Do you have clients who’ve maxed out their Disability Insurance coverage and could possibly be leaving their retirement unfunded if they got sick or hurt?
Try DI Retirement Security (DIRS). It provides coverage for individuals to help them continue to make retirement contributions if they become unable to work due to disability.
Since retirement contributions are not necessary to qualify for this coverage, any individual in a qualifying occupation (class A through 5A Select) earning at least $76,000 per year can apply for DIRS.
Coverage also does not diminish eligibility for regular individual Disability Income (DI) Insurance. This means an individual can qualify for DIRS even if he or she already has a regular individual DI policy up to the maximum issue and participation limits.
How DIRS Works
- If the insured is disabled beyond the elimination period, benefit payments are made to an irrevocable trust. These proceeds are not accessible until age 65 or 67 (depending on the Benefit Period selected).
- The insured directs the investment of the funds to fit his or her investment style and risk tolerance, using a number of investment options within the trust. There is a $50 per month trust administration fee.
- The trust is activated only after the insured meets the elimination period requirement and benefits begin. Trust earnings are taxable each year to claimants/ insureds, unless they selected a non-taxable investment instrument.
- Claim benefits paid to the trust are non-taxable if the insured pays the DIRS premium. Benefits are taxable if an employer pays the premium and the premium is not considered income to the employee.
- At the end of the Benefit Period, trust assets are distributed to the insured per the terms of the trust agreement.
- Coverage provides a maximum benefit up to 15% of earned income, with a minimum benefit requirement of $1,000 per month. For 2011, the maximum benefit is $4,125 per month ($5,325 per month if the benefit is taxable).
- Available elimination periods are 180 or 365 days.
- Benefit periods are To Age 65 or 67, with “Your Occupation” periods of two years, five years, Age 65 or Age 67.
- Optional riders include: Future Benefit Increase, Cost-of-Living Adjustment and Mental/Nervous Substance Abuse Disorder Limitation.
If DIRS is written as a stand-alone policy with no other DI coverage applied for or in force, then simplified underwriting guidelines are used. If the client applies for other DI coverage along with the DIRS application, full underwriting applies. Employer groups that qualify for a multi-life discount also receive the discount on DIRS policies.
For more information contact your Disability Income Insurance Specialist today.