6 Things To Know About Your Disability Insurance
Posted on July 11, 2007
I really did not even know what disability insurance was five years ago. While in college, and prior to entering the corporate world, there was little time to understand cumbersome topics such as “disability insurance.” But the older I get and with the prospect of having people rely on my income in the future, it can be wise to understand the details of all my insurance policies. Disability insurance provides coverage for a portion of income lost as a result of total or partial disability caused by an accident or illness. There are two basic types of disability insurance: long term and short term. Long term disability insurance provides the individual with coverage equal to sixty percent (60%) of the gross salary when combined with social security and other benefits for extended periods of time or until retirement age. Short term disability insurance provides coverage during the initial phase of a disability with times frames of two weeks to two years. Now that you have a basic understanding of what disability insurance is, check your policy to see where you stand on these six things:
- Know what percentage of your income you will receive if you become disabled. Most policies will cover 60% of your income up to a certain dollar amount for long term disability. If you have a high six figure salary or receive large bonuses not tied to base salary you may need to supplement your current employer coverage to ensure you are properly protected.
- Know your wait periods and benefit periods. The wait period is the amount of time it takes to start receiving benefits, typically six months. The benefit period is the time frame you will receive benefits, typically can go as long as retirement age of 65.
- Know if your policy covers both illness and accidents. It is quite standard that they cover both, but you will want to make sure.
- Know if you have a guaranteed renewable policy. This is an important feature that will allow you to renew your policy each year without having a medical exam. This way the insurer cannot single you out with a rate increase because you have made a lot of claims.
- Know if you have a noncancelable policy. This is another important one that will not allow the insurer to cancel your current policy or raise your premium for any reason.
- Know if your policy has residual benefit protection. With residual benefits, if you become partially disabled and can only work part time this will pay a portion of disability benefits.
If you currently do not have disability insurance check the following links to look into the cost of insuring yourself:
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