Plumbers don’t wake up in the morning and think, “Gosh, I had better get me some disability insurance today.”
But, if you are a plumber, you should.
As a plumber, your work is more than fixing faucets. You are highly skilled and trained, and enjoy the challenge of fixing and solving problems. You rely on your technical skills as well as your physical ability to get the job done.
However, what if you could no longer do your job? Have you ever thought about that?
Have you ever thought about what would happen if you became sick, ill, injured, and disabled? And, how that disability affects your family?
How would you pay your bills if you could not work?
If you can’t work due to an injury or illness, that’s a disability. Disability quickly affects your future plans and the lifestyle you worked so hard for.
In this article, we discuss disability insurance and the best disability insurance for plumbers. Here’s what we will discuss:
- What Is Disability Insurance?
- 3 Great Reasons Why You Need Disability Insurance
- The Characteristics Of A Strong Policy
- Best Disability Insurance
- How Carriers Underwrite Your Application
- Estimated Premiums Of Disability Insurance
- What If You Have Some Through Your Union or Employer?
- Final Thoughts About Disability Insurance
Let’s start with an overview of disability insurance. Understanding this section places you on the right path to protecting your income and family.
What Is Disability Insurance?
Disability insurance is, simply, a type of insurance that pays you a dollar benefit if you can’t work due to illness or injury.
Do you need disability insurance?
Many plumbers tell me, “no”, but if you:
Make money, and…
…You use that money to pay your mortgage, groceries, and other needs, and…
…If you and your family would be in a tough financial situation if you could not work, then:
It is really that simple.
Essentially, if you will struggle to pay the bills upon an illness or injury, you probably need disability insurance.
It’s Paycheck Protection For Plumbers
Think of disability insurance as “paycheck protection” for plumbers.
Let’s start by thinking about how you pay for things.
We have our house, cars, vacations, luxury items, and necessities. Think of all that.
How do you get the money to pay for all of that?
From working, you ask?
Yes. All of that is derived from your ability to work and earn an income.
Conversely, all of that is potentially gone with your inability to work and earn an income.
How much benefit do you receive if you can’t work? That depends on how much you make and your income. Depending on your situation as a plumber, carriers might insure up to 60% of your gross salary if you are an employee. If you are self-employed or a 1099-contractor, carriers will insure up to 80% of your net income.
Wait, John. Why don’t I get 100% of my income, you ask?
Good question. Carriers rarely insure 100% of your income or salary. Why? Well, there are a couple of reasons:
- If you receive a benefit, your benefit is income tax-free. So, you pay no taxes on your benefit, and
- To incentivize you back to work
Human nature tells us that if we receive 100% of our income, we probably don’t want to go back to work, right?
There are ways to potentially obtain 100% of your income. It is outside the scope of the article. If you want to learn more, feel free to reach out to us.
Disability Insurance Is Your Spare Tire
As a final thought here in this section, think of disability insurance as a “spare tire”. You really don’t think of your spare tire (or AAA) until you really need it. And, when you do, you are thankful you have that spare tire or the AAA membership. A temporary tire replaces your flat. You are back on the road, and you get your other tire repaired.
Disability insurance is no different, except it gets you back on the road of your life.
Don’t skimp and think a disability can’t happen to you. Maybe now is a good time to discuss the 3 reasons why plumbers need disability insurance.
3 Great Reasons Why Plumbers Need Disability Insurance
Now that we know what disability insurance is, let’s talk about the 3 reasons why plumbers need disability insurance.
Wait, John, you say. I am not going to get disabled.
After all I’ve said so far, you still think you won’t?
OK, then…how do you know?
If you did know, however, you could play the lottery and enjoy your winnings. You can quit your job as a plumber. Know what I mean?
The fact is, you can be the healthiest person on earth and diagnosed with cancer the next day. It happens to thousands of individuals every day.
This unknown brings us to our first reason.
Reason #1: A Disability Happens Anytime And To Anyone
The chance of disability for all of us is really high, even for plumbers. According to the Social Security Administration, an adult worker has a 1 in 4 chance of experiencing a long-term disability.
That is higher than common scenarios such as passing away from cancer (1 in 7) and even death from a car accident (1 in 107).
Remember, a disability is any injury or illness that prevents you from doing your job. So, a disability for a plumber could be a:
- Broken hand
- Cancer diagnosis
- Back injury
- Head injury
- Multiple sclerosis diagnosis
- Torn ACL
- Loss of eyesight
- Shoulder injury
- A stroke
The list goes on and on…
No one plans for a disability. Disabilities do not discriminate. They do not care about your ethnicity, your job, or how much you make. It occurs when you least expect it.
