In this episode, Scott and I discuss the Catastrophic Rider that can be added to an Own Occupation Disability Insurance plan.
Catastrophic events occur if you are on a disability insurance claim but also have 2 of 6 activities of daily living that you cannot perform. This then triggers the additional insurance benefit on top of the base benefit.
This is the high-level definition and each insurance carrier has specific contract provisions, specific to that carrier and not every state offers this rider. Although the CAT provisions can be a little different between each carrier but overall; the ADLs are what trigger the additional coverage.
This one feature isn't as expensive as COLA and we have a mix of clients that purchase it. Often, with the ADL loss; many can get better before their elimination period is up so some question the value. It is certainly a personal choice and I have one of these on my disability insurance contract.
Please tune in as this episode should help you to determine if you want a CAT rider or would like to remove one off of your contract.
Thanks for listening!
NOTE: This podcast was transcribed by a free AI transcription tool called Otter. Please forgive any typos or errors.
Amber Stitt 0:00
Hello, in today's physician edition episode, we discuss the catastrophic writer also known as Cat coverage. This is a double benefit that's triggered a couple of different ways. We'll walk you through that today, I hope you enjoy catastrophic coverage otherwise known as CAP coverage. This one triggers if you have to have six ADLs, typically, or cognitive impairment, and this will usually double your benefits, some carriers offer a little bit less than the basic benefit amount depending upon your structure, when you sign up for your contract, depending upon your limits of your your contract.
Well, I think you did mention that catastrophic is a, you have to lose two of your six activities of daily living or have a cognitive impairment. Now, the cost-benefit load is typically between $2.50, about $3.50 per month per $1,000 benefits, there's no stipulated amount that you have to buy, you can buy $1,000, or $1,500, or up to eight or $10,000, depending on the carrier and the state, of course of what you're buying.
So it's not offered in every state either.
It's not and it's just a matter of do, do you want to take that extra level of insurance. And the way I was hesitant to look at this is it's very expensive, right? It is a typical contract is $25 or so $30 a month per 1000 benefits, or something of that nature depending on your age. And this is around 250 to $3. And sounds to me like about 1/10 was 1/10, the cost and the claim abilities, probably about 1/10, an insurance company to give it away for free. So just make sure it's right for you and think about your planning and your family planning. And if you're already towards the top of the maximum of the benefit that you're eligible to buy, then you may want to add this or not, you know, maybe just bump up the base benefit. It's just a way to customize and really make something fit what you need for you and your family.
So someone could start out with this and then remove it from their plan when they feel like they have more financial opportunities to then cover some of those incentives.
Absolutely. You can have this as a rider on the policy. And then just like we've discussed on other areas, other topics, you know, the reality is you can move those riders as you deem necessary. So once a year when you sit down and you talk to your advisor about is the benefit level correct as the waiting period correct? Is the definition Correct? Are these riders still correct for me? And just address it and make sure that you're making a good cognitive decisions on what you're spending money on because you want to make sure you're getting value for your dollar.
Thank you for joining us on today's episode of the amber Stitt show physicians edition. For more information about this podcast, books, articles and more, please visit me at Amber stitt.com. For more information about physician insurance contracts, please listen to the entire physician edition podcast series or visit us at MD disability quotes.com. Thank you for listening
Transcribed by https://otter.ai
Thank you again for joining Scott and I, in this episode of The Physician's Edition. We will see you next time!