DISABILITY INSURANCEDisability Health insurance provides a preset income to an insured person who is unable to work due to injury or illness income payments to an insured wage earner when income is interrupted or terminated because of illness, sickness, or accident.
Disability is usually defined as any mental or physical illness or injury which prevents you from performing your regular or customary work. This includes elective surgery; illness or injury resulting from pregnancy, childbirth, or related conditions; or inability to work due to a written order of quarantine from a state or local health officer.
Anyone who works probably needs disability income insurance to help replace income lost because of a long-term injury or illness. Disability insurance replaces income you lose when you have a long-term illness or injury and cannot work. This is an important type of coverage for working-age people to consider. Disability insurance does not cover the cost of rehabilitation if you are injured: Health Insurance usually covers this.
RISK OF DISABILITYAny one of us can become disabled. Many people think that disabilities caused by accidents are more common, yet, it is quite possible you will suffer a disability during your working career (before the age of 65) that lasts longer than 90 days. The chances that you will suffer such a disability are three times higher than the likelihood of dying before retirement. In light of this, disability insurance should be considered separately from life insurance.
A period of disability is not like a vacation. You would have no idea how long the disability would last. Consequently, the emotional and financial hardships it would cause could be severe. You and your family would face many challenges. In the event of disability, family expenses often increase. It costs money to be disabled!
Since it is much more likely that you will become disabled rather than die as a result of an accident or illness, adequate disability insurance is important.Some points to check when shopping for a Disability Insurance policy are:- Does it cover both injury and sickness?
- Is it for partial or total
disability?
- Does the policy define disability as inability to perform your
current occupation or as inability to perform any occupation of which you are capable?
- When does coverage begin?
- How long will benefits be paid?
- What is the weekly or monthly benefit?
- How much of your income will be replaced?
- What does the policy it cost?
- Is it guaranteed renewable?
- Are there any exclusions or limitations that might apply? Disability Insurance policies may specify that income benefits will not be paid to a disabled person if the disability results from certain causes.
COMPARISON SHOP ONLINE FOR DISABILITY INSURANCE
Rates for disability insurance can vary by hundreds of dollars, so it pays to shop around. You can compare hundreds of disability insurance companies' rates conveniently on the internet.
Search for the disability insurance plan that offers the benefits you might need.
Once you've completed your online comparison of several disability insurance providers, eliminate the insurers that do not meet your basic requirements. Then, choose the insurer that offers the features most important to you, as well as the best rates.
The disability insurance company you select should offer both fair prices and excellent service. Quality service may cost a bit more, but provides added conveniences, so compare a number of insurers to get a feeling for the quality of their service. Check for any special discount programs theses disability insurance companies might offer to lower your costs. Get at least four or five competitor's rate quotes before making a decision.
Disability Insurance can be purchased from most life insurance companies, and benefits can be tax-free.
Many variables affect the cost of disability insurance. You can expect to pay approximately three percent of your annual income as a premium: 4% would give you some additional features. Cost will vary according to options chosen. Keep in mind that there is a general relationship between price and quality.
Disability insurance is a contract between you and an insurer. If you meet the conditions of disability, they will pay. Your disability policy is really just a set of rules. But before you need them, it's best to understand just how those rules work. Pay particular attention to the contract wording of the policy. Clarity of the contract is essential. When shopping for Disability Insurance coverage, consider these questions the insurance companies might ask:- What is your occupation? What do you do in the course of a day? Any manual labor? Are mobility or manual dexterity key functions in your occupation? Define for the insurer. Different occupations have different risk factors, some are more costly to cover, (e.g. farming).
- Does the policy cover both accident and sickness? Are there any differences in the way the policy applies to sickness claims versus accident claims?
- What is the duration of the protection? Two years? Five? To age 65? For life? Consider how you would support yourself beyond age 65 if your pre-65 disability coverage is inadequate to provide for saving for retirement. What is the cost of a lifetime benefit or future savings protector rider? If you work beyond 65, and have a to-65 policy, can you maintain the policy with a 2-year benefit?
- Is the policy non-cancellable by the company for the stated duration?
- What is the length of the waiting period? Lengthening the waiting period from 30 to 90 days may reduce the cost by about 25 - 35%, but it could also prevent you from claiming during short-term illness. Do you have liquid assets that you could use to cover you for a longer wait period?
