While you may have purchased a life insurance policy and become comfortable with the choices you’ve made regarding your policy and its terms, you probably haven’t thought about what could happen if, instead of death, you suffer a debilitating injury. A disabling injury can leave you and your loved ones without a source of income, large medical bills, and the cost of both rehabilitative services and long-term care. Many insurance providers give the option of purchasing add-on riders to your existing policy, offering more specific coverage depending on your needs. It is very possible you can purchase a disability income insurance rider and it may benefit you to do so.
Keep in mind when purchasing a Disability Insurance Plan that you also make sure that it is easily found when the time comes. Often when it is needed, the person it is provided for is not coherent enough to tell you with which company it is with. Register it on a database to prevent it from becoming a lost policy.
The definition of a disability often changes depending on the existing circumstances surrounding the situation. Total disability typically covers you being able to perform your own job, with residual disability covering the loss of earnings or loss of earnings and ability to do work. Some disabilities will automatically classify you as being totally disabled (called presumptive disabilities) and includes: the loss of two limbs, the loss of speech and hearing, and permanent blindness.
The benefit period for disability insurance differs from total or term life insurance in that the length of time you get the benefit once you are disabled is dependent on the benefit period you’ve chosen when you purchased the policy. This could be anywhere from two to five years or even be contingent on an age designation. Some policies have lifetime benefits but most are categorized as short term or long term. Short term policies typically pay benefits anywhere from as little as 13 weeks up to a 2 year period. Any longer period of benefit coverage is considered long term. As a general rule, the longer period you pick means a higher premium you pay out.
There is also a waiting period before you are able to begin receiving your disability benefits from the policy. Known as the elimination period, this waiting period often affects the premiums you pay as well. Acting in the opposite of the benefits coverage period, the longer a waiting period the less you pay in premiums and the shorter the period the higher. Most people choose the length of waiting period based on cost and on how long they might be able to life off of savings or ancillary income before they begin receiving their disability benefits.
The main purpose of disability insurance is to cover your loss of income while recuperating from injury. To that end, and to ensure you have some incentive to return to work, the insurance typically pays only a fraction of your normal income. The amount of disability you receive is typically 50 to 70 percent of your income, subject to a designated monthly maximum. This amount is determined when you apply for the policy and takes into account earned and unearned income and other disability coverage you may be eligible for (Social Security, group policy benefits, etc.).
Certain types of accidents or illnesses may not be covered by the disability policy, including war, suicide attempts, and normal pregnancies. And if you have a pre-existing condition, the policy may exclude your condition from the coverage, either permanently or for a specific time period.
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