How to Insure Your Income: Harsh Market Reality

In recent years, most of these class assumptions have not held true.

In reality, a doctor who makes a claim may have a disability income benefit of $10,000 a month or more -- payable to age 65. A construction worker who goes on claim often will have a disability benefit of $2,000 per month -- payable for two years.

In addition, the doctor may have the your occupation definition of total disability, which means that he or she can earn substantial income in another occupation and still collect disability income benefits. The construction worker is more likely to have the any occupation definition -- which means, if he or she moves to another job or occupation, the disability benefits end.

Claims patterns in the 1990s show that many insurance companies miscalculated the frequency and number of the high-priced claims emanating from the professional market. For many insurers, the major sources of current claims expenses and problems are the yuppies they sought so eagerly.

Insurance companies are experiencing a high frequency of claims coming from the professional market due to psychological stress. The problem with this type of claim is determining whether a person is really stressed out to the point of disability.

Plus, a person who makes a stress claim is less likely to return to the stressful environment of his or her former occupation -- which lengthens the disability.

This is not to suggest that the professional class is faking stress-related claims. Psychological pressure can manifest itself in terms of physical problems. When this occurs, the source of the problem needs to be removed. But stress claims are difficult to measure with any certainty.

Stress tends to be associated with the higher-salaried, professional occupations. So, many insurance companies have found themselves left with expensive, difficult-to-measure disability income claims.

Many simply are not writing new disability income policies -- having been deluged with pricey claims originating from supposedly low-risk occupations.

This hurts everyone, though. A better prescription would be for insurance companies to use better judgment in choosing and handling disability business.