- Will the monthly benefits be indexed for inflation? If you are shopping for a new policy, you can keep the premium lower and assume some of the risk by stating a ceiling for the indexing at say 3 - 4%, instead of 7 - 10% as was common in some older policies. Central bankers have a low-inflation mindset these days, and this trend is expected to continue. This is a very important option, and should be strongly considered.
- Is the premium level or increasing?
- If the policy pays partial benefits for partial disability, what are the parameters? This is useful if you can only work part-time while recuperating, or if you never become "totally disabled".
- Does it pay for rehabilitation program costs? If so, are there limits?
- Is there an option to increase income benefits in the future (subject to financial considerations) without evidence of good health?
Additional questions for policy features some disability insurance companies offer:- Are you able to choose your own physician? Must you be under the care of a physician?
- Is there a waiver of premium if you become disabled? If so, how does it work?
- Are loss of speech, hearing, sight or use of two limbs considered permanent disability?
- What exclusions or limitations are included in the policy? Are any pre-existing medical conditions identified?
- If a disability recurs within one year, will the company waive the elimination period?
- If you become disabled and your benefits are indexed while on claim, when back to work would you then have a right to increase your base policy coverage to the indexed amount? This is called a "qualified right".
- If you die while on claim, is there any benefit for survivors? Some policies offer a lump sum equal to 2-3 times the monthly benefit.
- If information deemed to be important to the underwriting process was withheld or mis-represented, would your policy be declared invalid? Is the policy incontestable after two years?
- What are the time limits and other conditions for making a claim?
Are the following riders available?- accidental death and dismemberment/loss of use
- advance start date for hospitalization
- lifetime accident coverage
- elimination period refund benefit
- term coverage (useful to cover specific obligations such as alimony, education, mortgages)
TYPES OF DISABILITY INSURANCE POLICIES
There are three basic types of disability insurance that may be purchased:
- Cancellable: The company can cancel the plan any time it chooses. This usually includes some plans for exceptionally high-risk individuals.
- Guaranteed renewable: You can renew the disability insurance policy but not necessarily at the same price. If you change occupations you may have to pay a higher premium.
- Guaranteed renewable and non-cancellable by the insurance company: You are guaranteed that you can renew the disability insurance policy each year, often quoted at the same premium price until you reach age 65.
- Disability Insurance
- Self and/or Spouse
- Parent
- Child
- Business Association
DISABILITY INSURANCE QUOTES IN:Alaska | Alabama | Arizona | Arkansas | California | Colorado | Connecticut | Delaware | Washington DC | Florida | Georgia | Hawaii | Idaho | Illinois | Indiana | Iowa | Kansas | Kentucky | Louisiana | Maine | Maryland | Massachusetts | Michigan | Minnesota | Mississippi | Missouri | Montana | Nebraska | Nevada | New Hampshire | New Jersey | New Mexico | New York | North disabilityolina | North Dakota | Ohio | Oklahoma | Oregon | Pennsylvania | Rhode Island | South disabilityolina | South Dakota | Tennessee | Texas | Utah | Vermont | Virginia | Washington | West Virginia | Wisconsin | Wyoming |
DISABILITY INSURANCE
QUOTES ONLINE
The Web has greatly affected the insurance industry, making disability insurance shopping much more efficient by giving the consumer more choices than what could be found in local phone books.
Consumers are now linked directly to hundreds of disability insurance companies via the Internet, making the tasks of obtaining disability insurance rate quotes faster and easier.
Increasingly, smart shoppers are obtaining disability insurance quotes from the insurance company's website, and even applying online to purchase insurance policies.
Comparing disability insurance quotes online gives the consumer an easier and faster way to select a policy at the best price, 24 hours a day, 7 days a week.
DISABILITY INSURANCE FYI
Disability payments from private sources, such as private pension or insurance benefits, do not affect your Social Security disability benefits. Moreover, it is estimated that a twenty-year old today has a 1 in 6 chance of dying before reaching retirement age and a 3 in 10 chance of becoming disabled before reaching retirement age, making survivors and disability insurance just as important in the future as they are today.
Disability insurance has improved over time. If you have coverage, consider reviewing it to determine if the policy is meeting your present needs. A policy that was ideal three years ago may not be the best for you today. If you do become disabled you'll want to be certain you have the best coverage. It's too late to review your policy once you become disabled or uninsurable.
If you are working and plan to discontinue in order to raise a family, or begin working out of your home, you should maintain any private disability coverage you may have. Or, plan ahead and consider buying a policy while you are still an employee. This is because you may not qualify for a new disability insurance policy if you are a homemaker or working from your home.