Tiger Woods knows this. Recall his horrible car accident. He left his hotel at 7AM. Around 7:10, he became disabled. His job is golfing, and he can’t do that.
The difference between Tiger Woods and us is he has millions to live off of. We don’t.
What if you faced a situation where you could no longer work? That is a disability.
However, a disability isn’t only a severe accident. It can be a cancer diagnosis, an ALS diagnosis, weird nerve pain shooting through arms that prevents you from using your hands.
Any type of illness or injury that prevents you from doing your job is a disability.
What would you do if you could not bring in an income to support your family?
Now, do you see the importance of disability insurance?
Reason #2: A Disability Could Last A Long Time
Disabilities could last a while. I am aware of the statistics floating around the internet. There is one that suggests that the average disability lasts almost 35 months. Possibly. The claims departments I speak to suggest, on average 18 months to 24 months. Nevertheless, could you and your family survive financially from 1.5 years to 3 years – or more – if you can’t work?
Some disabilities are longer. Disabilities from mental illnesses or alcohol/drug abuse can last years. How do you know these unfortunate situations won’t happen to you?
Conversely, some are shorter. We just had a client who came off a claim from Leukemia. He was out of work for almost 11 months. It doesn’t matter what his occupation is. A disability can happen to any one of us.
The moral of this section is you really don’t know. Disability insurance protects you from this unknown. It pays you a benefit, which in turn you can focus on your rehab, treatment, and family. Which, brings us to our next section.
Reason #3: More Important People Rely On You
Your clients are very important. There is also a group of people who are more important. Who can be more important than my customers, you think. They pay my income.
True. They do, but they don’t love you as your family loves you. By far, if you have a family, your spouse and children rely on you more than you think. They love you more than anything.
If you are disabled, without disability insurance, there are tough questions that need answering.
- Would you and your family be able to continue your standard of living without your income? If not, what changes would need to be made?
- Would your spouse have to work or work more?
- Would you need to sell your home to make ends meet? This happens way more than you think.
- Who could be flexible with the children?
- Would you have the money to hire someone to take care of the kids? The tough questions can go on and on.
I call disability the destroyer of dreams. Your future and family dreams could be destroyed. I’m being honest here.
They don’t have to, though. With disability insurance, you have peace of mind knowing that you have a plan – and income – in place should the unexpected happen.
Remember the spare tire/AAA analogy. That is the sole purpose of disability insurance: to provide payments to you in case you can’t work. Then, you can focus on rehab / getting better and getting back to work.
The Elements Of A Strong Disability Insurance Policy For Plumbers
Hopefully, we have made a great case showing that plumbers need disability insurance.
I’m ready to enroll now, John, you say.
Sounds great. First, though, let’s discuss the characteristics that make a strong policy.
You see, there are many policies that offer limited benefits.
You don’t want to mess with those policies. The worst thing that could happen is you file a claim, expect a payout, and don’t receive one.
So, let’s first discuss the basic elements needed in any disability insurance policy for plumbers. We will then discuss additional insurance options and riders.
Disability Insurance Policy Basics
I speak to professionals, including plumbers, about disability insurance every day. There are 2 major sources of confusion that these professionals hear from elsewhere. These confusing components are essentially “the basics”, but if you get these wrong, you could be in for a surprise when it comes time to make a claim.
The first is the waiting period or elimination period. In terms of disability insurance, it is not the period of time before your policy is in effect. That is correct for other types of insurance, but not for disability insurance.
The elimination period is the length of time – a waiting period – that elapse before you are eligible for disability benefits. It happens upon the claim. For example, a 90-day elimination period means your benefit period will begin after 90 days of disability. On the 91st day, you are eligible for benefits. Typically, you receive your first benefit 30 days after that.
This means you need to have adequate savings to carry you and your family until benefits begin.
The second is the benefit period. The benefit period starts when you are eligible for benefits and lasts until the end of the benefit period or if you return back to work, whichever occurs first. It is not the maximum timeframe that your policy exists. As long as you pay the premiums, you will have the policy until age 65 or 66 – at retirement age.
Typically, the maximum benefit period for plumbers is a 5-year benefit period. A longer benefit period might be possible.
Remember, the average disability claim is 35 months (internet stats) or the 18-24 months (from claims departments).
The Disability Definition Matters…
The definition of disability matters. You generally want some type of “own occupation” definition.
There are two “degrees” of the own occupation definition: “true” own occupation and the “modified” own occupation definition. (There are other own occupation definitions, but these are the two most common.)
Here’s what they each mean. The “true” own-occupation definition means:
- you will receive a disability benefit based on your inability to do your job (as a plumber), AND
- also, work simultaneously in another job for an earned income (should you decide you can).
