If you and your family depend on your income, you should probably get long-term disability income insurance.
Think about what you and your family would do if you were disabled, even for a few months. Who would cover your expenses? One of the main reasons people go bankrupt in the United States is that they get sick or hurt and can't work.
Most people don't know that they are more likely to become disabled than to die before their time. Still, they are more likely to buy life insurance than disability insurance. People in the insurance business call disability "the forgotten risk" because of this. Journal of the American Society of Chartered Life Underwriters statistics show that if you are between the ages of 30 and 55, your chances of becoming disabled are two to three times higher than your chances of dying.
If you are 35 years old, you have a 50/50 chance of getting sick or hurt for at least three months before you retire. Before he or she turns 65, one worker in seven will become disabled for more than five years.
People often think that if they get sick or hurt, the government or Worker's Compensation will give them money. In fact, more than 80% of people who apply for disability benefits from Social Security are turned down. For a partial or short-term disability, Social Security does not pay benefits. Before you can get Social Security, you must have been disabled for a year or think it will last for a year. Worker's compensation only pays out if you were hurt at work, and the benefits are usually only good for a few years.
Your health insurance will pay for hospital, doctor, and other medical bills, but you will still not have a salary. Long-term care insurance only pays for nursing home or assisted living centre bills. Insurance for disability, on the other hand, does not pay bills. Instead, the insurance company sends you regular payments of money. It is meant to replace your salary so that you and your family don't have to worry about money when you can't work because you are sick or hurt.
When buying long-term disability insurance, what should you look for? First, Moody's, A.M. Best, and Standard and Poor should all give the insurance company a top rating. These agencies rate companies based on their capitalization, growth, earnings, and other measures of how stable they are financially.
Second, you need to make sure you know what your policy says. Before you can start getting benefits from some policies, you have to wait a certain amount of time. For example, your policy might make you wait six months before you start getting benefits. In this case, you would start getting benefits six months after you became disabled.
People often call the time you have to wait the "elimination period." Most choices are between 30 and 720 days.
Look for a "premium waiver" clause. This means that if you get sick or hurt, you won't have to pay for your disability policy any longer.
What do you have to do to get the policy renewed? The insurance company can cancel your policy if it doesn't automatically renew.
Another thing to think about is the different ways to pay. Some policies only pay out for a certain amount of time, like two years. Some policies are good for life. Most policies pay out benefits until you reach retirement age, at which point you can start getting Social Security payments.
Most policies have a clause about people who are still disabled. If you get hurt and can't work, you may go back to work part-time at first. Or, since you were out of work for a while, it may take you a while to get your business back to where it was before you got sick or hurt. Your insurance should pay you if either of these things happen.
Look over the policy to see if it has a benefit for repeated disabilities. A recurrent disability is one that comes back after you get better from the first one. Your insurance should not make you wait a new amount of time or ask for proof that the two conditions are related.
When you buy disability insurance, the amount you pay is based on how much money you make. The more money you make, the more your policy will help you. But you also need to think about the fact that as you get older, your income will go up. You need a future increase rider or an automatic increase rider because of this. With these riders, you can keep your policy but increase the amount of benefits you get based on how much more money you make as you get older.
When you buy insurance, the price will depend on a number of things. If you choose to replace only 50% of your income instead of 80%, you will pay less for the insurance. If you choose a longer elimination period, you also pay less. The insurance company looks at your current health and may not cover conditions that were there before. Women and smokers may pay more for disability insurance than non-smoking men because they file more claims. If you have a job with a lot of risks, your policy may cost more.
Policies for disability insurance can be hard to understand. Sitting down with a professional insurance agent to talk about the terms of the policy and ask questions until you fully understand the details of the quotes being given is always the best way to go.
