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?
- How do insurance companies determine disability premiums?
- Is there a way to save money on disability insurance?
- When can you claim disability insurance benefits?
- Who receives partial disability benefits?
- What are the benefits of disability insurance?
What are the basic types of disability insurance?
- 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
- Vocational Rehabilitation (if the policy permits)
- Other employment support programs
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- 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.
How do insurance companies determine disability premiums?
- Susceptibility to disability
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.
Is there a way to save money on disability insurance?
- 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.
- 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.
When can you claim disability insurance benefits?
- 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.
Who receives partial disability benefits?
What are the benefits of disability insurance?
- 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.
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.
- Can I get the benefits of disability insurance if I am pregnant?
- Should I go for mortgage disability insurance?
Total Comments: 64
Posted: Tue Mar 14, 2017 05:25 am 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: Wed Mar 07, 2018 04:26 pm Post Subject: injured while on unemployment
currently on unemployment had car accident and unable to work ca i apply for disability
Posted: Sat Jul 21, 2018 04:04 pm 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?
Posted: Thu Apr 25, 2019 05:59 am Post Subject:
Great questions and answers.