LIKELIHOOD OF BECOMING DISABLED

Disability Probabilities

Probabilities of Extended Disability 167

SOURCES OF FUNDS FOR DISABLED PERSONS

DISABILITY INCOME INSURANCE POLICIES

Situations Warranting Coverage

Policy Provisions

Ability to Keep the Coverage in Force

Long-term-care Insurance

When Benefits Start

Recurring Disability

Duration of Benefit Period

Residual Benefits

Level of Benefits Payable

Premium Payments

Return-of-Premium Option

Rehabilitation Benefits

Presumptive Disability

Incontestability

Treatment of Organ Donations

Social Security Rider

Hospitalization Benefits

Dividends

INSURANCE COMPANY LIMITATIONS ON THE AMOUNT OF COVERAGE

Minimizing Fraudulent Claims

Modifying the Standard Issue Policy Exclusions

BUSINESS USES OF DISABILITY INSURANCE

Business Overhead Insurance

Disability Income Coverage for Key Persons

Salary Continuation Plans

Disability Buy-Sell Funding

The ability to work and earn an income is the most valuable economic asset most people possess. Their involvement in the work force provides their livelihood after they emerge from the dependency of childhood. Only a very small percentage of people have inherited or accumulated so much wealth that their unearned income is large enough to allow them the luxury of not participating in the work force. The majority of the population must work for a living, and those persons unable to work often suffer severe economic hardship.

In the United States it is usually taken for granted that people will enjoy a healthy life and an ability to participate in the work force from the end of their teens or early twenties until age 65 or even later. For the bulk of the population this is an accurate assumption. However, health impairments can limit or preclude an individual from participating in the work force either temporarily or permanently. Accidents, illnesses, and congenital defects take their toll on individual lives. Within the working-age population (people between the ages of 18 and 65) susceptibility to injury and illness increases with age.

It is important to note, however, that we live in an ever-changing environment and threats to good health change over time. Tuberculosis and polio are examples of once widely spread communicable diseases that devastated millions of lives. Nearly all cases of tuberculosis were fatal before the development of effective medical treatment, and those who survived polio were usually disabled for life. Vaccinations have nearly eradicated polio and rendered tuberculosis medically controllable in the United States and most of the world. More recently there has been a significant reduction in deaths from heart disease, which can be mainly attributed to improved diet (especially reduced ingestion of saturated fats) and increased exercise. Other indications of improvement are statistics showing a per capita decrease in the consumption of cigarettes and distilled spirits such as whiskey and other so-called hard liquors. However, the information is not all good. For example, the air we breath has been deteriorating in quality. As buildings have been made more energy efficient through increased insulation, they trap more of the fumes from cleaning fluids and other toxic substances used within the buildings. We don�t know yet what effect these changes will have on long-term health and mortality statistics.

In the 1980s we saw the emergence of a frightening and devastating disease called AIDS (acquired immunodeficiency syndrome). It is communicable both sexually and by intravenous blood contamination, and it can be spread from a mother to a fetus or newborn child. AIDS impairs the ability of infected individuals to recover from illnesses because the body�s immune system has been destroyed. The disease is not fully understood, but we do know that it can have long latency periods (up to 12 years documented so far and suspected to be longer when we have had an opportunity to observe longer periods) followed by an immune-system breakdown that makes the body susceptible to deterioration from diseases that otherwise would pose no serious threat to healthy individuals. Victims of AIDS often die from communicable diseases that are rarely, if ever, fatal to persons without AIDS. There is no cure for the disease, and within a few short years it has spread to all nations of the world. As the above examples indicate, we are subjected to a bevy of constantly changing threats to our continued good health.

The changing environmental and health risks are not confined strictly to illnesses. For example, in recent years many Americans have embarked on rigorous fitness programs to improve their health. However, large numbers of both minor and major disabling accidents have resulted from jogging, high-impact aerobics, and other activities. An example of changing risk is reflected in the automobile accident statistics after the federal government imposed a maximum speed limit of 55 miles per hour during the late 1970s and early 1980s. The lower speed limit resulted in a decreased number of automobile accidents and in fewer injuries and associated disability claims. Since some states have raised the maximum speed limit above 55 miles per hour, insurance claims data indicate that injuries, disabilities, and deaths from automobile accidents are again increasing.