It is important to find out what percentage of your income you will receive, as well as the waiting period before benefits begin.
DISABILITY INSURANCE TERMS
BINDER -
A temporary agreement which provides coverage until a disability insurance policy can be written or delivered.
CANCELLATION -
The termination of disability insurance coverage during the policy period. Flat cancellation is the cancellation of a disability policy as of its effective date, without any premium charge.
DISABILITY INSURANCE -
disability insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of disability from illness, sickness, or accident.
EXCLUSION -
Certain causes and conditions, which are not covered. Exclusions will be listed in the disability insurance policy.
INSURER -
The disability insurance company.
LIMIT -
Maximum amount a disability insurance policy will pay either overall or under a particular coverage.
POLICY -
The written contract of disability insurance.
PREMIUM -
The amount of money insurers charges for disability insurance coverage.
QUOTE -
An estimate of the cost of an insurance policy, based on information given to the disability insurance company by the applicant.
RIDER -
Also known as an endorsement, a rider is an amendment to a disability insurance policy that is used to add or delete coverage.
UNDERWRITING -
The process of qualifying applicants for insurance and rating them according to their level of insurability so that the correct premium rates may be charged.
DISABILITY INSURANCE TIPSInsurers want you to have an incentive to return to work. As such, you usually cannot cover yourself for 100% of your pre-disability earnings. The limits range from 50-70%, depending on your pre-disability income.
The underwriting scrutiny on Disability Insurance applications is more stricter than on life insurance policies. First, most top-name companies won't cover someone who isn't employed at least 20 hours/week. Second, existing medical problems may disqualify an applicant. Third, the insurers want an income history.
It is imperative that you disclose all prior ailments and treatments. Give complete information on your application so that the insurer cannot dispute your claim by suggesting that you may not have disclosed certain facts. Be specific and accurate.
A copy of last year's tax return is often requested to accompany Disability Insurance applications. This is verification of income and imperative when trying to insure a self-employed individual. For a self-employed person, only 50-70% of net business income will be insured, not gross.
Some companies will not insure home-based workers because it's difficult to evaluate the extent of the disability relative to prior at-home work habits.
WHEN DISABILITY INSURANCE IS DENIEDIf disability insurance coverage is denied here are some other things you should consider:- It is appropriate when disability insurance coverage is denied because of a medical problem, to continue to apply at least for accidental death and dismemberment coverage (lump sums), or for a stand-alone accident policy which will provide monthly income.
- Check for a Disability Insurance (DI) rider on a life insurance policy: It is important to understand the kind of coverage you may have. For example, on a life insurance policy you may have a disability waiver of premium. These riders may be too specific to be of value as they could read: "completely unable to do any or every duty of any occupation." In fact, most disability riders on life policies will not provide monthly income at all. They will only pay your life insurance premium if you become disabled. Read carefully!
- Check for Disability Insurance coverage on a loan or mortgage: The disability insurance coverage you may have on a loan or mortgage may not cover you unless you are totally disabled. Be sure you understand the definition of disability in these contracts. Ask yourself, is this what you intended to buy. Also, the coverage only remains in place as long as the loan or mortgage is outstanding.
DISABILITY INSURANCE RECAP
Remember, Disability can be more disastrous financially than death. If you are disabled, you lose your earning power. You still have living expenses and, often, huge expenses for medical care. When purchasing disability insurance, ask:
How is disability defined? Some policies consider you disabled if you are unable to perform the duties of any job for which you are qualified. Better plans pay benefits if you are unable to do the usual duties of your own occupation.
When do benefits begin? Most plans have a waiting period after an illness before payments begin.
How long do benefits last? After the waiting period, payments are usually available to age 65, though shorter or longer terms are also available.
What are the benefits? What dollar amount is promised? Can it be reduced by Social Security disability and workers' compensation payments? Are the benefits adjusted for inflation? And will the policy provider continue making contributions to your pension plan so you have retirement benefits when the disability coverage ends?
What is the difference between own occupation and regular occupation? The difference between own occupation and regular occupation is that if you become disabled and were deemed to be totally disabled per the policy's definitions, with own occupation you could work at some other job and still collect your full policy benefits. Whereas with regular occupation usually there is a further stipulation that if you accept employment at any other gainful occupation you will be cut off benefits.
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