Single? Don’t Skimp on Disability Insurance

March 26, 2009



You are throwing away money when buying the cheapest policy on the
market. The odds of getting paid a monthly benefit under that
contract may be extremely lower than receiving benefits from a
quality contract. Individual disability insurance is designed to
replace anywhere from 45-60% of your gross income. This is designed
on a tax-free basis should a sickness or illness prevent you from
earning an income in your current occupation. Every disability
insurance plan has a different definition of total disability in
the policy. There are three basic types:

Own-Occupation Disability Insurance

If are deemed incapable to perform the duties of your regular
occupation, the company will pay the claim. You are even allowed to
get another job in a different field and still be paid. This is the
only plan that does not penalize somebody for going back to work in
a different occupation while on a claim.

Income Replacement Insurance

This is the most common definition of total disability in the last
few years. Most insurance carrier has moved to an income
replacement definition, if they stopped offering own-occupation
disability insurance. You will be penalized or lose the benefit if
you work while on a claim.

Gainful Occupation Coverage

This is a very common definition in an employer sponsored long-term
disability policy. This is also very popular with property and
casualty insurance companies who have decided to release a
disability insurance policy to offer more options to their clients
and put a foot in the market. This is the worst possible definition
and leaves whether you are disabled or not up to the insurance
company itself.

The first aspect of any disability insurance policy one needs to
understand is the renew ability feature. Non-Cancelable and
Guaranteed Renewable guarantees you that after you purchased the
policy there will be no changes to your premium schedule, monthly
benefits, or policy benefits to age 65 or whatever age you elected.
The insurance company legally cannot change anything concerning
your policy unless you want them to. A Guaranteed Renewable plan
states that an insurance company will probably not change anything
about the policy, but they can if they choose to at anytime. A
Conditionally Renewable plan is a policy that offers you virtually
no guarantees for your disability insurance policy. Stay away from
these policies; you will get burned. Next you will need to know
what you can expect if you get disabled.

There will be a period of time from the on set of your disability
till you receive a benefit check. This is called the elimination
period. The industry has made the most common offer a 90-day
elimination period for an individual disability insurance policy.
You can expect a high charge if you choose to go with a shorter
elimination period of 30, or 60 days. Most companies will also give
you a price break if you can go longer than 90 days. Now once the
checks star coming you have moved into your benefit period.
Choosing this is most important. You don’t want to be left with out
money to live on if you are disabled forever and picked a five-year
policy. This is time frame you will be getting a check, think
long-term, if you don’t need it than who cares, you might sometime
later. Once the elimination period has been satisfied, monthly
benefit checks will begin to come in at the end of each month. Your
benefits will stop when you return to work in your occupation, or
another occupation making the same income. The most popular choice
for a disability insurance policy is to age 65. Some people prefer
to go with lifetime with a higher premium.

A Cost of Living Adjustment is a rider that kicks in if you
actually go on a disability insurance claim, it will increase your
monthly benefit every year while you are on a claim along with the
CPI up to the maximum you elected. You have to be disabled for more
than a year to use it. A Future Increase Option is a rider locks in
your insurability for a certain period of time (normally to age
55). So, as you increase in age, and increase your income level,
you can increase your monthly benefit regardless of any health
changes. An Automatic Increase Rider increases your total monthly
benefit each year for about five years. Your premium will go up
with this rider each year because you are buying more disability
insurance coverage. Make sure you look at these carefully and pick
one that is best for you if you want the extra coverage.

DISCLAIMER: This information is for educational and informational
purposes only. The content is not intended to be a substitute for
professional advice. Always seek the advice of a licensed Insurance
Agent or Broker with any questions you may have regarding any
Insurance Matter.

Single? Don’t Skimp on Disability Insurance

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Disability Insurance – Why You Need It Now More than Ever

August 25, 2008

 

Disability insurance is very important for many people and even for
the people who don’t need it. One never knows what can happen, so
to have this available is extremely important. A non-cancelable
disability contract guarantees that your policy cannot be canceled
or have the rates change as long as you continue to pay on time.
Another type, a guaranteed renewable contract, ensures that the
terms of your policy stay the same, but the cost can change over
time. The last kind of disability contract is an optionally
renewable policy. This policy can be canceled by the company at
renewal time and require exams. These types of policies help those
with disabilities obtain and keep medical coverage. There can be a
grace or waiting period but usually you will be reimbursed for
anything accrued at that time.

The waiting period is the time from your first claim to the day you
get your first disability check. Your insurance premium will be
based on your benefit amount, the more you get each month the
higher your premium will be. The longer you collect disability the
higher your premium will be as time goes on. A doctor to determine
eligibility will obtain your current health status and medical
history. If you have any pre-existing conditions or injuries, it
doesn’t mean you are not going to get it. You need for it now
relies on what happened to make you disabled.

You are defined as disabled when the condition that is keeping you
from being able to work is defined and in your employee manual.
This definition will also tell you what you qualify for and how to
obtain it. It will also inform you of whether or not you are
entitled to a new job till you are better or have to be out of work
completely. Some companies offer easier jobs that pay the same
instead of losing an employee and having to pay. Everyone should
have some disability coverage. If you get hurt on the job and can’t
continue your current position you need to have protection that
will keep you from not being able to live. You want to make sure
you know what your business’s policy is in case you need it at some
point. Many companies have group policies that cover all employees
that are working there. One would need to find out if the policy
covers injury and illness or just injury. Also what the time frame
is and will you possibly require more. Most of these will only
cover you if you are injured at work and for a minimal time period.
Some companies don’t even have this type of insurance and you would
be out of luck if injured, while others have several types of
disability, including long and short term.

If you do get injured on the job the first step is to be seen by
your employer’s doctor. This is whom you will be seeing for as long
as you are disabled and collecting disability. You will be examined
and told what is wrong as will your employer. A determination will
be made as to what needs to happen and who is responsible. If you
are declared injured and cannot return to your normal job, another
position must be found for you or you will be paid while on leave,
if this is in the company’s guidelines. Not all employers will pay
so make sure you are working for a company that has extensive
disability insurance that covers both short and long-term issues.
Also see if they cover illness and injury that is not work related.
Many people lose their jobs because they cannot go back to work for
a long time after an injury and the injury didn’t happen at work.

Your coverage will begin after you have been examined and given a
diagnosis. Once all the necessary documents have been filed and
what you are required to do has been set, a new position or payment
will be assigned at that time. You must make sure that if you are
going to be out of work for a long term disability you must pay the
agreed premium to keep the benefits coming and make all
appointments and requirements set by your employer. To breech any
of this could terminate your claim. Make sure you know what is in
store at your job in case of illness and injury you may need it
someday.

DISCLAIMER: This information is for educational and informational
purposes only. The content is not intended to be a substitute for
professional advice. Always seek the advice of a licensed Insurance
Agent or Broker with any questions you may have regarding any
Insurance Matter.