Suddenly, disability insurance is being offered to everyone

Staying Ahead

March 03, 1997|By Jane Bryant Quinn | Jane Bryant Quinn,Washington Post Writers Group

THE INSURANCE companies that sell disability policies are finally discovering America.

In the past, they sold principally to high-earning professionals such as doctors and lawyers. Now they're noticing everyone else: midlevel professionals, small business owners and employees, business executives and managers, technicians, skilled clerical and white-collar workers, "gray-collar" workers in high-tech manufacturing plants.

"Real opportunities exist in the middle market," says Timothy Gardner, a manager at Conning & Co. in Hartford, Conn.

This new group, however, can't afford the fancy individual policies that doctors and lawyers buy. So the trend today is toward developing stripped-down group coverage, to be sold through the workplace at a lower cost.

Disability insurance protects your earning power. It pays you a specified monthly income if, due to illness or accident, you're not able to hold a suitable job.

You're covered for disability under Social Security, but it pays only if you're truly pulverized, physically or mentally. You're not eligible if you're able to work in any substantial job.

Private insurance, by contrast, can pay when illness or accident damages your earning power without destroying it completely. It also can pay higher benefits.

Disability insurance is especially important for single people. They should buy it in preference to life insurance, if they have no dependents. Married people need protection if their spouse couldn't earn enough to support the family at an acceptable level.

What might you pay? A ballpark price at Unum Life Insurance Co. in Portland, Maine, might be $20 to $25 a month, if you're in your mid-30s and buying a benefit worth $1,500 a month, says Vice President Eric Helsley. That's well below the price of comparable individual coverage -- at Unum, maybe $70 a month for a mid-30s man and $100 for a woman (women pay more because they make more claims). Group policy prices rise with age, but not by a lot.

Most larger employers have offered disability coverage for years, but perhaps only to their office, middle-management and executive staffs. Insurers are interested mainly in workers with well-paid jobs that are interesting and physically safe. Presumably, such people will go back to work as soon as they can, rather than malinger on disability pay.

Nowadays, however, safe, well-paid jobs can also be found on the manufacturing floor. In high-tech shops, for example, production workers program computers rather than run heavy machinery. That makes them more like office workers than traditional blue-color employees. They're being offered disability coverage, because they pose much less risk.

Unum also now sells coverage to such previously uninsurable risks as sheriffs and police officers, says President Elaine Rosen. Its catastrophic-disability policy pays if you're so disabled that you need help with basic life activities, such as feeding, bathing and dressing.

Solving another problem, MassMutual Life sells a policy that replaces the pension credits you lose during years when you're totally disabled, says Charles Lanigan, an expert on disability insurance.

Policies of the future will cast an even wider net, predicts James D. Johnson, spokesman for Paul Revere Life Insurance Co. in Worcester, Mass. "We'll need coverage for part-timers, for people who function at more than one workplace, for people whose income goes up and down and for dual-income couples who might want a policy that pays if either is disabled."

There are many ways to pay for disability coverage in the workplace. Sometimes the company pays all. Sometimes you pay, through payroll deduction. Sometimes the company gives you a basic benefit to which you can add.

Add if you can, especially if the coverage is portable. Many policies can be kept when you leave the job -- some for one year, others to age 65 -- without your having to pass a health exam.

You sometimes get a choice between buying your employee coverage with pretax dollars (not reported as taxable income on your W-2) or with after-tax dollars. Pretax is cheaper, but if you're disabled you'd have to pay tax on your benefits.

Pub Date: 3/03/97

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