Insurance Disability Insurance
Individual disability income insurance provides protection against the income related uncertainties that are caused due to disabilities.
One of the most important yet surprisingly less popular than life and other insurances is disability insurance, the insurance that protects your income! If the insured person is not able to work due to any injury or illness, this insurance can help him meet his day-to-day living expenses and other bills in the event of such absence of income.
There are certain facts about disability insurance that you need to know about before you go ahead and get yourself insured. They are as follows:
- 1. The definition of disability if not a set one and often depends on the terms of the policy you are considering. It is important to know this definition as it has the highest bearing on when and how much you can claim from your policy.
- 2. All policies have different inclusions and exclusions. For example, some policies may give occupational rehabilitation benefits while some may not. Make a note of these when considering policies to purchase.
- 3. Benefits for such policies only start accruing after a certain waiting period. Though it is true that the longer your waiting period the lower your premium payments, you must consider that you will be without any income during this period.
- 4. Different policies have different maximum benefit time periods. Though this again affects your premium amounts, it specifies for how long you are entitled to the benefits.
- 5. When taking a policy, be sure to analyze how much disability coverage you are likely to need. It is usually between 60 to 80 percent of your current post-tax income.
- 6. Certain additional benefits such as social security benefits for permanent or long-term disability may be applicable to you. Be sure to understand them as well.
- 7. There are several ways to get coverage. You can apply for yourself or let your company apply for you as part of a group of employees. Being part of associations such as AARP may also get your disability insurance for being a member.
- 8. Understand the process of filing a claim and the documents you require for it, before you choose a policy over another.
Type of Disability Insurance: There are 6 different types of Disability Insurance and they are as listed below:
Individual Disability Insurance: Namely for the employees of an insurance company or people who are self-employed.
Business Overhead Expense Disability Insurance: Intended for businesses for overhead expenses refunds.
Key Person Disability Insurance: Enables business to recoup lost profits when key person is disabled.
High Limit Disability Insurance: Entitles income replacement of 65 percent irrespective of income amount.
Employer Supplied Disability Insurance: It is acquired by an employer for the employees to cover for accidents at work.
National Social Insurance Scheme: The US Government provides it to all citizens.
- First and foremost, choose a long-standing, financially strong insurer.
- Choose your policy only after comparisons across policies, insurers and premiums.
- Go for non-cancelable policies
- Buy such policies early
- Gauge your holding period and increase your waiting period to the maximum possible, in order to reduce your premium amounts.