In other words, you can continue to work in another occupation while receiving disability benefits for the inability to do your job as a plumber.
So, if you can’t use your hands, but you can greet people at Walmart, you will receive disability benefits in addition to your earnings as a Walmart greeter.
Modified own occupation is a bit different. You will receive a disability benefit based on your inability to do your job. However, you can’t work in another job. So, if you worked as a Walmart greeter, you won’t receive disability benefits under the modified own occupation definition. This is a good definition, too.
Finally, there is the stringent “any” occupation definition. This means, simply, if you can work in any gainful occupation (for which you are reasonably suited, considering your education, training, and experience), you’ll be denied benefits. So, under this definition, you won’t receive a disability benefit based on your education and experience as a plumber because the insurance carrier says you can work as a Walmart greeter.
The plans we work with contain the favorable true own occupation definition for plumbers. Moreover, you can align this definition to match some or all of your benefit period.
2 Important Disability Insurance Elements For Plumbers
Plumbers should obtain some type of own occupation definition. However, a comprehensive policy should contain the following 2 additional elements.
These 2 elements, in addition to the own occupation definition, create a formidable disability insurance plan.
Residual or Enhanced Partial Disability Benefit
The disabilities we have implied so far are total disabilities. In other words, you can’t work at all.
However, many disabilities start out or end as a partial disability. What if you can work, just not full time?
This is where you want partial disability benefits. A plan that offers partial disability benefits pays a pro-rated benefit of the time or work lost because of the partial disability.
Many policies offer an enhanced partial disability benefit. This provision pays a benefit if you work in your occupation on a part-time basis due to an illness or injury.
Usually, the amount of disability income you receive is a percentage of your total monthly disability benefit. For example, let’s say you work 3 days a week now and therefore experience a 40% income loss. If your monthly disability benefit is $4,000, you will receive $1,600 ($4,000 X 40%). This is a simple example to illustrate.
However, beware. Many policies state they have partial disability benefits. But, when you read their definition, it states that partial benefits are paid after a period of total disability.
This means if you are only partially disabled (i.e. you can still work, but not full-time), you will not receive any benefits until you have met the carrier’s requirements of total disability first.
That could be years before you become totally disabled. Take multiple sclerosis or carpal tunnel syndrome. Both of these conditions may start as a partial disability. However, if you don’t have adequate partial disability benefits, you won’t receive anything until you are totally disabled.
This scenario underscores the importance of partial disability benefits.
Proper partial disability benefits circumvent the total disability requirement and allow you to receive benefits immediately (after you satisfy the elimination period) if you are partially disabled.
Guaranteed Purchase Option
Let’s say you purchased a disability insurance policy 5 years ago. Your salary is now $25,000 more than what it was when you applied. You are now underinsured if you make a claim.
What do you do?
If you have a guaranteed purchase option, you can purchase more disability insurance with no evidence of health insurability. In other words, you don’t need to go through underwriting again.
That means if you now have type 2 diabetes or Multiple Sclerosis (for example), you can still purchase more disability insurance. How great is that?
You just need to prove your income increased, usually through a tax return or your W-2 stub.
I’ve seen many policies where this option is left off. If you don’t include this option at the time of application, you will then need to reapply for a new policy if you want more disability insurance. If your health changed in any way, you could face benefit limitations, higher premiums, or declined altogether.
You can see how important this option is.
Optional Disability Insurance Riders
We have discussed the 3 important elements of a disability insurance policy for plumbers. In my opinion, these are generally “non-negotiable” elements.
However, you can add optional riders at an additional cost to your policy to best fit your needs and budget.
Disability insurance is very customizable. You can make it as cheap or expensive as you want. (However, as you will see, you don’t need an “Ashton Martin” plan to adequately protect yourself).
If you want more benefits, expect to pay more in premium. Think of it as a seesaw. The more benefits you want, the higher the premiums.
Some popular rider options for plumbers include:
Return of Premium Rider: You will receive the premiums you paid back if you never make a claim.
Retroactive Injury Benefit Rider: Pays additional benefits from the date of disability due to injury if disability occurs within 30 days of the injury and continues through the elimination period.
Activities of Daily Living Rider: This rider pays an additional benefit if you can’t perform two or more of the activities of daily living. Additionally, it will pay if you are cognitively impaired. This condition is a catastrophic disability.
Accident Plan: pays an indemnity benefit (i.e. fixed dollar benefit) if you are hurt or injured and go to urgent care or the ER.
Mental/Nervous/Drug/Alcohol Extension: Most carriers provide a 2 year benefit period only for disabilities caused by mental or emotional disorders (like depression) or by drug/alcohol abuse. This option extends the 2 year benefit period to your contracted benefit period.
