Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
The funding source of paying disability claims depends on who is backing up the promise to do so.
1. Social Security DI is funded by tax-payers
2. State-sponsored DI (if available) is usually funded by employers within that state. (A sole-proprietor that constitutes a company of one person may be able to "opt in" to the program with special enrollment.)
3. Individual - or corporate-owned DI is funded by an insurance company that collects premiums from the individual or corporation to form a "pool" of money from which claims are paid.
In any of these cases, the funding source must have sufficient funds in the pool to pay out legitimate claims as they are submitted. Premiums reflect the justified cost of maintaining that fund at the proper level. Therefore, claims may require a company to submit an application to the State Department of Insurance for increasing premiums for a specified "block of business" within which claims will - or already have - exceeded premiums coming in for that block. (An individual cannot be singled out for premium increases.) If one owns a policy that is "non-cancelable", that term means that the carrier cannot increase premiums for any reason over the life of the policy.
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1. Social Security DI is funded by tax-payers
2. State-sponsored DI (if available) is usually funded by employers within that state. (A sole-proprietor that constitutes a company of one person may be able to "opt in" to the program with special enrollment.)
3. Individual - or corporate-owned DI is funded by an insurance company that collects premiums from the individual or corporation to form a "pool" of money from which claims are paid.
In any of these cases, the funding source must have sufficient funds in the pool to pay out legitimate claims as they are submitted. Premiums reflect the justified cost of maintaining that fund at the proper level. Therefore, claims may require a company to submit an application to the State Department of Insurance for increasing premiums for a specified "block of business" within which claims will - or already have - exceeded premiums coming in for that block. (An individual cannot be singled out for premium increases.) If one owns a policy that is "non-cancelable", that term means that the carrier cannot increase premiums for any reason over the life of the policy.