The insurance companies that sell disability policies are finally discovering America.

In the past, they sold principally to high-earning professionals such as doctors and lawyers. Now they’re noticing everyone else: midlevel professionals, small business owners and employees, business executives and managers, technicians, skilled clerical and white-collar workers and “gray-collar” workers in high-tech manufacturing plants.

“Real opportunities exist in the middle market,” says Timothy Gardner, a manager at Conning & Co., an insurance research and money management firm in Hartford, Conn.

This new group, however, can’t afford the fancy individual policies that doctors and lawyers buy. So the trend today is toward developing stripped down group coverage, to be sold through the workplace at a lower cost.

Disability insurance protects your earning power. It pays you a specified monthly income if, due to illness or accident, you’re not able to hold a suitable job.

You’re covered for disability under Social Security, but it pays only if you’re truly pulverized, physically or mentally. You’re not eligible if you’re able to work in any substantial job.

Private insurance, by contrast, can pay when illness or accident damages your earning power without destroying it completely. It also can pay higher benefits than the government might.

Disability insurance is especially important for single people, who have only themselves to depend on. Singles should buy it in preference to life insurance, if they have no dependents.

Married people need protection if their spouse couldn’t earn enough to support the family at an acceptable level.

What might you pay for a workplace plan? A ballpark price at Unum Life Insurance Co. in Portland, Maine, might be $20 to $25 a month, if you’re in your mid-30s and buying a benefit worth $1,500 a month, says vice president Eric Helsley.

That’s well below the price of comparable individual coverage at Unum, maybe $70 a month for a mid-30s man and $100 for a woman (women pay more because they make more claims). Group policy prices rise as you age, but not by a lot.

Most larger employers have offered disability coverage for years, but perhaps only to their office, middle management and executive staffs. Insurers are interested mainly in workers with well-paid jobs that are interesting and physically safe. Presumably, such people will go back to work as soon as they can, rather than malinger on disability pay.

Nowadays, however, safe, well-paid jobs can also be found on the manufacturing floor. In high-tech shops, for example, production workers program computers rather than run heavy machinery. That makes them more like office workers than traditional blue-color employees.

They’re being offered disability coverage, because they pose much less risk.

Venturing even further out on this limb, Unum now sells coverage to such previously uninsurable risks as sheriffs and police officers, says president Elaine Rosen. Its catastrophic-disability policy pays if you’re so disabled that you need help with basic life activities, such as feeding, bathing and dressing.

Solving another problem, MassMutual Life sells a policy that replaces the pension credits you lose during years when you’re totally disabled, says Charles Lanigan, an expert on disability insurance.

Policies of the future will cast an even wider net, predicts James D. Johnson, spokesperson for Paul Revere Life Insurance Co. in Worcester, Mass.

“We’ll need coverage for part timers, for people who function at more than one workplace, for people whose income goes up and down, and for dual-income couples who might want a policy that pays if either is disabled.”

There are many ways to pay for disability coverage in the workplace. Sometimes the company pays all. Sometimes you pay, through payroll deduction. Sometimes the company gives you a basic benefit to which you can add.

Add if you can, especially if the coverage is portable. Many policies can be kept when you leave the job some for one year, others to age 65 without your having to pass a health exam.

You sometimes get a choice between buying your employee coverage with pre-tax dollars (not reported as taxable income on your W-2) or with after-tax dollars. Pre-tax is cheaper, but if you’re disabled you’d have to pay tax on your benefits. When you buy with after-tax dollars, your disability benefits come tax-free.

“We suggest using after-tax dollars,” says Richard Friedman, vice president of employee benefits for the Ayco Co., a financial advisory firm based in Albany, N.Y. If you’re disabled that’s when you’d need tax savings the most.

Fee-only planners

Looking for financial advice? “Find a Fee-Only planner” is what you usually hear from consumer types like me. We take the rosy view that such planners, on average, give more objective advice.

But there are thorns among the roses. That “fee-only” claim may be a subterfuge.

True Fee-Only planners charge a flat fee $75 to $200 an hour for answering your questions or drawing you a financial plan. If you need an investment, they’ll recommend no-load or low-load insurance, mutual funds and annuities.

If they manage your money on a continuing basis (usually by investing it in mutual funds), they shouldn’t charge more than 1 percent of your account (the average is 0.6 percent).

They don’t take sales commissions in any form. They don’t accept fees for referring clients to commissioned salespeople. They don’t profit from commissions earned by others in their firm.

By contrast, true commissioned salespeople get a percentage of the money you invest. Your cost: anywhere from 3 percent to 9 percent of your first-year investment in mutual funds and annuities, 50 percent to 110 percent of your first-year’s life insurance premium, and additional fees in later years.

You don’t see the cost, because it’s quietly taken out of your investment. But it could be more than you’d pay a Fee-Only planner for advice.

Then there are the planners in between.

Some charge fees for developing a financial plan, then commissions for buying the investments they recommend. Others charge for the plan but reduce that fee by any commissions they earn.

These planners may describe themselves as fee-based or fee-offset.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.

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