The Basics on Long-Term Disability Insurance
Long-term disability insurance is one of the most important types of insurance a person can own.
It protects one's income, which is the most valuable financial asset of any working person, who is not independently wealthy.
Although, disability insurance is a very detailed type of coverage with many different provisions and definitions offered, it is important for professionals interested in obtaining coverage to understand the basic anatomy of the policy as well.
When Do I Get Paid? The provision that describes when benefits begin is known as the "elimination period".
Most of the major insurance carriers offer 30-day, 60-day, 90-day, 180-day, 360-day and 720-day elimination periods.
The truth is that this provision should not be taken lightly and should involve at least a basic evaluation of your overall financial situation.
If you have enough liquid assets in reserve, to cover 6 -12 months worth of expenses, than it may be advisable for you to consider a 180-day or 360-day elimination period rather than 90-day or 60-day.
This reduces the cost of your long-term disability insurance policy, but still ensures that you are adequately protected in case of a long-term disability.
If you do not have adequate savings, than it would likely be advisable to select a 90-day waiting period instead, or potentially even shorter.
It is important to take your overall financial situation into context when deciding on the elimination period for your policy.
How Long Do I Get Paid? The benefit period of a disability insurance policy determines the duration of time for which a benefit is paid for any single period of disability.
Most insurance companies providing long-term disability insurance today offer a 2-year, 5-year, 10-year and to age 65 benefit.
For a long-term disability claim, the "to age 65" benefit clearly provides the greatest level of coverage.
However, it is also important that you understand exactly how the shorter term benefits function as well.
A 5-year benefit period indicates that for a single period of disability, you are eligible to receive benefits for up to 5-years.
However, if you recover from the disability, return to work and then go on a separate claim 2 years later, the full 5-year benefit period is available again.
The 5-year benefit period is not only good for 5 single years, but rather a 5-year period for any single period of disability.
How Do I Get Paid? Understanding the circumstances in which one may qualify for benefits is perhaps the most important thing you can do prior to actually purchasing a policy.
The provision that describes these circumstances is known as the "definition of total disability".
There are many different versions of this definition available in today's market place and without influencing your opinion, I simply recommend you review this provision with care.
There are some variations that are specific to the duties of your occupation (at the time of disability) and others that are more generalized and simply related to any occupation.
Understanding which definitions are more favorable can be critical in selecting the best disability insurance policy.
Review this provision and discuss it with your insurance agent or financial advisor.
Since not all disabilities are total disabilities, it is also important to be sure your policy will pay benefits for partial disabilities as well.
A partial disability is one where an injury or illness causes you a 20% or greater loss of income.
The provision that covers partial disabilities is known as the residual disability benefit and should also be reviewed with your insurance representative.
It protects one's income, which is the most valuable financial asset of any working person, who is not independently wealthy.
Although, disability insurance is a very detailed type of coverage with many different provisions and definitions offered, it is important for professionals interested in obtaining coverage to understand the basic anatomy of the policy as well.
When Do I Get Paid? The provision that describes when benefits begin is known as the "elimination period".
Most of the major insurance carriers offer 30-day, 60-day, 90-day, 180-day, 360-day and 720-day elimination periods.
The truth is that this provision should not be taken lightly and should involve at least a basic evaluation of your overall financial situation.
If you have enough liquid assets in reserve, to cover 6 -12 months worth of expenses, than it may be advisable for you to consider a 180-day or 360-day elimination period rather than 90-day or 60-day.
This reduces the cost of your long-term disability insurance policy, but still ensures that you are adequately protected in case of a long-term disability.
If you do not have adequate savings, than it would likely be advisable to select a 90-day waiting period instead, or potentially even shorter.
It is important to take your overall financial situation into context when deciding on the elimination period for your policy.
How Long Do I Get Paid? The benefit period of a disability insurance policy determines the duration of time for which a benefit is paid for any single period of disability.
Most insurance companies providing long-term disability insurance today offer a 2-year, 5-year, 10-year and to age 65 benefit.
For a long-term disability claim, the "to age 65" benefit clearly provides the greatest level of coverage.
However, it is also important that you understand exactly how the shorter term benefits function as well.
A 5-year benefit period indicates that for a single period of disability, you are eligible to receive benefits for up to 5-years.
However, if you recover from the disability, return to work and then go on a separate claim 2 years later, the full 5-year benefit period is available again.
The 5-year benefit period is not only good for 5 single years, but rather a 5-year period for any single period of disability.
How Do I Get Paid? Understanding the circumstances in which one may qualify for benefits is perhaps the most important thing you can do prior to actually purchasing a policy.
The provision that describes these circumstances is known as the "definition of total disability".
There are many different versions of this definition available in today's market place and without influencing your opinion, I simply recommend you review this provision with care.
There are some variations that are specific to the duties of your occupation (at the time of disability) and others that are more generalized and simply related to any occupation.
Understanding which definitions are more favorable can be critical in selecting the best disability insurance policy.
Review this provision and discuss it with your insurance agent or financial advisor.
Since not all disabilities are total disabilities, it is also important to be sure your policy will pay benefits for partial disabilities as well.
A partial disability is one where an injury or illness causes you a 20% or greater loss of income.
The provision that covers partial disabilities is known as the residual disability benefit and should also be reviewed with your insurance representative.