Disability Insurance Protects You and Your Family
Disability insurance is as important to your financial life as health insurance is to your overall well-being. Disability insurance makes certain that the insured individual has an income in times of illness or accident that prevent he or she from working. Policies can be written for individual disability insurance and many employers offer coverage. Also, several state, such as California have a disability insurance program that is funded by payroll deduction.
When deciding on disability insurance, first be certain to check if you are already covered by one of these plans. If so you may only want to buy a policies that adds additional coverage rather than a basic plan. Also find out whether dual coverage cancels the employer or state coverage.
Policies that offer separate coverage for short term disability have a waiting period of up to two weeks and make payments up to 2 years thereafter, whereas long term policies have a waiting period of several weeks to several months and a maximum benefit period ranging from a few years to the rest of your life.
There are important terms that the policy buyer must understand before purchasing a disability policy.
Noncancellable means the policy can only be cancelled by the insurance company in the case of non-payment of premiums. This gives you the important protection you need in the case of a lengthy period of disability and the right to renew the policy every year without an increase in the premium or a reduction in benefits. You also want to make certain that your disability insurance is guaranteed renewable. This ensures your right to renew the policy with the same benefits and not have the policy cancelled by the company. Under this clause, the insurer does have the right to increase your premiums as long as it does so for all other policyholders in your rating class.
There are several additional options for your consideration when purchasing a policy. You may want to make certain that the insurance company gives you the right to buy additional insurance at a later time. And it is important to determine if the benefits can be coordinated in the event that the amount of benefits you receive from your insurance company is dependent on other benefits you receive because of your disability, such as from the state. Your policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies. Another feature is a cost of living adjustment, which is important in long-term disability insurance plans.
by Sally.Anderson 19 years ago