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Disability Income Insurance

The Michel family is in the process of identifying the best insurance company that
offers disability income insurance. The main objective of the family is to ensure that they are
able to still retain a stable income stream in case Mr. Jacques Michel is unable to work due to
injury or disability. Since Mr Michel is the main provider for the family it is prudent for the
family to protect their source of income since both Mrs Michel and their son Pierre wholly
depend on the income of Mr Michel for their upkeep and expenses. Mr Michel is currently 32
years of age and according to the insurance industry statistics, Mr Michel has a 50%
probability of incurring a disability that can keep him out of work for over 90 days and can
potentially last for up to 3.2 years. Given the high risk of disability Mr Michel currently
faces, it is essential that he is able secure an income flow to sustain his family in the event on
a disability in order to shield his wife from unforeseen financial liability since she will have
to work and take care of their son. The table below shows the relevant information of two of
the cheapest insurance companies that can provide Mr. Michel with disability income
insurance. The monthly benefits and premium are mainly based on his salary and age among
other factors.

A.M Best Rating

Benefit per Month
Benefit period
Waiting period
Premium per Month
Renewable Policy
Cost of Living Increase

Met Life
A+
$5,500
Until the age of 65
90 Days
$280
No
No

Principal Financial
A+
$5,200
Until the age of 65
90 Days
$283
No
Yes

According to the main factors that determine the insurance policy of Mr. Michel, there
are insurance companies located in the U.S. that can offer him relatively cheap insurance

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coverage, namely: Met Life as well as Principal Finance. The companies provided the quotes
on their disability insurance policies through their websites. A review of the companies on the
A.M Best ratings website also shows that both insurance companies have a significantly high
rating of A+ and their insurance cover that can be amended in accordance with individual
preferences such as how much premium to offer per month or the required monthly benefits.
A review of the quotes provided by both companies reveals that there are slight differences in
the monthly premiums, as well as the monthly benefits Mr. Michel can receive from both
companies. Met Life offers approximately 94% of Mr. Michel monthly net pay which is
slightly higher compared to the monthly benefits offered by Principal Financial which can
cover up to 89% of Mr. Michels monthly net pay. Another difference is that while Met Life
does not offer benefit increases to account for increase in the cost of living, Principal
Financial does offer cost of living increases and therefore has an adjustment rider.
However, both companies have various similarities such as the fact that their policies are not
renewable and offer coverage for disability income insurance to the maximum age of 65
years.
It is therefore recommended that Mr. Michel insures with Met Life since the insurance
company offers higher benefits relative to the monthly principle. Despite the fact that
Principal Financial offers a cost of living adjustment, it is unlikely that it could exceed the
benefits already offered by Met Life.

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Works Cited
AM Best. Understanding Best's Credit Ratings .Web. 25 Apr. 2016.
Met Life. Disability Insurance. Web. 25 Apr. 2016.
Principal Insurance. Disability Income Protection. Web. 25 Apr. 2016.