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| Top 5 Reasons for Disability Insurance |
1. Maintain Lifestyle
2. Replace Lost Income
3. Save Retirement Assets
4. Security of Paying Bills
5. Peace of Mind
2. Replace Lost Income
3. Save Retirement Assets
4. Security of Paying Bills
5. Peace of Mind
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The Fundamentals of Disability Insurance
Disability insurance pays benefits when you are unable to earn a living because you are sick or injured. Most disability policies
pay you a benefit that replaces a percentage of your earned income when you can't work.
Why would you need disability insurance?
Your chances of being disabled for longer than three months are much greater than your chances of dying prematurely, due in
part to medicine that has made many fatal illnesses treatable. (Source: 1985 Commissioner's Individual Disability Table A--most
recent data available.) Although this is good news, it increases your need to protect your income with disability insurance.
Consider what might happen if you suffered an injury or illness and couldn't work for days, months, or even years. If you're
single, do you have other means of support? If you're married, you may be able to rely on your spouse for income, but you
probably also have many financial obligations, such as supporting your children and paying your mortgage. Could your spouse's
income support your whole family? In addition, remember that you don't have to be working in a hazardous position to need
disability insurance. Accidents happen not only on the job but also at home, and illness can strike anyone.
If you own a business, disability insurance can help protect you in several ways. First, you can purchase an individual policy that
will protect your own income. You can also purchase key person insurance designed to protect you from the impact that losing
an important employee would have on your business. Finally, you can purchase a disability insurance policy that will enable you
to buy your partner's business interest in the event that he or she becomes disabled.
Likelihood of Suffering a Disability by Age 50
Source: 1985 Commissioner's Individual Disability Table A (most recent data available)
What do you need to know about disability insurance?
Once you become disabled and apply for benefits, you have to wait for a certain amount of time after the onset of your disability
before you receive benefits. If you are applying for benefits under a private insurance policy, this amount of time (known as the
elimination period) ranges from 30 to 365 days, although the most common period is 90 days. Group insurance policies through
your employer will generally have a waiting period of no more than 8 days for short-term policies that pay benefits for up to six
months, and 90 days for long-term policies that pay benefits up to age 65.
You can purchase private disability income insurance policies that offer lifetime coverage, but they are very expensive. Most
people buy policies that pay benefits up until age 65; however, two- and five-year benefit periods are also available. Because
many injuries or illnesses do not totally disable you, many policies will offer a rider that will pay you a partial benefit if you can
work part time and earn some income.
Where can you get disability insurance?
In general, disability insurance can be split into two types: private insurance (individual or group
policies purchased from an insurance company), and government insurance (social insurance
provided through state or federal governments).
Private disability insurance refers to disability insurance that you purchase through an insurance
company. Many types of private disability insurance exist, including individual disability income policies,
group policies, group association policies, and riders attached to life insurance policies. Depending on
the type of policy chosen, private disability policies usually offer more comprehensive benefits to insured
individuals than social insurance. Individually owned disability income policies may offer the most
coverage (at a greater cost), followed by group policies offered by an employer or association. Check with your employer or
professional association to see if you are eligible to participate in a group plan. If not, contact your insurance broker to look into
individual coverage.
Workers' compensation and Social Security are two well-known government disability
insurance programs. In addition, five states (California, Hawaii, New Jersey, New York,
and Rhode Island) have mandatory disability insurance programs that provide disability
benefits to residents. If you are a civil service worker, a military service member, or other
federal, state, or local government employee, many disability programs are set up to
benefit you. In general, however, government disability insurance programs are designed
to provide limited benefits under restrictive terms, and you should not rely on them (as
many people mistakenly do) as your main source of income if you are disabled.
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| For most of us, our greatest asset is our ability to earn money. We protect our other assets (our home, our car, our life), and yet many of us never consider the importance of providing adequate income in the event of disability. It is estimated that almost one of every seven people will be disabled for at least five years before the standard retirement age of 65. |
| The Advisors Of "The Insurance Suite" Will Design A Plan To Meet Your Needs. |
| Protect Your Income Today with our Customized Disability Quotes |
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