Disability Insurance

 Disability income insurance, which complements
health insurance, can replace lost income.

There are three basic ways to replace income:

• Employer-paid disability insurance

This is required in most states. Most employers provide some short-term sick leave.

Many larger employers provide long-term disability coverage as well, typically with benefits of up to 60 percent of salary lasting from five years to age 65, and in some cases extended for life.

• Social Security disability benefits

This can be paid to workers whose disability is expected to last at least 12 months and is so severe that no gainful employment can be performed.

• Individual disability income insurance policies

Other limited replacement income is available for workers under some circumstances from workers compensation (if the injury or illness is job-related), auto insurance (if disability results from an auto accident) and the Department of Veterans Affairs.

There are two types of disability policies:

• Short-Term Disability policies (STD) have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.
   

• Long-Term Disability policies (LTD) have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.

Disability policies have two different protection features that are important to understand!

• Non cancelable: means the policy cannot be canceled by the insurance company, except for nonpayment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.
   

• Guaranteed renewable: gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, your insurer has the right to increase your premiums.

In addition to the traditional disability policies, there are several options you should consider when purchasing a policy!

• Additional Purchase Options
  Your insurance company gives you the right to buy additional insurance at a later time.
   

• Coordination of Benefits
  The amount of benefits you receive from your insurance company is dependent on other benefits you receive because of your disability.
   

• Cost of Living Adjustment
  Increases your disability benefits over time based on the increased cost of living measured by the Consumer Price Index. You will pay a higher premium if you select this coverage.
   

• Residual or Partial Disability Rider
  This provision allows you to return to work part-time, collect part of your salary and receive a partial disability payment if you are still partially disabled.
   

• Return of Premium
  This provision requires the insurance company to refund part of your premium if no claims are made for a specific period of time declared in the policy.
   

• Waiver of Premium Provision
  This clause means that you do not have to pay premiums on the policy after you’re disabled for 90 days.
   

Key things to look for!
 

• The Definition of Disability
  Some policies pay benefits if you are unable to perform the customary duties of your own occupation.
  
  Others pay only if you are unable to perform any job suitable for your education and experience.
  
  Some policies define disability in terms of your own occupation for an initial period of two or three years and then continue to pay benefits only if you are unable to perform any occupation.
  
  "Own occupation" policies are more desirable, but more expensive.
   

• Benefit Period
  Amount of time you will receive monthly benefits during your life. Experts usually recommend that the policy you buy pay you benefits until at least age 65, at which point Social Security disability will take over.
  
  If you are young, you may consider buying a policy offering lifetime benefits because it will still be relatively inexpensive.
   

• Policy that will Replace 60 to 70 Percent of Your Total Taxable Earnings
  A higher replacement percentage, if available, is more expensive.
  
  *Evaluate your other sources of income before deciding how much disability coverage you need.
   

• Coverage for D0isability Resulting from Accidental Injury or Illness
  An accident-only policy is less expensive but does not provide adequate protection.
  
  Ideally, both accident and illness coverage should be purchased.
   

• A Cost-of-Living Increase in Benefits
  You are buying a policy today that may not pay benefits for a decade or more. Should you need those benefits, you will want them to have kept pace with increases in the cost of living.
  
   *Some companies also offer "indexed" benefits, keeping pace with inflation after benefit payments begin.
   

• A Policy Paying "Residual" or Partial Benefits
  This type of policy is available so that you can work part-time and still receive a benefit making up for lost income.
  
  A standard feature in some policies, and added by a rider to others, a residual benefits policy pays partial benefits based on loss of income without an initial period of total disability.
   

• Transition Benefits
  Offered by some companies, it can offset financial loss during a post-disability period of rebuilding a business or professional practice.
   

• Ongoing Coverage
  A non-cancelable policy which will continue in force as long as the premiums are paid; neither the benefit nor the premium can change.
  
  A guaranteed renewable policy keeps the same benefits but may cost more over time since the insurer can increase the premium if it is increased for an entire class of policyholders.

Disability Premiums...

Disability premiums are based on your age, sex, occupation and the amount of potential lost income you are trying to protect.

In general, the lower the chance that your occupation puts you in harm’s way, the lower the premium.

The higher the chance of injury, the bigger the premium.

So, for instance, an accountant working in an office would have much lower disability premiums than a construction worker.

 You can call our customer service representatives Monday through Friday
9 am - 5:30 pm and Saturday 9 am - 2 p.m. to give you personalized phone quotes.