You are all set to pursue an exciting job opportunity, in sync with your goals and dreams. Thereon, your emphasis is about gaining wealth of experience that helps you to blossom professionally and personally. Recognition follows; you are encouraged to continue being a consistent, top performer. You have charted a dynamic growth plan for the future. Everything seems to be moving perfectly well, you are happy and excited with the upward trend in the career graph, when the unexpected happens.
An injury or health condition prohibits continuation of job, temporary or permanent. Your dreams of life go kaput. Life seems to have come to a standstill. Hard to accept, but life is full of uncertainties. Plan for the unexpected events in life, able yourself with an income when disabled - disability insurance ensures just this. Find out more about short term disability insurance as well as long term disability insurance. Learn how to collect a competitive disability insurance quote.
A close look at the statistical report released by the Commerce Department's Census Bureau - March 2001 indicates the importance of protection in the form of disability insurance.
Aftermath of disability
Take a realistic look at life post disability. Do you have substantial savings, assets to provide alternative income to meet financial requirements? And how long will the savings, assets help you? Or would you like to borrow money? The most common changes in life of people affected by disability:
What is Disability Insurance?
Disability Insurance offers benefits to the policyholder if the policyholder becomes incapable of working. While some policies pay you a flat amount, others pay a percent of your salary. You can receive benefits till your disability prevents you from returning to work. But the benefits may expire after a few years, depending on the type of policy you choose. Besides monetary benefits, disability insurance can help you train for another job with vocational rehabilitation services if you are not able to return to the current job.
How does disability insurance provide income?
When you purchase a disability insurance policy, you are required to pay monthly premium towards the policy. Age, gender, occupation and income are taken into consideration for calculating monthly premium. In the event of an illness or health condition that prevents you from working, the insurance company guarantees replacement of income, which is usually between 50% and 70% of your earned income. However, the benefits of policy reach you only after a particular period, referred to as elimination period, which is mentioned in the policy.
Classification of disability
The term disability and its related classification differ from one insurance company to another as also with the type of disability policy. While purchasing disability insurance, take special interest in understanding the term 'disability'. Ask questions to find how the policy defines disability. This will determine the policy cost and in case of an unexpected future event, how you qualify for disability benefits. Disability is generally classified into-
Injuries and illnesses (including work-related): Injuries and illness, work-related or otherwise are covered.
Accident-only: Restricted to disability as a result of accident other than work-related. Strictly does not include work-related accident.
Does the employer provide disability insurance?
Employers do provide disability insurance to majority of employees. This way you are likely to be covered by disability insurance policy through your employer. But the payment you receive is likely to be a taxable income. You can however, supplement employer's coverage by purchasing a policy for yourself. Payments from this are tax-free.
Types of disability insurance
Disability policy is classified into two types depending on the length of benefit period. Restrictions in terms of maximum coverage amount and time have been fixed in order to coax the disabled person return to work. Your premiums and benefit period are based on the hazards of your profession.
Short-term disability insurance: Elimination or waiting period is 0-14 days and the benefit period does not exceed 2 years. Employers usually cover their employees for short term disability insurance, ranging from a few days to a year. While some states in the U.S. require the employer to provide short term disability insurance, there is no law the needs them to provide long term disability insurance.
Long-term disability insurance: Elimination or waiting period can be few weeks or months, benefit is provided from 1-3 years or to age 65. Check to see if the group disability insurance provided by your employer takes care of at least 60% of your income. Besides your savings must be able to hold you through the waiting period.
Noncancelable: The insurance company cannot cancel the policy except in such cases when the premium is not paid. This policy can be renewed every year and the insurance company cannot make certain amendments such as increase in premium amounts or reducing the benefits. Insurance experts recommend opting for this type of a disability insurance policy.
Guaranteed renewable: As with noncancelable disability policy, the insurance company cannot cancel the policy as long as you pay the premium. However, the insurance company can make amendments; increase the premium amount for a particular or all types of disability policy.
Waiver of premium: You will not be expected to pay premium for 90 days from the date of disability.
Cost of Living Adjustment: Keeping abreast with the inflation, the premium amount will also increase. Accordingly, the benefit from the policy will also increase.
Partial disability rider: Under this scheme, you may return to work part-time, collect part-time income and also partial monthly benefits.
Return of premium: Subject to no disability and no claims within a specific period from the policyholder, the insurance company is required to refund a portion of premium paid.
Additional purchase option: You may simply purchase additional disability insurance.
Disability insurance quote
If you are convinced of the need for a disability policy, its time to determine the actual amount of coverage you may require if disabled. Use these tips in evaluating the amount.
To obtain a disability insurance quote, you will be required to complete a form with details that are common with any insurance policy. Furnish accurate information, compare various options and select the most appropriate one.