[REPLAY] Key Financial Underwriting Concepts from Ameritas

Re-released 09/16/2025 

If you have ever been confused or just aren’t sure about how the underwriter determines the amount of individual disability income or business overhead expense benefit they will approve – this session is for you. As part of the underwriting process, you are often asked to collect various tax schedules and other financial documentation for your disability insurance applicants. In this session, Paul Zimmerman, VP and Chief DI Underwriter outlines the most important factors associated with financial underwriting, provides insight into the key items to keep in mind when you are meeting with potential clients and advises you on the appropriate income documentation necessary. 

Here is an example for calculating unearned income and its impact to the benefit amount available on a DI policy:

• Applicant has an earned income of $400,000 and unearned income of $250,000.
• We ignore unearned income in the amount of up to 50% of earned income:
  • $400,000 x 50% = $200,000 – this amount is ignored.
  • $250,000 – 200,000 = $50,000 unearned income that will impact the benefit amount.
  • We will deduct 50% of the remaining monthly unearned income from the monthly benefit otherwise available based on earned income.
    • $50,000 / 12 months = $4,167/month
    • Unearned income reduction: $4,167 x 50% = $2,084
  • Maximum issue limit for $400,000 earned income is $16,200/month, less unearned income reduction of $2,084 = $14,116 which is the benefit amount Ameritas would issue.
• *This is a manual calculation. The software is not programmed to calculate this for you.

In response to the question about BOE and reimbursing for the replacement physician should the physician owner become disabled:

• We do not cover salaries, fees, drawing accounts, profit or other remuneration as an eligible expense for any person sharing business expenses with the owner or any member of the owner’s profession or occupation, other than a substitute for the disabled owner.
• While disabled, we will consider the salary of the owner’s substitute as a covered expense up to the lesser of one-half the maximum monthly benefit or $10,000 (this salary must be reasonable for the duties performed). So this means all or part of the substitute’s salary may be a covered expense.
• We also offer a Substitute Salary Expense Rider for an additional premium. This is designed to help pay the expense incurred to employ another person to perform the disabled owner’s duties after total disability begins. This means the monthly salary or wage expense actually incurred and paid to the substitute while the owner is disabled. These benefits are paid in addition to the maximum monthly benefit for total disability.
  • This benefit is limited to the lesser of one-half the base monthly benefit or 100% of the insured’s monthly earned income at the time of issue.
  • Benefits are payable up to six months.
• *Benefits for a substitute will only be paid under the base policy or this rider – not both.

In response to the question about calculating Future Increase Option (FIO) and Benefit Increase Rider (BIR) amounts and how to request a quote:

• There is no difference in how we determine an applicant’s earned insurable income for either a base disability policy or an increase to the base policy.
• Whatever the earned insurable income is at the time of the policy increase, you would insert it into the quoting software and then you would also input the amount of any existing disability benefits (individual DI with Ameritas or other carriers and also any employer group disability benefits). Then the software will calculate the amount of additional coverage available.