If you’re an accountant looking for disability insurance, then you’re in the right place. The pricing for disability insurance for accountants can vary from company to company, but like most professions, we can help you find the best disability insurance policy for your goals and needs. If you work as an accountant, whether you do part-time tax prep or you’re a CPA, we can help you protect your income with a disability insurance policy. Read on to learn more.
What to Expect – Disability Insurance for Accountants
Accountants, like many professions, need disability insurance. Disability insurance protects your income if an injury occurs or illness prevents you from working and earning money.
Disability insurance for accountants is priced according to your age, gender, and health. A fourth factor is your occupation. For accountants, special consideration is given based on your education and accreditations.
The average accountant is a 44-year-old female. Women make up about 63% of the industry’s workforce. The average salary is slightly over $70,000 annually.
The top occupation classes are normally reserved for CPAs. The higher your occupation class, the less expensive your policy is.
The next highest occupation class is available to accountants with four-year college degrees. Depending on the disability insurance company, they might require that degree to be in accounting.
Finally, accountants without a CPA designation or any four-year college degree have the lowest occupation class. To be fair, even this class is equal to or better than several other occupations, such as real estate agents and registered nurses.
What to Look For
A lot goes into buying a disability insurance policy. Thankfully, if done right initially, disability insurance for accountants only must be purchased once.
Policy Design
Disability insurance for accountants must have a few critical components for the coverage to be meaningful.
First, ensuring at least 60% of your income is protected from accidents and sickness is important. It may be redundant to mention in this post, but remember that personally paid (as an employee or self-employed) premiums allow for a disability insurance policy’s benefits to be received tax-free.
Next, make sure your policy has true own occupation coverage. That means you can make a claim based on your inability to continue the duties of your actual job (as opposed to “any occupation”-the ability to do “any” job based on your education, experience, and training). True own occupation also allows you to work in another profession and continue to be on claim (if you lack the ability to do your original profession).
Having residual coverage is also important. Residual coverage allows you to receive benefits if you suffer a loss of earnings due to sickness or injury. It allows the insured to continue working in a diminished capacity, without suffering the loss of income that would normally accompany that situation.
Last, you should have a benefit period that covers a substantial number of your working years. Many disability insurance policies will cover you up to age 65, 67, or even 70. You would want a policy that covers 10 years at a minimum, if not through retirement age.
The Insurance Company
Depending on your occupation class, accountants may be priced differently by each disability insurance company.
The takeaway here is to use an independent disability insurance agency to help you find the best coverage. An agency that is independent and specializes in disability insurance, such as ours, will allow you to price coverage from the top companies, such as Guardian, Principal, and The Standard.
This ensures you get the best policy for your needs and goals.
Group (Association) vs Individual
One option for an accountant may be to purchase coverage through the AICPA. Offered through Prudential, you can request coverage if you’re under age 65, a member of the AICPA or a State Society of CPAs, and living in the US or its territories.
AICPA Pros
The plan offered through the AICPA is solid disability insurance for accountants. It has many benefits and pricing desirable in a disability insurance policy.
For one, it has an “own occupation (own occ)” definition of disability. Members can request up to $12k per month and coverage may last for life, depending on when you become disabled (prior to age 50).
They also offer a residual feature, which is important for reasons mentioned earlier in this article. It is optional, so this benefit is only valuable if you’ve selected (and paid for) it.
AICPA Cons
While this policy is a good option for those who qualify, it has a few weaknesses.
Their own occupation of disability is not “true own occupation”. Meaning, that you’re unable to earn an income in any other profession (for example, working as a professor in accounting) if you’re on claim.
With a limitation of 12k per month, any accountant making more than 250k annually is likely to be underinsured. While this may be a relatively small subsection of the overall accountant population, there are some who may have this problem. In addition, this policy uses a “monthly earnings” determination of policy benefits. While this is common for association plans, it is largely undesirable vs. a true “monthly benefit” plan.
Also, several individual policies have a less restrictive definition of partial disability. Residual claims (where you can only partially do your job) are very common. Being able to make a claim on reduced earnings is important. The AICPA plan only allows for a 20% loss to claim whereas several individual carriers allow for that loss to be 15% or even less depending on other factors.
The other issue is termination of coverage. Where an individual plan (that is non-cancelable/guaranteed renewable) can only be canceled by the insured (up to certain ages), group/association plans, such as the AICPA plan, can be terminated for several other reasons. Most notably, you’re no longer a member of the AICAP or any State Society of CPAs. Termination could also occur if the master policy terminates (which is unlikely, since it would probably be replaced).
Lastly, the pricing is banded, meaning it will go up as you get older. In addition, none of the pricing is guaranteed. It can be changed on a class-wide basis at any time.
In conclusion, if you qualify for this policy, it should be considered. As with any disability insurance policy purchase, weigh the benefits with the costs and negatives to determine the best policy for your needs.
Employee vs. Self-Employed
If you’re an employee, you many have coverage through work. Similar to the AICPA plan, group policies have many of the same benefits and limitations. The most notable limitation is that “you can’t take it with you.” Stated plainly, if you leave your employer, you lose coverage.
If you’re looking for self-employed disability insurance for accountants, then there are several considerations.
For one, having employees or substantial earnings may help you secure more coverage or purchase the same coverage for less in premium costs.
Also, self-employed individuals may enjoy the flexibility that a personal disability policy affords. Claims can be easier (with the right policy), and you may even work in another role/job while still receiving benefits.
Summary
Disability insurance for accountants can be purchased in several ways. From individual plans to group or association policies, the most important factor is securing coverage.
As with any profession, there is no such thing as the best disability insurance policy for accountants. The policy that pays claims when you need it is better than everything else.
Weigh your options and find the policy that fits your needs and goals.
We are an independent agency that specializes in providing expert, objective advice in helping you shop for your disability insurance.
Complete the quote form on the left or contact us today for a confidential, complimentary consultation.
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