Disability Insurance: What You Need to know
by Drew Madison
When we’re young we think nothing negative will ever happen to us, but it is fact that 1 in 4 twenty year olds will become disabled before they retire. It’s important to know the basics, and some of the nuanced details about disability insurance, so that you can protect yourself, and your family.
What is Disability Insurance?
Disability insurance protects individuals in the case they may become seriously injured throughout the course of their profession. Similar to life insurance, more often than not, disability insurance will be offered to employees by their employer as part of a benefits package. When one starts their job or career at a firm, they will be able to go through steps on their employer’s website that ensures they are covered under a policy. This article will be specifically helpful if you are not in this group, if you need to obtain disability insurance individually.
Types of Disability Insurance
- Individual Disability Insurance – essentially this is simply a non-employer based insurance program where you must purchase insurance personally.
- High-Limit Disability Insurance – this type of insurance is designed to provide a higher disability payment, as you could have probably guessed. (Standard is 65% of salary.) As a result, this type of insurance will almost always charge a higher relative monthly premium.
- Employer-Sponsored Disability Insurance – self-explanatory, but this is simply insurance that your employer has contracted with an insurance firm on your behalf. They will likely have varying options for you to choose from, and the process will be much easier than if you are purchasing individually.
- Business Disability Insurance – similar to personal insurance, but for a business. This type of insurance will provide a business with a monthly payment in the event the business suffers due to natural issues, for instance, if the business loses a CEO, the insurance may pay for the process to rehire, and payment for a new CEO.
Buying Disability Insurance: Step-by-Step Instructions
Step 1: Research online to find a top disability insurance firm that you can trust: See the list below for a quality start:
- Colonial life
- The Hartford
- Met life
Step 2: Check the details of the disability insurance plan you are selecting: (Even before you fill out any forms) this is very important specifically for disability insurance because there can be a significant amount of grey area between what is considered “disabled” or not under the insurance policy and generally a time discrepancy from when you become disabled and when you may start receiving payments. The last thing anyone would want is to pay a monthly premium for disability insurance, and then to wait 9 months after being unemployed before receiving any payments from their insurance plan. (This is an occurrence that can happen)
Step 3: Choose a plan that meets your needs based on your life and current health situation:
- As discussed above: different plans will offer a higher premium or lower deductible etc. and it is always a balance!
- Look at dual insurance programs between life and disability – insurers will sometimes offer plans at reduced rates for those that combine their insurance programs.
Remember, do not stress too much about purchasing disability insurance, that time spent over-worrying could be better spend on time with family, or running a business, or on your job. Know the details of your policy, speak with an agent, buy disability insurance, and then go back to focusing on your life. After all, the thesis behind purchasing insurance is to ensure one can maintain their lifestyle, so follow these instructions, then go on and enjoy life.