policies, and added by a rider to others, a residual benefits
policy pays partial benefits based on loss of income without an initial period of total disability.
Transition benefits
Offered by some companies, it can offset financial loss during a post-disability period of rebuilding a
business or professional practice.
Ongoing coverage
A non-cancelable policy which will continue in force as long as the premiums are paid; neither the benefit
nor the premium can change. A guaranteed renewable policy keeps the same benefits but may cost more over
time since the insurer can increase the premium if it is increased for an entire class of policyholders.
Financial stability
Check the financial ratings of an insurer. Your insurance agent or company representative should provide
this information or check with the following companies, which rate insurance company strength:
- A.M. Best Company, Inc.
Ambest Rd.
Oldwick, NJ 08858
908-439-2200
www.ambest.com
- Fitch Ratings
1 State Street Plaza
New York, NY 10004
1-800-75-FITCH
www.fitchibca.com
- Moody’s Investor Services
99 Church Street
New York, NY 10007
212-553-0300
www.moodys.com
- Standard & Poor’s Insurance Ratings Services
55 Water Street
New York, NY 10004
212-438-2000
www.standardandpoor.com
- Weiss Research
15430 Endeavor Drive
Jupiter, FL 33478
800-289-9222
www.weissratings.com
Waiting period
Every disability policy imposes a waiting period, also known as the elimination period. This is the number of days
you must be disabled before receiving benefits. If you are disabled during the elimination period, you will not receive
any benefits, even though you are not able to work. If the elimination period is short, such as 30 or 60 days,
the premium will be higher. A longer elimination period may strain your finances more when you need it, but you
will be charged a lower premium. Most experts recommend that you select an elimination period of 60 to 90 days.
The first check is usually paid 30 days after the waiting period.
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