Disability Insurance: Policy that minimizes financial loss

Submitted by Anonymous (not verified) on Mon, 09/17/2007 - 11:14
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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Related Readings:

Related Calculators:

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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

Posted: 30 Jan 2013 10:36 Post Subject: social security disability insurance backpay

sdi backpay.

I received my ssdi award letter. I know my first check will come on February 13, 2013. I have backpay coming but i dont know when. does anybody know how long it takes for that backpay check to arrive after getting your first ssdi check?

Posted: 30 Jan 2013 06:44 Post Subject:

If it doesn't come with the initial check, it should come fairly soon thereafter. Are you entitled to "back pay" as the result of an appeal for benefits, or did you simply fail to file your claim immediately following your disability?

And are you talking about Social Security Disability Insurance (SSDI) or CA State Disability Insurance (SDI)?

SSDI checks, like all other payments from Social Security, are direct deposited on or about the first day of every month. CA SDI checks come by mail every two weeks for the duration of your disability or to the expiry of your benefit period, whichever comes first.

Posted: 01 Mar 2013 11:52 Post Subject: occupational/accident ins.

my occ/acc ins.wouldn't pay me for my stroke as of job relate injurie.for almost 4yrs.So is

Posted: 01 Mar 2013 01:22 Post Subject:

A stroke is not an injury, it is a medical condition. As a result, any disability would never be paid for by any form of accidental injury benefit or insurance.

A long term disability policy is different. It simply pays a benefit if you are unable to work according to the definition in the contract, regardless of whether the disability is injury or illness related.

Posted: 02 Mar 2013 04:34 Post Subject: SOCIAL SECURTIY BACK PAY

Well since I had my stroke and now I'm getting my s.s.d..i. this started back in 2009 after waiting 7 month my first check was in feb.2010 but there wasn't no back at all up till now3 yrs.later. Do I get one I live in Tx

Posted: 02 Mar 2013 05:03 Post Subject:

Since the checks come from Social Security, don't you think it makes more sense to schedule an appointment with your local Social Security office and talk to someone who has access to your complete file and can probably answer your questions in 5 minutes or less?

I live in Tx


It doesn't matter where you live.

Posted: 17 May 2013 06:58 Post Subject: Normal vs. Special Base period for computing SDI benifit amo

I live in California, and have filed a pregnancy DI claim. I need assistance with getting my "normal base period" (Jan. 2012-December,2012) for computing my qualified weekly/daily pay amount substituted/adjusted to a "Special Base Period" (April 2012-March 2013) for my claim that started on May 8, 2013. I need to include my 1st quarter 2013 pay period due to the fact that I was on long-term unemployment from January 2012- December 17, 2012. I was unemployed all of 2012 (the normal base period) until I began working on Dec. 17, 2012 and received one week of pay during the normal base period of over $300. I earned a lot more during my first quarter of 2013 and if based on this amount my weekly benefit would be substantially increased from the one week I worked in December that they are calculating my benefit amount from.

Is my only remedy an appeal? Are you able to give me any advice or number I may call for assistance.
This loss in pay will be an extreme hardship on my family. It is hard enough taking a 55% cut in pay, which my HR office calculated I would receive, but this will be over a 90% cut in pay. My HR dept at work did not use the first four of the last five quarters to calculate my benefits, they used my last four quarters. EDD says this is incorrect and because I had one quarter with more than $300 paid to me in the normal period, my entire disability and PFL would be calculated using the normal Base period and can not be changed.

This is taken from the EDD website:
"Under certain circumstances, the law permits substitution of wages paid in quarters prior to the normal base period of a claim in order to make a claim valid and/or increase the weekly benefit amount. Special base period cases include cases where an individual’s wages during the normal base period were adversely affected by: military service, industrial disability, trade dispute, or long-term unemployment.

Posted: 27 Sep 2015 03:36 Post Subject: occ/acc ins. on thne job.

If I had a job-related injury while at work and I'm a o/o truck driver leased to a trucking co. and who pay for my policy on the job. Can a workers' comp. ins. step in for the job because they don't want to pay me and denial my claim I have on the job? :?: :?: :twisted:

Posted: 07 Dec 2015 05:11 Post Subject: Disability Insurance

Important and useful information about disability insurance, I have found here.

Posted: 06 Mar 2017 05:04 Post Subject: Become an disability insurance salesman

I'm looking to sell disability insurance what I need to do our get paid for references/ refers

Posted: 14 Mar 2017 05:25 Post Subject: Short-term disability

I applied for insurance from my job on 2/2/2017. They denied me from payments from 12/17-12/31/16. Than the said my insurance had a waiting period. My job said it started 1/1/17 when they started payments from me. Now they are saying that all my doctors need to send records when my main doctor already did. They want to prove I'm disable. I have had two open heart surgeries, kidney failure, diabetes, and on the 24 of march I and having my heart shocked to stop my afib. Can I sue them Hartford.

Posted: 07 Mar 2018 04:26 Post Subject: injured while on unemployment

currently on unemployment had car accident and unable to work ca i apply for disability

Posted: 21 Jul 2018 04:04 Post Subject: DISABILITY INS,

PREMIUMS WERE PAID BY AUTOMMATIC DRAFTS. INS. CO.CANCELED COVERAGE, WHEN CLAIM FILED. STATED THAT MONTHLY PREMIUM NOT PAID. HAD THIS COVERAGE FOR 25 YEARS. WHEN I NEEDED, INS. CO. REFUSED TO PAY. DO I HAVE ANY RECOURSE?

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