Protect Your Paycheck

Long-term disability needn't cripple you or your church.

by Paula Bilitz

When Glenn Dennard, pastor of Family of Faith Church in Phoenix, Arizona, talked to an insurance agent in the fall of 1990, he didn't think he'd need disability insurance. The 20-something husband and father was healthy and productive.

Nonetheless, Joseph Rinaldo, agent for Ministers Life of Minnesota Mutual Life Insurance Company, persisted. "We worked for a year-and-a-half with the congregation and board of Dennard's church," Rinaldo says. "We pointed out that disability is a real risk to both pastor and church. If Dennard were disabled, it would be difficult for the church to provide for him and his family and also support a fill-in pastor."

After much consideration, Family of Faith Church purchased a disability income policy and additional life insurance for its pastor. The policy went into effect in March 1992.

Plan for Uncertainty
As Dennard was heading home after visiting a parishioner nine months later, his car was involved in a serious, rollover accident. The critically injured pastor was evacuated by air from the scene. He was close to death.

By God's grace, he survived. After a lengthy hospital stay, Dennard went home, where he recovered over the next year with the help of extensive therapy.

Needless to say, Dennard and Family of Faith Church were thankful they had insurance to cover Dennard's disability. "It was a long process to get that policy in force," Rinaldo admits. "But it saved the church and the Dennard family from all the problems that we talk about when we help people plan for uncertainty."

More Need than Ever
Given the financial consequences of a disability, every working person needs some kind of protection. Helene Josovitz, an agent from Rockville, Maryland, believes the need for income-protection insurance has never been greater. "Families today depend on two salaries," she says. "Living expenses are high. Improved medical technology means people are surviving illness and injury and living longer."

Ministers who are disabled face the same consequences as anyone else, says Theresa Bergum, director of disability and worksite marketing for Minnesota Mutual. "Clergy may be able to count on their savings, family, or congregation for a short time," she says. "But no business—let alone a church—can bear a burden of that magnitude for very long."

For Pastor and Churches
How will a church support a minister whose health is seriously impaired and pay for someone to fill in for the pastor?

That's something Josovitz faces daily in metropolitan Washington, D.C. Since the passage of the Community Reinvestment Act, banks are required to lend money to inner-city churches, Josovitz says. As a result, the city is witnessing a massive expansion of churches. With that explosion comes risk. "Churches have large loans and depend on the presence of the minister. If the clergyperson is unable to work, how will the institution continue?" she asks.

Pastors owe it to themselves, their families, and their churches to have some type of protection should they become disabled, Josovitz says.

Layers of Protection
Selecting income-protection insurance can be confusing, primarily because of its many options. Bergum suggests the best strategy for sorting through those options is to focus on the needs for income protection. Ministers Life suggests three primary benefits: replacement of lost income, protection of future insurability, and inflation protection.

Replacing lost income. The main reason to purchase disability coverage is to replace lost income if a person becomes disabled. In determining what benefits are best for a particular situation, ask these questions:

• How much? How much monthly benefit would you need to cover your current living expenses?
• How long? If you were seriously disabled, how long would you need to receive benefits?
• How soon? Based on your savings and other resources, how long after your disability begins could you wait before benefits start?

Next, consider the conditions under which benefits are received. For example, an income replacement policy offered by Minnesota Mutual pays benefits based on a person's ability to earn income when disabled. "If you're able to partially replace your income in a different occupation, your benefits are adjusted accordingly," says Bergum.

Protecting future insurability. Your income will probably increase throughout your career, which means that eventually you will need additional disability protection. To buy additional insurance, however, you may have to be in good health, and good health doesn't always continue throughout prime working years.

When buying income-protection insurance, look for a policy that allows you to increase your coverage based solely on income increases, not on the condition of your health.

Inflation protection. If you're disabled for a long period of time, inflation can have devastating effects on the purchasing power of your monthly benefits. Disability policies can include inflation protection that adjusts your benefits throughout a long-term disability. When comparing such an option, look for one that offers increases based on the Consumer Price Index and calculates increases on a compounded rather than a simple basis. Also, select one that doesn't limit increases in the benefit once your monthly benefit has doubled or tripled.

In addition, be aware that many companies have standard exclusions for contingencies, such as acts of war and pregnancy, and limited benefits for mental, nervous, alcohol, or drug-related disabilities.

The Cost
Obviously, a policy that offers more benefits will cost more. For example, the annual premium for a disability income policy from Minnesota Mutual for a nonsmoking pastor, age 35, who earns $30,000 a year and is not covered by a group plan is $505.84. The monthly income benefit from that policy after disability is $1,100 per month until age 65.

Coverage for future income protection ($74.81) and inflation protection ($144.96) increases the premium to $724.61. But those additional benefits may be worth the cost of providing a solid plan of protection that meets the needs of a pastor and his church during a lengthy disability.

When selecting disability insurance, find a comprehensive policy that's backed by a financially strong, high-quality company. If you become disabled over a long period of time, it's vital that the company you depend on will be there when you need income. The best indicators of a strong company are its ratings from top independent insurance industry analysts: A.M. Best, Standard & Poor's, Moody's Investors Service, and Duff & Phelps.

Paula Bilitz is a marketing consultant with Ministers Life Resources in St. Paul, Minnesota.

Copyright © 1998 by the author or Christianity Today International/Your Church Magazine. For reprint information call 630-260-6200 or e-mail yceditor@yourchurch.net.
July/August 1998, Vol.44, No. 4, Page 56

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