Court reporters probably don’t think of disability insurance right away. But, they should.
You are healthy, and you probably think a disability can’t happen to you.
Sure, you are probably healthy. However, have you ever thought about what could happen if you could no longer do your job?
Have you ever thought about what would happen if you became sick, ill, injured, and disabled? Moreover, how that disability affects your family?
How would you pay your bills if you could not work?
In this article, I discuss 3 great reasons why court reporters need disability insurance.
I also go into detail about what constitutes a great policy, discuss underwriting, discuss cost, and touch on the best policies for your occupation.
This is a complete guide about disability insurance for court reporters.
Here’s what we will talk about. There’s a lot here (we are thorough). So, feel free to jump around to a section that interests you.
- 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
- Other Disability Insurance Options
- Why Your Association Plan Doesn’t Work (Usually)
- Final Thoughts About Disability Insurance
Let’s jump right into discussing what is disability insurance.
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. The benefit is a percentage of the salary or income you make (more on that in a minute).
Do you need disability insurance?
Many court reporters 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, because of an injury or illness, 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.
Disability Insurance Is Paycheck Protection
Think of disability insurance as “paycheck protection”.
Think about how you are able to 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 court reporter, carriers might insure up to 60% of your gross salary. If you are self-employed or a 1099-contractor, carriers will insure maybe 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, right?
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.
If you think I am joking, think about your work colleagues, circle of friends, and acquaintances. You probably know someone who is or has been disabled. Did he or she have disability insurance? If so, how did it help? If not, what happened to him or her?
3 Great Reasons Why Court Reporters Need Disability Insurance
Now that we know what disability insurance is, let’s talk about the 3 reasons why court reporters need disability insurance.
Wait, John, you say. I am not going to get disabled.
Is that right? How do you know?
You are right. I don’t.
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 court reporters. You see, a disability does not discriminate. It does not care about your ethnicity, gender, age, or occupation.
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 court reporter could be a:
- Broken hand
- Cancer diagnosis
- Back injury
- Head injury
- Multiple sclerosis diagnosis
- Torn ACL
- Loss of eyesight
- Carpal tunnel
- Pinched nerves that make it difficult for sitting
- 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, 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.
However, a disability isn’t only an 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?
OK, I’ve belabored this point. However, 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 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. This brings us to our next section.
Reason #3: More Important People Rely On You
Here’s another important reason. You may think your employer or your job is the most important person. Who can be more important than them, you think? They pay my income.
True. They do. Let’s be honest, though, your employer doesn’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 Court Reporters
Hopefully, we have made a great case showing that court reporters 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 court reporters. We will then discuss additional insurance options and riders.
Disability Insurance Policy Basics
I speak to court reporters 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 a claim. For example, a 90-day elimination period means your benefit period begins 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 court reporters is to age 67.
Remember, the average disability claim is 35 months (internet stats) or the 18-24 months (from claims departments). So, even a 5 year benefit period works.
The 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 court reporter), 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 court reporter.
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.
Be Aware Of The Any Occupation Definition
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), the carrier denies your benefits. So, under this definition, you won’t receive a disability benefit based on your education and experience as a court reporter because the insurance carrier says you can work as a Walmart greeter.
Do you want this definition? Let’s say you have a long-term problem with your left wrist or arm because of work repetition. Can you do another job? If you can, then the any occupation won’t pay a benefit.
The plans we work with contain the favorable true own occupation definition for court reporters. Moreover, you can align this definition or the modified own occupation definition to match some or all of your benefit period.
2 Important Disability Insurance Elements For Court Reporters
Court reporters should obtain some type of own occupation definition. Additionally, a comprehensive policy should also contain the following 2 additional elements.
The following 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?
Carpal tunnel starts this way. Same with Multiple Sclerosis, usually. And, many other situations as well.
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, be aware. 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. Again, 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.
These 2 scenarios underscore 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.
Note: nearly all the carriers limit guaranteed purchase options on applications based on age. If you are age 45 or older, guaranteed purchase options usually are not available. Of course, if you have this with your policy, you can exercise an increase up to age 55, usually.
Optional Disability Insurance Riders
We have discussed the 3 important elements of a disability insurance policy for court reporters. 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 court reporters 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.
Note: many very long-term disabilities are from mental illnesses like depression. So, this rider could work for you.
The Best Disability Insurance For Court Reporters
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, not all carriers insure court reporters the same. Look at these snapshots out of two underwriting guides of a couple of popular carriers. They classify the court reporter occupation at a class 2.
The carriers we like insure the court reporter occupation at a class 5. Moreover, there is no limitation of benefits.
