If you’re employed by the federal government, it is unlikely that you have any meaningful coverage should you be unable to work due to an accident or poor health. Disability insurance for federal employees helps protect you by providing a monthly income should you miss extended time at work. For most people, regardless of their profession, missing a few paychecks would hurt. However, what if you went without income for a year, or three? Not working for an extended period normally spells financial catastrophe. If you’re a federal employee who has decided that you need disability insurance, then read on to see how we can help you protect your paycheck.
What to Expect – Disability Insurance for Federal Employees
Like most companies, the federal government has a myriad of occupations under its employ.
There are almost 2.8 million federal employees, from executive and defense to the EPA and social security.
Most disability insurance is priced based on your occupation, not your employer. However, the federal government is unique because it doesn’t have true group disability coverage for most professions, unlike its private sector counterparts.
Therefore, since most federal employees need individual disability insurance, we must consider your occupation first when looking for coverage.
Disability insurance for federal employees is priced according to your occupation, health, gender, and age. Your policy design comes into play as well but assuming identical coverage amounts, those are the “big 4” criteria.
Your occupation is classified differently by each disability insurance company. For some jobs, such as an attorney, most of the carriers will classify you the same. For others, such as a nurse, one company may have a more favorable occupation class than another.
This is why it is imperative you purchase your disability insurance through an agency that:
1) Specializes in disability insurance
2) Will listen to you about your needs and objectives
3) Is independent, allowing you to shop the best pricing from the major carriers in the market
Health
Your health is vital for many reasons, but in this context, it can dictate how much your policy costs.
If you smoke or you’re overweight, expect to pay more for disability insurance coverage.
Having a history of something like back pain isn’t likely to raise your rates. However, you’ll likely have an exclusion.
An exclusion isn’t covered by your policy, meaning if you’re unable to work due to an exclusion, your claim will be denied.
All disability insurance policies have basic exclusions.
Self-harm, injuries while committing a felony, and healthy childbirth are all exclusions built into all individual disability insurance policies.
The earlier example, back pain, is normally an exclusion only if you have a history. Most exclusions on individual disability insurance policies come from pre-existing conditions.
Although having an exclusion from a previous health condition isn’t ideal, you won’t normally pay more, and your policy will still cover the hundreds of other issues that can prevent you from working.
Gender
Men pay less than women for disability insurance.
Unlike life insurance, where longevity works in a woman’s favor, with disability insurance they pay more. Ultimately, disability insurance is priced according to potential (and historical) claims. So, if women have more or longer claims, then the pricing of their policies reflect that.
There are a few tips/tricks we can use to help women secure affordable disability insurance. Read the section about “discounts” in the “what to look for” section later in this article.
Age
This category is very similar to life insurance.
The older you are, the more your policy will cost.
Very few carriers even offer disability coverage past the age of 60, and even fewer are available once you’re over 65.
Disability insurance is meant as income protection and while it’s not always the case, the older you are, the less (total) income you have to protect before retirement.
Regardless of your age, this is still something that we can help with. Again, making sure our policy design provides both important coverage and reasonable premiums is our primary goal.
Unfortunately, most of these components that go into the pricing of your disability insurance policy are mainly out of your control.
Sure, you can give up smoking or lose weight, but it’s not like you will get younger or switch professions to facilitate your disability insurance purchase.
The good news is that if we design the right policy and take advantage of discounts, disability insurance for federal employees is still very affordable and attainable.
What to Look For – Disability Insurance for Federal Employees
Let’s talk about some things within your control, mainly the policy design and any discounts that may be available to you.
Disability Insurance for Federal Employees – Policy Design
Your policy design is how we structure your coverage and it includes your benefit length, benefit amount, waiting period, and riders.
Since the federal government employs so many professions, it is difficult to publish one article that covers the bases.
For those who want more detail on how to properly design a policy based on your occupation, please visit this page:
You’ll find there is a lot of great information there about how to get started. You can also complete the form on the left, and we’ll contact you right away.
If you don’t feel like reading that article AND you’re still not ready to request quotes, let’s outline general rules of thumb for buying a disability insurance policy, regardless of your profession.
Your Occupation
Whether you’re a doctor or a groundskeeper, disability insurance for federal employees should cover YOUR ACTUAL job.
There are two main types of disability insurance, any occupation (any occ) and own occupation (own occ).
Any occ means that you’re only considered disabled if you can do no job that is suitable for you based on your education, training, and experience.
Own occ allows you to make a disability claim if you can’t do your job, even if you could work in another.
Social security disability uses an “any occupation” definition of disability whereas most individual disability insurance policies are going to have own occupation provisions, whether built-in or optional.
If you can, try to buy an “own occupation” policy.
Your Benefit Amount
Generally, it would help if you looked for a policy that covers an acceptable amount of your income.
This would be an amount that includes paying your big bills (e.g. your mortgage, utilities, groceries, etc.) and leaves additional money for your lifestyle. Just because you’re considered disabled doesn’t mean you still don’t want to get the most out of life.
Your Benefit Length
In a perfect world, your disability insurance would last until retirement (age 65, 67, or 70) and those policies are readily available.
