Disability Insurance: Policy that minimizes financial loss

by Guest » Mon Sep 17, 2007 11:14 am
Guest

Disability insurance pays you (policy holder) an income if you become unable to work due to a disability resulting from an accident or illness. You may have thought about insuring your life, your health or your assets. But have you thought of insuring your ability to earn? Disability insurance gives you the scope to safeguard your income when you are not able to earn.

If you have a family that depends on your income you surely must have disability insurance policy to protect your earning capability. Studies have shown that an average human being has more chances of becoming disabled from an accident or illness than dying. So, it is not unusual that you too have a chance of becoming disabled.

What are the basic types of disability insurance?

You may take disability insurance for a long term or short term depending on your requirement and choice.
  • Short term disability insurance policies provide benefit for maximum 2 years and only after a waiting period of 0-14 days.
  • Long term disability insurance policies provide benefits that range from a few years to the rest of your life after a waiting period that ranges from several weeks to several months.

You may opt from the 3 basic types of disability insurance coverage:
  • Social Security Disability Insurance (SSDI): This federal government provided insurance is for workers with a disability that is diagnosed to last at least 12 months and does not allow them to earn fruitfully. SSDI needs the policy holder (you) to provide medical evidence for the disability. In addition, you are also required to match the medical listing set by Social Security Administration (SSA). Otherwise your residual working capacity will be taken into consideration. Benefits from Social Security include:
    • Monthly wage
    • Medicare
    • Vocational Rehabilitation (if the policy permits)
    • Other employment support programs

    Click here for more information.

  • Employer-Provided Disability Insurance: There are several companies that offer disability insurance policies as part of the employee benefit plan. For individuals who receive long-term disability protection, the benefits may rise up to 65% of the salary for 5 years or till the time the individual reaches the age of 65 years. Sometimes the benefits may also extend to your lifetime. If the premiums are paid by your employers then you will have to pay the taxes as levied on the benefits you receive.

  • Individual Disability Insurance: Self-employed individuals seeking disability insurance may find policies with the private health insurance companies. Such individual policies may be comparatively more expensive than group disability insurance policies and the premiums and benefits received largely depend on your occupation, state and country. With such a policy you may receive disability insurance benefits between 50% and 70% of your income compensated.
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How do insurance companies determine disability premiums?

There are quite a few factors that are considered while determining disability insurance rates. The factors include:
  1. Age
  2. Gender
  3. Occupation
  4. Susceptibility to disability
If you are involved in construction and work on fields or are involved in site works, you will be considered more vulnerable to injury and illness compared to others who stay inside the office for the entire day. Hence, if you have a lower risk of getting involved in accidents or falling ill, your disability insurance premiums will be low.

If you plan to get disability income insurance you must get it as soon as possible because the earlier you get it the better for you.

There are again 2 protection features of disability insurance:
  • Non-cancelable: In such a policy the insurance company cannot cancel the policy of the insured except when there has been a non-payment of premiums. You may get this policy renewed every year without your premiums being increased or your benefits being decreased.
  • Guarantee renewable: This policy guarantees the policyholder the ability to renew his policy and get the same benefits as before. However, premium rates may go up as decided by the insurance company and this holds good for all other policies in the same class.
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Is there a way to save money on disability insurance?

Yes, you can keep the cost of disability insurance down with the following 2 tips:
  1. Elect a longer waiting period before receiving benefits: You can lower your premiums if you can manage enough resources to cover your expenditure during the first 3 months of disability. So start saving.
  2. Elect a limited/shorter benefit period: This means that you will receive disability insurance benefits up to the age of 65 and not for a lifetime. But do not go for a benefit period that ends before normal retirement age. You might pay lesser premiums but again you will also find inadequate coverage when you need it most.
Ask your agent for disability insurance quote and make sure you have 3 to 4 quotations to compare and get the best offer.
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When can you claim disability insurance benefits?

Disability health insurance claims can be made if:
  • A disability arises due to unpredictable conditions. This means that your disability is not from an earlier known medical condition or a chronic illness.
  • You have a disability while you are at work and the disability arises as a result of any work related issue.
  • The waiting period is over.
To know about short term disability insurance claim click here.
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Who receives partial disability benefits?

Partial disability benefits are received by employees who are partially disabled. Partial here would mean an employee's inability to perform 80% of his normal work duties. In such a case, the remaining 20% of work that the employee can do will not be compensated.
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What are the benefits of disability insurance?

