If you work in any engineering field, then having disability insurance is critically important. Software engineers, mechanical engineers, electrical engineers, and others all need disability insurance coverage. Like other professions, disability insurance for engineers can differ from one insurance company to the next. Helping you find the best disability insurance policy for your goals and needs is what we do. So, regardless of the engineering subfield you’ve chosen, if you’re looking for disability insurance to protect your income in the event of sickness or injury, read on to learn more.
What to Expect – Disability Insurance for Engineers
Engineers, like many professions, need disability insurance. Disability insurance helps replace your income if an injury or illness prevents you from working and earning money.
Disability insurance for engineers is priced according to your age, gender, and health. A fourth factor is your occupation. For engineers, special consideration is given based on your education and time spent in the field.
Getting demographic data for engineers is not as simple as other careers, since the Bureau of Labor Statistics breaks their statistics into engineering subfields. As a larger group, architecture and engineering is a fast-growing field, with the median annual wage at $77,900.
If you’re interested in seeing how your field stacks up to the others, you can review the occupational outlook handbook put out by the US Department of Labor.
Almost all engineering subfield professions are covered, including aerospace engineers, civil engineers, mechanical engineers, environmental engineers, biomedical engineers, petroleum engineers, and computer hardware engineers.
Depending on your specialty, there may be one policy that is better than the others.
The top occupation classes for engineers are normally reserved for those with professional engineering degrees and who spend minimal time (less than 25%) in the field or in a lab. The higher your occupation class, the less expensive your policy is.
Depending on the disability insurance company, there may be several classifications for engineers. Having a lesser degree or spending more time with field and lab duties will decrease your occupation class.
When it comes to disability insurance for engineers, if you want the best pricing, you should shop around. Depending on your degree and how much field work you do, one company may give you a higher occupation class than other. Assuming similar benefits, the higher occupation class policy is less expensive.
What to Look For
Designing a disability insurance policy is complex and should be personalized with each individual’s needs and objectives in mind. Thankfully, if done right initially, disability insurance for engineers must be purchased only once.
Policy Design
Disability insurance for engineers must have a few critical components for the coverage to be meaningful.
First, insuring at least 60% of your income is protected from accidents and sickness is important. For some of you reading this, that number may seem low.
How should you be expected to survive on 40% less income?
For many disability insurance companies, we have little choice. Nearly all companies that sell individual disability insurance will max out your coverage at around 60-70% of your income.
But, there is an inherent advantage to income received from a personal disability insurance policy.
Please note, if you pay your disability insurance premiums out of pocket with after-tax dollars (as opposed to your employer paying for your policy), then your monthly benefits are tax-free.
This helps mitigate the benefit limitations imposed by the disability insurance carriers.
Next, make sure your policy has own occupation coverage. Anyone with a highly specialized profession that requires extensive education and training should strongly purchase a policy with this definition of disability.
Having own occupation disability insurance for engineers 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).
Depending on the type of own occupation coverage you purchase, you may even be able to work in another profession, earning income, and continue to be on claim.
You’ll also want a policy that allows for residual disability claims. This benefit, usually added as a rider, will let you go on claim if you suffer a loss of earnings due to sickness or injury, even if you continue to work partially. A residual disability rider will allow an insured to continue working in a diminished capacity, without having to deal with losing income that would normally accompany those circumstances.
Last, make sure your benefit period covers the majority of your working years. Your future income is tied to your future wealth, lifestyle, and eventual retirement.
Protecting the majority of that income is critical.
Many disability insurance policies for engineers will cover you up to age 65, 67, or age 70 and beyond. Putting a policy in place that protects your future income will ensure that a disability doesn’t wreak havoc on a well thought out financial plan.
The Insurance Company
Choosing the right company is critical when it comes to disability insurance for engineers. Companies may classify you differently based on your education and work duties.
Using an independent disability insurance agency, you can find the right coverage at the best cost.
An agency that specializes in disability insurance, such as ours, will allow you to price coverage from the top companies, such as Guardian, Ohio National, and Principal.
This ensures you get the best policy for your needs and goals.
Group vs. Individual
As an engineer, you may work for a large company or you may be on your own.
If you work for a company, start there. Group disability, while not as flexible as individual coverage, is often less expensive than private insurance and may allow you to qualify for a policy more easily.
If you are an NSPE (National Society of Professional Engineers) member, you’ll have a plan available to you as long as you are under 60 years old, work 30 hours per week, and are not on active duty in the military.
NSPE Pros
The plan offered through the NSPE is a solid option for engineers. Provided by NY Life, many benefits are attractive, but what’s most impressive is the pricing.
The plan is an “own occupation” policy for the first five years and can cover up to $7,500 in benefits up to age 65. There are variations, such as COLA and reduced benefit length, that can affect pricing, but the base policy includes several important features.
Residual disability, waiver of premium, and a survivorship benefit are all priced into the base policy. Residual is a very important component of proper disability insurance for engineers.
This can be a decent plan when weighing costs with the benefits.
NSPE Cons
There are downsides to the NSPE plan versus purchasing an individual plan (or maybe even a work plan, depending on how generous the coverage is).
First, after 5 years, the plan goes from an “own occupation” definition of disability to this:
Wholly and continually prevents an insured person from engaging in any and every occupation or employment for which he or she is reasonably suited by training, education, or experience.
That wording is not preferential in a disability insurance policy, especially one covering a highly-skilled professional.
Also, the residual disability can only be claimed after a period of total disability, and the maximum amounts are subject to much lower limits once age 50 or older.
Last, the plan is not available in several states, so even if the policy design/pricing proves attractive, there is no guarantee it will be available to you in your state of residence.
While there are limitations, the pricing is excellent (especially for younger ages and women).
However, one might consider purchasing base coverage from the NSPE and then purchasing a supplemental plan from an individual provider.
The NSPE plan offers premium relief, whereas the individual plan will provide much more benefit rich coverage.
Employee vs Self-Employed
If you work for a company, you might have coverage available through work.
Like the NSPE policy, a group policy as an employee will be fairly competitive on price but is typically weaker on benefits than an individual policy.
Group policies don’t have guaranteed pricing, the policy could be eliminated without your say, and they are normally not portable if you leave. Also, if your employer pays your premiums, then your benefits will be taxable.
If you’re looking for self-employed disability insurance for engineers, then there are a few other considerations.
If you have employees or substantial earnings, you may secure more coverage or purchase the same coverage for less in premium cost.
Many self-employed individuals enjoy the flexibility and additional benefits that a personal disability policy affords. Claims can be made easier (with the right policy design), and you may even work in another role/job while receiving benefits.
Last, no one can take away your policy during your working years or raise your rates (again, assuming the right policy design and timely payment of your premiums).
Summary
Disability insurance for engineers can be purchased in several ways. From individual plans to group or association policies, the most important factor is owning a policy.
As with any profession, there is no such thing as the best disability insurance for engineers. The policy that pays the claim when you need it is better than everything else.
Analyze your options and choose the policy (or policies) 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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