Disability Insurance

Disability insurance can replace a portion of your income if you become sick or disabled and have lost the ability to work.  Statistics show, you're more likely to become disabled at some point in your working career than you might think.  In the event of an accident or illness, purchasing disability insurance will ease the pain against this financial burden.

There are two types of disability insurance: Short term and Long term. 
Your employer may have a short term disability insurance policy in effect to protect you.  The benefit period is usually not longer than 2 years and normally would not cover all your expenses.  Some employees contribute to the cost of this policy through payroll or some employers pay 100% of the premium.  For more comprehensive coverage, a long term disability policy may be a better fit.  Long-term disability policies usually have benefit periods of 5 years min and some policies have benefit periods to age 65 or life.  Most prospects purchase these types of insurance policies individually (not through their employer). The the policies are typically expensive.

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Benefit Period

The benefit period is the amount of time the policy will continue to pay a monthly amount when a claim is made.  Disability insurance benefits are based on the salary of the insured individual.  As a normal rule of thumb, 60% of the gross wages are used as a benefit amount for the client.  The agent and the client determine the benefit period best suitable for the needs of the client.  The longer the benefit period the more expensive the premium becomes.  Benefit periods are typically in years and can be as long as lifetime.

Waiting Period

Included in all disability insurance policies is an elimination/waiting period.  There are a certain number of days that must pass prior to receiving benefits from the policy.  This acts as a deductible thus reducing the premium the longer the waiting period.  Standard options are: 30, 60 90, 180 or 360 days for a waiting period.

COLA-rider

There are a few standard riders available to add on a disability insurance policy.  The first common rider is Cost of living often referred to as COLA.  This rider guards against inflation and will increase your monthly benefit amount up to a pre-selected percentage.   The actual increase in the benefit amount is set by the CPI.  If the CPI is 4% and the policy has a 3% COLA, then the benefit amount can only be increased 3%.  If the CPI states 2%, then the amount of the increase to the benefit amount would only be 2%.

Future Increase Option-rider

Another common rider is the future increase option.  This gives the insured the ability to increase the benefit as their income grows.  Disability insurance insures your income at the time the policy is written.  Without this rider, the benefit is set to the amount of insurance selected.  The rider allows you to purchase increased benefits and guarantees your insurability. This allows you to purchase increased amounts of insurance regardless of your health condition.

For a more detailed explanation of disability insurance, please contact a licensed agent. You can request a quote from a local insurance agent using the quote link below.

FOR A DISABILITY INSURANCE QUOTE