DISABILITY CONCEPT DEFINITIONS
Terms to help you understand how disability coverage works.
WHAT ARE POLICY RIDERS?
The max monthly payment you receive for an approved claim based on your income This amount is typically received tax-free BENEFIT AMOUNT
WAITING PERIOD
The amount of time you must wait after the onset of an illness or injury before monthly benefits on a new claim can be paid
The max amount of time you can receive benefits on a claim while disabled. BENEFIT PERIOD
Riders are optional plan provisions/add-ons that modify your policy’s basic coverage These can include options like
RESIDUAL/PARTIAL
Pays partial benefits if you can still work but not at full capacity, causing your income to be reduced by at least 15-20% depending on the carrier.
COLA
Increases your monthly benefit each year to keep up with inflation Typically starts at 3% in the second year of an active claim
OWN OCCUPATION
Pays full benefits if you're unable to work in your specialty, even if you can work in another field Without it, any earnings from another specialty would impact your paid benefit
FUTURE INSURABILITY
Lets you increase your coverage later without another medical exam or health questions Premium rates for future increases are based on your age at the time of the increase Available terms and rider types can vary by carrier
LEVEL VS. GRADED PREMIUMS - WHAT’S THE DIFFERENCE?
Level premiums are based on your starting benefit amount and stay the same for the life of your policy.
Graded premiums start lower and increase as you age.
A FEW THINGS TO KEEP IN MIND...
HEALTH INSURANCE BASICS
Here are definitions to know as you review options for health coverage:
DEDUCTIBLE
What you must pay for most medical expenses before the plan pays claims. A family deductible is 2x this amount.
MAX OUT-OF-POCKET
(Or OOPM) The most paid in a plan year. Once met, the plan pays 100%. A family OOPM is 2x this amount.
COINSURANCE/COPAY
The patient’s cost for specific care
Coinsurance = % charge
Copay = Flat $ charge
METAL TIERS
Categorizes plans based on how much they pay. In order of amount they are: Bronze, Silver, Gold, and Platinum.
FORMULARY
A list of prescription drugs covered by your plan. Medications are grouped into tiers by cost.
HIGH DEDUCTIBLE PLAN
Often called HDHP These plans do not pay expenses until a deductible is met.
UNDERSTANDING THE DIFFERENCES IN NETWORK vs. COST
Our table below lays out the basics of each major health network type and how network choice can affect monthly premium pricing.
The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Tax and legal advice offered through Financial Designs Tax Services, LLC and Financial Designs Legal Services, LLC. Members of Financial Designs, Inc. who are also Cambridge representatives do not offer tax or legal services. Please see your tax or legal advisor. Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Financial Designs, Inc., Financial Designs Tax Services, LLC and Financial Designs Legal Services, LLC are not subsidiaries or affiliates of Cambridge Investment Research, Inc. Cambridge Investment Research, Inc. does not offer tax or legal advice.