John Bonasso CLU^® ChFc^® Financial Advisor

Q. What is this program?

A.  This program is a 10% permanent discount program on high quality Individual Disability Income Insurance offered to eligible WVU Students/Residents/Fellows through the Berkshire Life Insurance Company, a wholly owned subsidiary of The Guardian Life Insurance Company of America, 

Q. Why is it being offered at WVU?

A. WVU believed it to be a valuable voluntary benefit opportunity for you.

Q. Is participation mandatory?

A. No. It is entirely voluntary.

Q. Who is eligible to participate?

A. 3 groups are eligible at WVU.     

• WVU M4 Students
• WVU Medical Residents (all programs)
  
• WVU Medical Fellows (all programs)
  

Q. When does eligibility begin?

A. Upon initial start/entry date into an eligible group.

Q. When does eligibility end?

A. You remain eligible as long as you are in any of the 3 groups above.  Your eligibility ends 180 days after your WVU program completion.  For M4 Students, that is Graduation Day, unless you remain at WVU in another eligible group.

Q. If eligible, is participation guaranteed?

A. No. You must qualify.

Q. Are there similar programs like this at other medical institutions?

A. Yes. Guardian, through its wholly-owned stock subsidiary, Berkshire Life Insurance Company of America, has a similar program at approximately 250 medical schools and institutions in the U.S.

Q. Will anyone contact me individually about this program?

A. To respect your general “request for non-contact”, a unique provision about the WVU program is that it is a one-way communication program.  We plan to send you 2 notices a year about the program, via e-mail or hard copy, from WVU.  It is up to you to contact the agent if you are interested.

Q. Who is the approved agent?

A. John G. Bonasso, CLU ChFC      Office: (304) 292-2050 x 215     Cell: (304) 694-5646   E-Mail: J Bonasso@Luttner.com

Q. If I am eligible, can I buy this product through any other licensed agent and still get the 10 % discount?

A. Yes, if they are licensed with Guardian and put the WVU Program code, 111600, on the application.

Q. Realistically, what is the potential benefit to me with this program?

A.  It provides both a substantial premium cost savings over time and a substantial benefit, if ever needed.  Claims paid on well-crafted disability income insurance contracts can easily get into the millions of dollars for a physician.  Your illustration will detail the potential payout for the plan design you choose.

Q. Does it make sense to get this while at WVU?

A.  Yes. Locking-in quality coverage for your working career at a permanent discount, which cannot be taken away from you if your health changes in the future, makes sense.

Q. Can I get this same coverage outside of this program?

A.  Yes, without the discount.

Q. What is Individual Disability income insurance (IDI)?

A. Disability income insurance is insurance that pays a benefit to you to replace lost income if you are disabled due to illness or injury.

Q. Are all policies the same?

A. No.

Q. What makes some contracts stronger than others?

A.  The details or “fine print” of the contract and the claims paying history of the company.  The strongest policies are, have, or offer the following features and options:

• A strong “True Own Occupation” Definition of Total Disability (Medical Specialty)
• Non-Cancellable and Guaranteed Renewable
  
• Enhanced Partial Disability with Unlimited Recovery Benefit
  
• Waiver of Premium Benefit
  
• Future Increase Option Rider
  
• A strong definition of Presumptive Disability
  
• Compound Cost of Living Adjustment Rider
  
• Student Loan Protection Rider
  
• Graded vs Level Premium options
  

Q. If I don’t have individual disability income insurance, what can I use to replace my lost income due to illness or injury?

A. Personal Savings, Spouses Income, Social Security Disability, Workers Compensation, Group Long Term Disability

Q. Isn’t that enough?

A. That is for you to decide since relying on the above sources can result in a comparatively low benefit.  Before you decide this, ask someone who is disabled and who has had to rely on these sources, “How has this worked for you?” 

Q. Why would I want to get individual coverage, versus getting all the Group Long Term Disability (LTD) coverage I can?     

I signed up for Group LTD. Isn’t that enough?

Being covered by Group LTD may turn out to be the best decision for 2 reasons. 

1. You never need it and
2. You are uninsurable for individual coverage and that is all you can get. Most Group LTD provide a limited amount of benefit, usually 50 – 60% of your base salary and that may even be a taxable benefit if the employer is paying the premium.
   

Q. What company is offering this program?

A. The Berkshire Life Insurance Company of America, a wholly-owned stock subsidiary of the Guardian Life Insurance Company of America.

