What to Consider Before Buying Disability Insurance

Disability insurance pays benefits if you become disabled and are incapable of providing the income necessary to care of yourself and your family. Often your workplace offers a disability insurance option, but often you may need to procure a private plan-or you may need supplement your workplace disability insurance with a secondary policy. There are a lot of disability insurance plans to choose from, so making a decision may seem overwhelming. To help choose the best plan for yourself or a loved one, here are a few things to consider before committing.

Is the policy non-cancellable? A non-cancellable guaranteed renewable policy is preferred, as it guarantees that your policy cannot be canceled and that the benefits and premium you initially decided on stay consistent, as long as you are paying your premium payments on time. With this kind of policy the terms last until some set age or timeframe that is pre-determined.

On the other hand, conditionally renewable policies are another less expensive option, but are much riskier. With these kinds of policies, the yearly renewal can be contingent on conditions set by the insurance company, and often those conditions are not favorable to you. This makes these policies high risk, as each year your renewal will fluctuate.

What are the job requirements for disability benefits? What this question is asking is what does disability really mean: does it refer to the inability to perform only your current job, or any job that you can perform given the nature of your disability? For example, if a surgeon hurts his or her hands and ends their surgical career, but can still work a desk job for a much lower rate

More inexpensive policies give less on what constitutes as a disability and many require that you take any available job, regardless of pay.

For highly compensated skilled professionals, “Own Occupation” Coverage is available. This very narrowly describes disability as an inability to perform your current occupation. Another option is a residual benefits rider that pays the difference between your old occupation and your new one.

What adjustments are included? Your policy may prevent the insurance company from making changes, but you may want to pay for riders that can make positive changes to your policy.

Does the benefit package include cost-of-living adjustments? Can you increase your coverage if your salary increases? Is there an option to add a rider to include benefits through retirement?

Discuss all these options and questions with your insurance agent and consider the cost/benefit options before committing to any riders or policies.

What is the elimination/waiting period? This refers to the amount of time between a disabling injury and the first payments. During this time the insurer verifies that the disability is real and long term, while you are still responsible for the expenses.
Ninety days the most common term, but longer terms are offered for less premium costs. It’s important to know what you are responsible for and how long you are responsible for it in the early days of your disability.

Doing your research and knowing what questions to ask when getting disability insurance is a very important part in making sure you are fully covered.

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