Disability Insurance
Friday, November 20, 2009
If diabetes is left uncontrolled, the person can manifest eye, kidney, nerve and foot problems and are at higher risk of stroke and heart attack. Renee Wood of Carson City, Nevada is working as a Financial Analyst, is mother of two school going kids. She's also Type 1 diabetic and understands that this gives her a higher-than-average chance of becoming disabled and unable to work. After meeting with her insurance agent, she decided to supplement her employer's disability coverage with an additional long-term Disability Insurance policy, to make sure if there is an incident then she can have enough financial support for her family and herself.
What is Disability Insurance?
Disability Insurance pays a portion of the insured‘s income during a disability because of an illness or accident. Disability Insurance gives you the scope to safeguard your income when you are not able to earn.
Income Protection Choices
1) Short-Term Disability (STD) - waiting period of an average of 0 to 30 days; maximum benefit period generally lasts 24 months.
2) Long-Term Disability (LTD) - waiting period varies depending on policy, it can be 30 days to more than 180 days;benefits that range from a few years to the rest of your life.
Types of Disability Insurance Policies:
1) Conditionally Renewable Policies - Insurance rates can increase or your disability coverage can be canceled anytime by the insurer. Avoid these policies.
2) Non cancelable Policies - Policy which can’t be canceled by your insurance company, excluding nonpayment of premiums. It is an annually renewable policy without loss of benefits or increase in premiums. Best option.
3) Guaranteed Renewable - Policy stays in force as long as the premiums are paid, re-insurability is guaranteed. But, your premiums can increase in future based on any filing of a Disability Insurance claim for injury or illness.
You may opt from the 3 basic types of Disability Insurance coverage:
1) Social Security Disability Insurance (SSDI) ---> His 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
2) Group Disability Insurance ---> There are several companies that offer Disability Insurance policies as part of the employee benefit plan. Benefits of such plans are:
* Take advantage of any disability protection offered to you at work, sign-up for short-term and long-term disabilities, if offered.
* Short term disability is a stop gap measure until long-term disability starts. From the day you report a disability, it may take several days to weeks for the disability claim paperwork to process until you receive your first check. Remember, you don’t receive a check the day you file your claim.
* Generally, an insurance company only pays 60% to 65% of your income during a disability. Most importantly, after being taxed on your income, you may only end up getting only 50% -55% of your income. Can your standard of living be maintained on half your income?
3) Individual Disability Insurance ---> Self-employed individuals seeking Disability Insurance may find policies with the private health insurance companies.
Purchase an independent long-term disability policy. You will never get 100% of your income but maybe up to 70% to 80%. Income from an independent disability policy is tax-free.
If you have a family that depends on your income you surely must have Disability Insurance policy to protect your earning capability.