Q. Are they good companies?

A. Yes. They are known for quality insurance products specifically for the Medical / Professional marketplace.

Q. What are the ratings for Guardian Life Insurance Company?

A. Ratings agencies are responsible for gauging the financial strength of companies so that investors, policyholders, or partners can work with the facts. Exemplary ratings indicate that a firm holds a sufficient balance of cash reserves in proportion to its commitments, signifying stability. Berkshire Life Insurance Company of America continues to receive high ratings across the board, a position the company has occupied for many years.

A.M. Best Company - A++
(Superior - highest of 15 ratings) 

Fitch - AA+ 
(Very Strong - 2nd highest of 21 ratings) 

Standard & Poor’s - AA+
(Very Strong - 2nd highest of 22 ratings)

Comdex Ranking - 99

Current ratings and Comdex Ranking as of 9/2018. All ratings and scores are subject to change. Source: VitalSigns a product of EbixExchange. Comdex is not a rating, but is a composite of all ratings that a company has received from the major rating agencies (A.M. Best, Standard & Poor’s, Moody’s and Fitch). Comdex percentile ranks the companies on a scale of 1 to 100 (with 100 being the best).

Q. An agent from another company tells me I should buy IDI from a mutual insurance company, and that since Berkshire is not a mutual, but a stock company, I should buy my policy from his mutual company. Is that right?

A. This is inaccurate. Please contact me to discuss.

Q. What is the product being offered?

A. “Provider Choice Individual Disability income insurance” from Berkshire Life Insurance Company of America, a wholly owned subsidiary of the Guardian Life Insurance Company of America.

Q. Is the DI product being offered considered strong coverage?

A. Yes. It meets all the requirements of a “strong contract” listed elsewhere in this Q&A.

Q. Is this the best IDI insurance on the marketplace?

A. Designed specifically for the Medical and Professional market, it can be arguably considered to be one of the strongest, if not the strongest, Disability income insurance contract available for the medical/ professional market.

Q. Should I replace my current disability income insurance to get this?

A. Maybe, if weaker. Replacement should never be considered until after you request a true side-by-side comparison of features, benefits and costs, from both the existing and proposed company. This will help you make that decision.

Q. Should I replace this in the future with other disability income insurance?

A. Generally, no. Replacement should never be considered until after you request a true side-by-side comparison of features, benefits and costs, from both the existing and proposed company. This will help you make that decision.

Q. With so many options available, how do I know what to get and what not to get?

A. This is a discussion to have with the agent because policies are tailored specifically for you. While more options exist, the following policy design features are common among Students/Residents/Fellows:

BASE POLICY

Monthly Income Benefit. (This can be from $2,500 to $7,500 depending on M4/Resident/Fellow status)
True Own Occupation Definition of Disability (Medical Specialty)
90 Day Elimination Period
To Age 65 or 67 Coverage

OPTIONAL BENEFITS

Future Increase Option (The maximum amount allowed is the difference between the Base Amount and $20,000, or 3x the base amount, not to exceed $20,000/mo.)
Enhanced Partial Disability Benefit Rider
3% Cost Of Living Adjustment Rider (Compound)
Catastrophic Disability Benefit Rider
Student Loan Protection Rider

Q. What does this cost?

A. A well designed graded premium policy for the WVU groups will be in the $125 – 200 month range.

Q. Why should I spend money on this when I have other obligations, like loans to repay?

A. For several reasons:

1. Building a strong protection foundation can be as important during residency as paying back loans.
2. It can be put in place for reasonable cost while you are young and healthy
3. The 10% lifetime discount adds up over time.
4. Dollars applied to potential income replacement, if needed due to a disability, can be more valuable than  dollars applied to loan balances, which might be contractually waived.

Q. Will premiums increase as I get older?

A. Graded Premiums will gradually increase with age. Level premiums will not.

Q. Shouldn’t I focus on paying off my loans?

A. This is a personal decision for you depending on the amount of risk you are willing to assume. Would you play the game without “suiting up”? If you were guaranteed not to ever need this coverage (which you don’t know) and if you were guaranteed to get it at any time (which you are not) then an argument could be made for waiting.

If you went on a disability claim, in retrospect you would see that a few thousand dollars paid towards a loan balance does nothing to replace your lost income. Loans can be strategically addressed after residency and fellowship, when potential forgiveness and sign-on bonuses are known and when your cash flow increases after residency and fellowship. Choosing to establish a foundation versus paying back a loan is a financially sound, but very personal, decision.

Q. If I ever make a claim and receive a benefit, will it be taxable as income to me?

A. The IRS wants taxes to be paid on either the premium paid or the benefit received. If a policy holder pays for the premium with their own after-tax dollars, the benefit received will not be taxable income. Conversely, when an Employer pays for the premiums, as many Group LTD plans are designed, income received as a benefit can be taxable. This is a huge difference and the reason that individual disability income insurance is generally paid for with your own after tax dollars.