Additionally, the carriers we like all have the:
- Own-occupation definition
- Partial disability benefits
- Guaranteed purchase options
And, additional options as we discussed. Moreover, the plans we like offer value-added benefits like retraining programs.
If you are Christian, we also work with a carrier dedicated to practicing Christians.
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
Let’s discuss each of these in more detail.
The Specifics Of Disability Insurance Underwriting For Court Reporters
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 condition. For example, if you take any anxiety or depression medication, nearly all the carriers limit the waiting period to a minimum of 90 days.
As we mentioned before, carriers insure a percentage of your salary. This percentage is usually 60% of your gross salary.
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 the least. For example, carriers classify a construction laborer at a 1 and an accountant at a 5.
Usually, carriers classify the court reporter occupation at a class 2. Sometimes, higher classifications are available. We work with one that classifies at a class 5.
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.
What Do The Carriers Do With The Information?
The underwriters review all this information and make an approval decision or not. They routinely look up your medical background in the MIB, prescription drug databases, driving records, tax records, etc.
As we discussed, certain situations may limit benefits, the benefit period, and/or waiting periods. They may also increase premiums to compensate for an increased disability risk. For example, if you use marijuana, some carriers will rate your policy (i.e. increase the premiums).
Nevertheless, if your benefits are modified in any way, it still makes sense to purchase the policy. We discuss more in our disability underwriting guide.
How Much Does Disability Insurance Cost Court Reporters
That’s the $1,000,000 question. Well, the premiums you pay are a function of everything we discussed in the underwriting section above.
However, disability insurance is not incredibly expensive.
Depending on your situation, disability insurance costs between $1.00 and $4.00 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 woman aged 40, making $75,000 annually (net income) could have a $4,700 monthly benefit, own-occupation definition policy for around $122 per month or a little over $4.00 per day.
Think about what you spend each day. You can definitely afford disability insurance.
Other Disability Insurance Options For Court Reporters
If you are self-employed, you can insure your business expenses. If so, then you have other options available to you and protect what you’ve worked so hard for.
A business overhead expense policy pays a benefit to you to pay your business expenses.
It is very similar to an individual policy, except:
- Up to a maximum 2 year benefit period only
- Limited “additional” options
- Usually, cheaper than an individual policy
- Premiums are tax-deductible
Most of our court-reporter clients work from home and have limited business expenses. However, if you have an office, for example, and other business expense commitments, you can have a business overhead expense insurance policy.
Typically, our court-reporter clients use the business overhead expense policy to pay for:
- Office supplies
- Electricity, internet, utilities
- And much more
As we stated earlier, the premiums are tax-deductible and if used correctly, the benefit is income tax-free.
You can read more about the advantages in our business overhead expense insurance guide.
Why You Should Not Consider Your Association’s Plan (Usually)
Many occupations offer associations, and the court-report occupation is no different.
Disability insurance is usually a popular offering for these associations.
Should you purchase your association’s disability insurance (link) plan?
In our opinion, no.
Oh, John. Of course, you would say that since you are a broker.
No. I am a CFP® Professional first. That means I hold fiduciary duty in whatever I do in terms of financial planning, including recommending disability insurance. It means I put you and your family first and not my interests at all.
And, my interests here include being transparent and honest about what is available to you.
If your association’s plan is viable and worth it, I’ll tell you that. However, most often, it is not.
Our association disability insurance guide describes the disadvantages (and, yes, the advantages).
There are many advantages to the court-reporter association disability insurance plan including:
- Inexpensive premium
- Pre-existing conditions generally covered
- To age 65 benefit period is available
As we said in our guide, however, there are disadvantages.
Here are many disadvantages of one of the popular court-reporter associations:
- Disability due to mental illness like depression limited to 24 months
- Up to $5,000 monthly benefit only
- Consecutive day waiting period
- Own occupation definition for 24 months followed by any occupation
- Partial disability benefits paid only after total disability
- Your benefit coordinates with social security and other payments
Unfortunately, we see these disadvantages with many association disability insurance plans.
Should you select your association’s disability insurance plan? I always say some coverage is better than none. However, you need to know what’s “under the hood”. Moreover, you need to determine how much you want your money to “stretch”. In other words, do you want to spend a little more in premium to obtain likely better coverage?
Now You Know The Reasons Why Court Reporters Need Disability Insurance
We hope now you have a solid idea why court reporters need disability insurance. We presented 3 reasons. Additionally, we went through important policy characteristics and explained potential costs and options.
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 court reporters secure the right disability insurance for their specific situation, giving them and their families peace of mind.
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