The Best Disability Insurance For Plumbers
You are probably wondering who we like to work with. First, we work with many disability insurance carriers. So, we are sure we can find one that meets your needs and budget.
However, many carriers insure the plumber occupation at occupational class 2. The carriers we like insure the plumber occupation at a class 3. Moreover, without any limitations on benefits.
Certain parameters have to be met. However, we have helped many plumbers save money this way.
Additionally, the carriers we like all have the:
- own-occupation definition
- partial disability benefits
- guaranteed purchase options
and additional options as discussed. The carriers we like also have solid, value-added benefits like re-training programs.
If you are Christian, we also work with a carrier dedicated to the Christian community.
Contact us if you would like to learn more. We are happy to chat with you. Since we work with so many disability insurance carriers, I am sure we can find a carrier that meets your needs and budget.
How Disability Insurance Carriers Underwrite Your Application
It’s important to understand how disability insurance carriers underwrite your application.
Oh, I just went through the life insurance process. I know how it works, you say.
Great. But, disability insurance underwriting is completely different.
Carriers aren’t insuring your mortality. They are insuring your morbidity. In other words, the risk of a disabling accident or illness and paying you a percentage of salary.
So, carriers look at the following attributes in an application.
When it comes to underwriting, carriers look at your:
- Income / Salary
- Other hazards and lifestyle situations
Age is a factor. The older you are, the more expensive the policy – all things being equal, of course. This is why you want to start your policy as soon as possible.
Obviously, your health matters. If you have a chronic illness or had a severe injury in the past, likely that illness or injury won’t be covered. Additionally, carriers can limit benefits based on any health conditions.
As we mentioned before, carriers insure a percentage of your salary. This percentage is usually 60% of your gross salary or up to 80% of net income if self-employed.
Your occupation matters as well. All the disability insurance carriers classify your occupational disability risk. The classification table is usually a 1 to a 5 (or 6 with some carriers). An occupation with a class 1 is most risky while an occupation with a class 5 is least. For example, carriers classify a construction laborer at a 1 and an accountant at a 5.
Usually, carriers classify the plumber occupation at a class 2. Sometimes, higher classifications are available.
Finally, carriers also consider other situations and lifestyle choices like hazardous hobbies. Do you like to rock climb? If so, that hobby will be excluded from your policy. (Related: see our article on disability insurance underwriting.)
How Much Does Disability Insurance Cost Plumbers?
That’s the $64,000 question. Well, the premiums you pay are a function of everything we discussed above.
However, disability insurance is not incredibly expensive.
Depending on your situation, disability insurance costs between $3.00 and $5.00 per day. Sometimes it is more; sometimes it is less.
The cost is about the cost of a cup of coffee at your favorite coffee shop.
If you can afford a cup of coffee, or lunch, you can certainly afford disability insurance.
For example, a male plumber aged 30, non-tobacco user, making $65,000 annually could have a $3,250 monthly benefit, true own-occupation definition policy for around $62 per month or $2.07 per day.
Again, the cost could be more or less depending on various factors.
What If You Have A Policy Through Your Employer Or Union?
Many plumbers have disability insurance through their union or employer.
While that is good, these plumbers are likely not fully insured.
What do you mean, John?
Typically, disability insurance through your employer is paid pre-tax. Check out your pay stub. Look closely. Likely, it is a pre-tax deduction.
If that’s the case, then if you make a claim, your benefit is taxable.
In other words, when you file your taxes the ensuing year, you will have to pay tax on your benefit.
That means the 60% you get through your employer is taxable. In effect, that means your net benefit is really only 40% of your salary.
Can you live off of 40% of your salary? Probably not.
That is where a supplemental policy helps.
It’s not expensive. A supplemental disability insurance policy sits on top of your group policy. The carrier for the supplemental policy accounts for your group policy and then offers an incremental amount of benefit.
Let’s use our young, 30-year old plumber again. For example, let’s say he receives a $3,000 monthly benefit from his union policy. Carrier XYZ offers an additional $1,335 monthly benefit with a supplemental plan. The cost is an additional $25 per month.
Supplemental plans are typically cheap because you are simply adding on top of your existing, group policy.
Final Thoughts About Disability Insurance For Plumbers
We hope now you have a solid idea of why plumbers need disability insurance. Confused? Don’t feel that way. We’re here to help educate you and protect your income and future.
Don’t know where to start? Use this disability insurance needs analysis worksheet. Follow the instructions; it is rather easy to fill out (we at My Family Life Insurance try to make understanding insurance easy).
Next, feel free to reach out to us for our assistance or a quote. You can use the form below. We only work for you, your family, and your best interests only. We have helped many plumbers secure the right disability insurance for their specific situation, giving them and their families peace of mind.