Q. Why is it expensive and hard to get?

A. Good companies pay claims fairly, and the claims payouts can be very large, into the millions. This is not entitlement.

Q. Are the contracts offered in this WVU program fully underwritten? If yes, what does that mean?

A. Yes.  It means that an underwriting team will review and assess your insurability based on:

• Your application
• Your income verification
• Medical/Personal History
• Medical labs and/or specimen samples

Based on the above records, you will receive an offer of insurability. In some cases, the offer may include a rating or be declined.

Q. What kinds of issues may cause a rating, or even a decline, with this program?

A. Because of the potential large payout for these contracts, applicants are thoroughly underwritten in 3 areas:

1. Occupation. Medical specialties are individually classified according to actual claims experience.
2. Medical. Build, exceeding height and weight guidelines, medical & physical health history, medications,  lab results, and tobacco usage are common reasons for ratings and/or declines.
3. Financial. Base amounts are offered for M4, Residents and Fellows without financial documentation.

Note:

Exclusions and Ratings.

Exclusions and premium ratings are tools that allow insurance companies to issue coverage in circumstances when an application would otherwise be declined. Limits and benefit periods may be reduced and/or elimination periods extended, depending upon the nature and severity of any medical impairments involved. Supplemental benefit riders may not be offered.

Extra Premium (Ratings) 

An extra premium is a means of providing disability income insurance coverage when there is an increase in risk due to current and/or past impairment or medical history. The extra premium enables companies to provide coverage for any disability resulting from such an impairment or history. An exclusion rider and an extra premium may both be necessary for some applicants. Extra premium charges are 25%, 50%, 75%, or 100%.

Q. So, getting this is not guaranteed?

A. Correct.

Q. What should I do if I cannot get this coverage?

A. Take all the Group LTD coverage you can get.  Check to see if your institution offers a “Guaranteed Issue” program. “Guaranteed issue” contracts are generally weaker than what is being offered to you, but stronger than Group LTD coverage.  In addition to the Group LTD, you may need to depend on Personal Savings, Spouses Income, Social Security Disability, and Workers Compensation. For Social Security and Workers Compensation you must qualify before any benefits are paid.

Q. Why should I as a young, healthy person buy individual disability income insurance?

A. To establish insurability since premiums are affected by age and medical history. Once coverage is approved and in place, it cannot be taken away for any decline in your health.  FYI – 10% of claims are for injuries.  90% are for illnesses. (Most common are Cancer, Joint & Spine Disorders, Digestive Disorders, and MS). Source: 2014 Council for Disability Awareness Disability Claims Review.

Q. Am I correct in assuming that if I am healthy now and wait to apply, that I might not be able to get it later?

A.  That is correct. It is not guaranteed to be issued, for example, if a medical health problem surfaces in the interim.

Q. How do I proceed?

A.

1. Contact the agent. He will oversee the details of the whole process.
2. Complete and submit an application.
3. Complete “Para-med” exam to answer medical questions and provide blood & urine samples
4. Underwriters review applications, medical records, para med results and then offer or decline coverage.
5. You review the offer and decide to take all, some, or none of the offer.
6. You pay a month’s premium to put the contract in-force. 

Q. Do I have to show proof of income?

A.  For participants wanting larger benefit amounts, proof of income, such as signed contracts or paystubs, are required.

Q. Why can’t I just wait?

A. That is your decision. The purpose of this Q&A is to inform you so you can make a sound decision.

Q. If I convert the Future Increaser Option (FIO) Rider to a monthly benefit later, will the 10% discount still apply?

A. If the FIO is converted while you are still an eligible participant, the 10% permanent discount will continue to apply.

Q. If I get a Graded Premium at 10% discount, will the 10% Discount remain if I convert to a Level Premium?

A. Yes.

Q. What if I get it and move to another state?

A. Nothing changes as you will have a WV contract that will travel with you. This actually may be advantageous since the WV contract you “lock in” may be less expensive than it would be for a contract issued in other states for the same coverage. This is due to differing requirements in states applicable to policies issued in the respective states.

Q. Does the 10% discount weaken the policy in any way?

A. No.

Q. What is a recommended strategy for an interested eligible participant while at WVU?

A. Establish insurability with a strong, well structured, graded premium contract.

Q. What is a recommended strategy for an interested eligible participant post-WVU?

A. Contact agent before WVU program terminates to discuss post-WVU income. Provide a copy of the signed employment contract. Exercise a sufficient amount of the Future Increase Option to bring the monthly benefit in line with new income. Change graded premium to level premium. The 10% discount remains on the entire policy, for as long as you keep it, for all policy provisions put in place during the period of eligibility and the 90 day post termination period.