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Policy Matters



It’s always good to have a backup plan. We have weather backups for weddings; college students are encouraged to have them (when choosing majors); even Jennifer Lopez had a backup plan in her 2010 movie of the same name.

What about the importance of a backup plan to pay for things like the mortgage, insurance, food, and a child’s karate lessons?

If you knew of a great backup plan that’s cost-effective and can be tailored to your clients’ individual needs and budgets, wouldn’t you tell them about it and encourage them to look into it?

Disability insurance protects your clients’ most valuable asset -- their income -- and is so customizable that it’s almost impossible to not find the right fit for a client.

Unlike most types of insurance that have distinct and limited rate classes, disability insurance (DI) offers some unique tools that can save money and increase your clients’ likelihood of protecting themselves with a Plan B. Exclusions are sometimes added to policies to indicate that -- instead of declining coverage -- an insurance company will insure your client for all causes of disability in the policy except one pre-existing condition (for example: a client with back problems may get an exclusion for back-related issues, but will be covered for the 3,000ish other causes). And then there are money-saving features and techniques, which are the focus of this article.

1. Multi-life discounts:

For your business owner clients, multi-life discount features (some vary by insurance company):

  • Requires 3+ employees (can include part-time employees)
  • Applies to business owners too
  • Can be employer or employee paid
  • Max issue age (typically 60-70)
  • 10-20% discount
  • Gender-specific rates
  • Unisex rates
  • 1099 employees
  • W2 employees
  • Local professional employer organizations

Benefits to the business:

  • Offering individual DI at the workplace is a valuable employee benefit
  • If company pays premiums, it reaps the reward of the 20% discount
  • Company can write off the premiums as a business expense

Benefits to the employees:

  • Individually underwritten policies with a common employer
  • If employee-paid, employees get the benefit of the multi-life discount on their premium
  • If they leave their employer, it’s an individual DI policy and they can take it with them, including the discount!

2. Stackable discounts:

For personal or business purposes (some vary by insurance company and state):

  • Affiliation discount:
    • Families with at least 3 income earnings adults (18+)
    • Companies with 3+ 1099 contractors or employees from same business entity/firm, can include 1 key person
    • Franchises: 3 or more franchisees under the same franchisor
    • Spouses of employees who are part of a multi-life group, even if the employee doesn’t purchase coverage
  • Association discount: 100+ eligible members
  • Can combine multi-life discount with:
    • Disability Buy Out
    • Business Overhead Expense
    • Business Loan Protection
    • Key Person Replacement
    • Select Occupation (discounts for selected occupation classes)
    • Retirement Security (standalone retirement plan)
  • 10-20% discounts for each type
  • Gender-specific rates

3. Group stackable discounts:

Group DI doesn’t offer discounts. However, if three employees within a group (association, corporation) decide to supplement their Group DI with individual DI, the multi-life discount can be applied to that additional coverage.

Additionally, if it’s an employer-paid group plan, the employer gets a 5% discount (on basic life, short term disability, long term disability, dental) when three qualifying lines of coverage are chosen for the group members (basic life, short term disability, long term disability, vision, and dental).

4. Policy customization features that can save money:

With customization comes choices. And those choices affect your clients’ premiums.

  • Benefit period. In general, the shorter the benefit period, the lower the premium.
  • Waiting period. The longer the waiting period, the lower the premium.
  • Definition of disability. While no single definition of disability exists, all policies define disability in one of two ways: 1) according to how an illness or injury affects an individual's ability to do his or her job or any other job (total disability), or 2) according to how an illness or injury affects an individual's ability to earn income (residual disability). Some policies combine both definitions. Some policies include one type of disability in the base contract, and the other type may be added as an optional benefit (known as a rider).

5. Get coverage when young:

The best way to save on DI is to purchase it when you’re young and healthy. And premiums are often less than average monthly technology expenses.

Let’s look at Tristan’s situation.

Gender Male
Age 25
Monthly benefit $1,000
Occupation class 5A (pharmacist)
Elimination period 90-day
Benefit period to age 65
  • Residual: if he’s back at work part-time but not making his full income, this allows him to continue to collect all or some of his disability benefit
  • Future Increase Option: as his income increases, so can his monthly benefit
Premium $19/month

When is the best time for your clients to insure their income? Now.

Help your clients prepare for the worst and count on the best. No one likes to think about the possibility of becoming sick or injured, much less paying for backup plans. TeamLLIS will work within your clients’ budgets to make income protection affordable. We know each insurance company’s sweet spots and we’ll customize their coverage: beginning with quotes based on the maximum amount they may be eligible for, consulting with you and/or them, then applying any available discounts, tweaking policy features, and removing riders. You’ll give them peace of mind knowing this backup plan will take care of their mortgage and family if a disability happens, protecting their incomes without breaking their banks.

LLIS has two disability insurance specialists to help you and your clients: Kathy Bilodeau and Brian Ciccarelli.


Term Life Insurance | Low-Load Universal Life (Individual & Survivorship) | No Lapse Guaranteed Univeral Life (Individual & Survivorship) | Long Term Care Insurance | Disability Insurance | Critical Care Insurance | Low-Load Variable Annuity | Immediate and Fixed Annuities | Low-Load Variable Universal Life | Hybrid Life/LTCi | Hybrid Annuity/LTCi

(We recommend low-load permanent life insurance and annuities when possible)

(Not all policy types available in all states)

For a list of current providers, visit the Advisor Tools section of our website and click on "Insurance Companies We Work With".

NAPFA ACP Garrett Planning Network NAPFA XYPN