The average disability claim is 31-34 months. Try to make sure that you have a policy that lasts this long at a minimum.
Please note, benefit length is not how long you can keep your policy. Most individual disability insurance policies are guaranteed renewable through age 65.
Your benefit length is how long you can go on claim.
Your Waiting Period
Known as your elimination period, disability insurance for federal employees has a waiting period.
Frankly, this is true not for just federal employees, but for almost all disability insurance policies on the market today.
What’s most important is to use the waiting period/elimination period to your advantage.
The default for most long-term disability policies is 90 days. For the short-term, 7 or 14 days is more common.
Choosing a shorter elimination period drastically increases your premiums. The longer you can wait to begin benefits, the less your policy will cost.
Applying basic math, you can see that choosing a more extended waiting period and simply saving the additional premiums you would have spent often works in your favor quickly.
For ExampleLet’s say that you’re a 35-year-old male federal attorney looking for 5k per month in coverage that lasts to age 65. You’re trying to decide between a 60 day and a 90 day waiting period for your policy. The 60 day policy costs 192.49/mo and the 90 day policy costs 120.28/mo. If you were to just save the difference (192.49-120.28=72.21) in your checking account earning 0% interest, after 69 months (5000/72.21≈69) you would have saved enough cash to cover the 30 days that you gave up by going with a longer waiting period. Plus, from that day forward, you’re paying the lower (90 day) premiums for over 24 years…a substantial savings over the life of the policy. This disparity gets even larger if comparing a 30 day waiting/elimination period.
Although it might seem counterintuitive to have your disability insurance policy not kick in for several months, the cost savings may be worth it.
Insurance should really be for the big stuff. If you get a small nick on your bumper, you probably wouldn’t call your auto insurance company because of your deductible. However, if you totaled your car you would gladly pay your deductible and have the insurance company foot the rest of the bill to get your car fixed (or a replacement vehicle).
With disability insurance, your deductible isn’t money but time.
Cover the big stuff first…not being able to work for 90 or even 180 days would hurt, but not as much as if you couldn’t work for 4 or 5 years.
To minimize your premiums, maximize your elimination period.
Riders
A robust disability insurance policy will have a few key features.
Sometimes, they will be built into the policy. In other cases, we must add them as a rider.
You can read our rider article if you really want to get in deep but for the most part, you’ll just need a few key additions to your policy if they aren’t already included:
1) Own occupation rider
2) Residual rider
3) Non-cancelable rider
4) Future purchase option
We can go through the pros and cons of each of these, however, usually, they are the most important (and the most expensive) riders available.
Sometimes, we will add a social insurance supplement rider to offset some costs associated with the riders above.
Disability Insurance for Federal Employees – Discounts
Who doesn’t like a discount?
As long as it’s the same product, why not pay less?
There are strategies we can use to help you pay less for your disability insurance (or pay the same but with more benefits). Let’s touch on a few.
Got Life?
You may already have life insurance (hopefully you do) but if not, buying your disability insurance and life insurance together from the same carrier has an upside.
Some companies will offer a 5% or 10% discount off of your long-term disability insurance policy if you purchase life insurance simultaneously.
There are specific requirements (mostly a death benefit threshold, which is lower for permanent coverage and higher for term) but if you already need the coverage anyway, why not take advantage of one of these programs?
Multi-Life Discounts
There are two ways to get these discounts.
①Phone A Friend
Find a few of your co-workers who also need a policy. Disability companies will often offer discounts and unisex pricing (which is enormous for female applicants) for as few as three policies from a common employer written through the same agency.
These discounts can be as high as 40-50% for women and 10-20% for men.
If you need coverage, your co-workers probably do too. If you can find no one right away, don’t worry. These discounts can be applied even on existing policies going forward once the threshold is passed.
②Existing Discounts
Find a company that already has a discount for federal employees.
They exist.
A few carriers will give discounts for anyone employed by the federal government. Sometimes, the discount can be as high as 25%.
If you’re interested, please complete the form on the left or simply contact us and let us know that you’re a federal employee. We’ll go from there.
Find an Association
Some associations have a group or supplemental plans that members can access.
If you’re a professional or have a special accreditation, consider contacting your trade organizations to see if they already have a plan in place you can utilize.
Group/association plans aren’t as strong as individual disability insurance policies (they’re not always portable, have poor definitions, and can change at any time) but the price is often reasonable, and they may cover things that individual plans won’t (such as pre-existing conditions and pregnancy).
Summary
Disability insurance for federal employees is less cut and dry than other types of disability coverage since the federal government employs so many types of occupations.
That doesn’t mean that purchasing disability insurance as a federal employee must be difficult.
If you educate yourself about these policies and the rely on a specialty agency (such as this one) to help you find the best policy for your needs/goals, then you’re moving in the right direction.
Understanding what you want and then looking for appropriate discounts is the ideal way to shop for a disability insurance policy.
Don’t do it alone.
Simply complete the quote form on the left or contact us and we’ll be in touch.
Having an expert, objective agent guide you through buying disability insurance is critical.
We can help.
