This Q & A interview with Mike Murphy, a licensed agent and President and CMO for Hagan Insurance Group, the administrator of the AIA Trust insurance programs for architects, helps to answer your questions about life and disability insurance.
What are some common misconceptions you hear when talking to architects about life and disability insurance?
The biggest thing we hear is that younger people don’t understand the value of having coverage. Instead, they hear financial analysts recommend 10 to 20 times their annual salary in life insurance coverage which seems like a lot when they may have some new financial obligations in their lives. When one is young and healthy and may not be at a life stage where they have a family which they want to protect, a member should buy the amount of life or disability insurance that they can comfortably afford, and then build on that as they get older and have more financial means and obligations.
Life insurance isn’t as expensive as most people think. A 2021 study from LIMRA found that most Americans overestimate the cost of life insurance by more than three times. If you’re a person who thinks life insurance is going to cost $60 a month, finding out it’s less than $20* per month might change the equation for you. There are a range of coverage levels available, and most people should be able to find a cost comfortable for them.
Life insurance can get more expensive as you age and as health issues develop. Locking in a life or disability insurance when you are young and healthy can save you money on premiums in the long run. According to a 2021 LIMRA study, about 40% of Americans wish that they had purchased life insurance when they were younger. Even if you aren’t married with kids, getting coverage now can help protect you with other financial obligations like a mortgage, student loans, or just secure a lower cost for whatever protection you may eventually want in the future.
AIA members have a lot of options when they’re looking for life insurance or disability insurance – so why should they consider the coverage available through the AIA Trust?
There are several important reasons. For starters, no one wants to pay more than they have to, and the AIA Trust program gives members access to group rates. The term life insurance available through the program goes even a step further, with group rates that were reduced by over 10% in the last several years.
The program makes it easy for members to get valuable information before buying. Coverage details and features are laid out online, including a rate calculator that provides cost alternatives instantly, without having to provide any personal information to immediately see your cost options.
There is also on online application portal so you can apply when and where you want in only a matter of minutes. The coverage is also portable, which is an insurance term for the fact that it’s not dependent on your employer but instead can travel with you through any change of employer or career.
Just as important, the AIA Trust policies are underwritten by New York Life Insurance Company, which has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies (A.M. Best (A++), Fitch Ratings (AAA), Standard & Poor’s (AA+), and Moody’s Investors Service (Aaa) – Source Third Party Rating Reports as of 9/30/21.
Many AIA members already have employer-paid disability insurance. Why should they consider more coverage from the AIA Trust?
What many people don’t realize is that any benefits received from disability insurance paid on your behalf by an employer would be taxed as ordinary income according to the IRS. Because of that, employer-paid disability might replace less than half of a member’s income after taxes.
When you think about that for a minute, if you’re unable to work because of a serious accident or illness, and then must get by on less than half of what you’re accustomed to, how would that work? For example, let’s say you’re earning $100,000 a year, with disability insurance through your employer, you might receive only $50,000 a year before taxes.
In that scenario, an AIA Member could add another $6,000 a month to your annual coverage because your total combined benefit amount (AIA and any other disability insurance) can total up to 60% of your average monthly income. According to the IRS, the AIA benefit would be tax free because you’re paying the premiums yourself. If you didn’t have any existing disability coverage, you could get up to $72,000 of AIA protection yearly.
The disability coverage available to members through this program is a valuable way to supplement any employer-paid coverage and “top off” total disability protection, up to the allowable total coverage limits.
If a member’s job isn’t hazardous, is disability insurance really that important?
In fact, most disabilities aren’t work-related at all. Keep in mind that accidents and sickness can happen to anyone, anytime. According to a study from the Social Security Administration, more than 25% of American workers will suffer a disability lasting at least a year sometime during their career. And according to a March 2020 Business Insider article, 90% of all disability claims are the result of illnesses rather than on-the-job injuries eligible for workers’ compensation. Disability insurance isn’t just for workplace accidents but for any covered illness or injury that prevents you from working.
One thing we hear from members about purchasing life insurance is they’ve heard it is time consuming and a big hassle to provide the medical underwriting information. How would you respond?
One advantage of today’s technology is that it significantly reduces the time and effort to get insured. Gone are the days of having to meet with an agent to laboriously fill out a paper application and send it in. The AIA Trust applications can be submitted online in a matter of minutes.
What are your final thoughts?
The AIA Trustees and Hagan Insurance Group would encourage all AIA members to explore the program and consider adding protection. Think about how hard you’ve worked to build your career, your family, and your savings. It’s critical to help safeguard what matters most from unexpected misfortune. Major life events like marriage, children, new house, or new job are good times to consider your coverage, but the fact is you should always be prepared ahead of time.
In addition, you always have a 30-day no obligation free look once coverage is approved. If for any reason you change your mind or are not satisfied with the terms and conditions of coverage, simply return it within the 30-day free look period, without claim, for a full refund of any premium paid.
Learn more about AIA Trust Life Insurance, Level Term Life Insurance and Long-Term Disability Insurance by visiting theaiatrust.com for more information on coverage features, costs, eligibility, renewability, exclusions and limitations. Underwritten by New York Life Insurance Company, NY NY 10010 on Group Policy Form GMR.
Mike Murphy is a licensed insurance producer with Hagan Insurance Group, the administrator for the AIA Trust Program. AR Ins. License: #2182060; California Insurance License #0I90210
This information is provided for general informational purposes only and is not intended to provide individualized advice. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.