Benefits received from employer provided disability insurance as well as SSDI are:
  • Tax Benefits: If the premiums are paid by you using post tax dollars, then you need not pay any tax on the benefit amount.
  • Discounts: While there are employers who offer insurance at a discounted rate, there are others who offer short-term insurance for free and at the same time give employees the option of choosing long-term insurance on discounts.
Benefits are paid one month in arrears. An individual may receive benefits as long as he/she continues to be disabled or meets eligibility requirements. The beneficiary will, however, be reviewed to see if there is any improvement in the condition. This will in turn determine whether he/she still is eligible to receive the benefits.

If you can anticipate the probability of being disabled due to any reason, it is best that you get yourself covered under the disability insurance policy. Ask your agent to explain the policy to you in details. Sometimes a general policy may not cover a critical illness. Purchasing add-on policies at times like these always help. So assess your risks and invest for your future.
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Hi, I'm curious about disability coverage. What do they normally covered? Will they cover partial disabilities? Is it a wise purchase when we have social security disability benefits? Tim k Wallace

Total Comments: 64

Posted: Fri Oct 22, 2010 08:33 am Post Subject: looking for inc

i am looking for workers comp inc for tree trimming in N.E.i have just started this although i have done it for years just never did it for a living and now i have to get workers comp to cover me and one more person a long with landscaping and would like to know the cost of it

Posted: Sat Dec 04, 2010 12:56 pm Post Subject:

on disability insurance who can i cover on it will it cover my whole family or just me

Posted: Sat Dec 04, 2010 12:57 pm Post Subject:

on disability insurance who can i cover on it will it cover my whole family or just me

Posted: Sat Dec 04, 2010 02:09 pm Post Subject:

If you are talking about disability INCOME insurance, it will only cover persons who earn income. You cannot cover your nonworking children.

Health insurance is a form of disability insurance, and it will cover your spouse and children.

Posted: Thu Dec 09, 2010 02:08 pm Post Subject: Currently on Unemployment Won disability

I have been collecting unemployment in Maryland after leaving my last position. I have been in and out of the hospital with Kidney problems but still kept up with my work search. I applied for disability and recived it in three months due to my declining kidney function. Disability is aware that my only income has been unemployment. My question is should I now ( being I was deemed disabled stop my unemployment and apply for SSI immediatley.My other question is have I done anything wrong considering I was keepin up with my obligations to Unemployment although I had to ultimatley get the disability because the kidney condition went bad quickly?

Thanks for your help!

Laura

Posted: Tue Mar 08, 2011 06:23 pm Post Subject: Pre-existing condition

My husband had back surgery more than 2 years prior to his getting some disability insurance. (The pre-existing condition clause was within past 24 months.) My question is: He has a prescription for pain pills that he fills periodically, and probably did during the 24 months of the pre-existing condition time-frame. This probably constitutes "treatment of a condition", doesn't it?

Posted: Tue Mar 08, 2011 08:28 pm Post Subject: bad knee

hi all,im the soul wage earner in this family im worried about income or losing my house or worse if i have a knee replacement.that keeps me out for 6 months or more .i have never been off work for this but have been to the doc for meds .can i still get a dis ins for this,is this counted as knowing about a condition .doc never said i needed a knee replacement just wanting to get insured for later down the road im 49 in good health,thanks mike m

Posted: Sat Jun 25, 2011 01:30 am Post Subject: disability insurance

I haven't worked in 3 years and during the time I worked I had physical limitations that has worsend since my position was eliminated. I was on unemployment (which has ended) and looking for a job. Can I qualify for disability insurance because of a physical condition that will not allow me to work effectively even though I have continued to look for employment but I still have the existing physical conditon?

Posted: Sun Jun 26, 2011 12:19 pm Post Subject: Disability

I have arthritis in my feet knees and shoulders, my job consists a major portion of walking. I getting to the point of difficulty doing so. I have short term and long term disability insurance, My question is if I go out on these coverage, would I be forced into surgery. I am 66 years old

Posted: Mon Jun 27, 2011 07:52 am Post Subject:

Can I qualify for disability insurance because of a physical condition that will not allow me to work



Unless you are speaking of a state-run disability program, the answer is no. If you wait to purchase insurance until you need it, you've waited at least one day too long. If you have been unemployed for more than 12 months, you would be unlikely to qualify for any state benefit plan.

If you are capable of working, then you won't qualify for Social Security Disability income benefits, either.

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