Disability Insurance

There are many ways to look at Disability Insurance , in other words many terms to use, terminology or language you won't find in any other insurance policy, so lets first break them down into understandable pieces of information.

Total Disability:A person is considered totally disabled if he is unable to perform all the principal duties of his job, or any other job for which he is reasonably suited, considering his income, education and experience. The danger to be aware of here is that if you can work only a few hours a week, you would have zero coverage under a policy covering only Total Disability.

Residual Disability:Residual Disability typically means proportionate coverage when you are not able to work full time (from a back injury or a heart attack for example) and usually resulting in an income loss of at least 20 percent. Under policies that cover only total disability, you would not receive anything in benefits. With residual Coverage, lets say you work part time and earn 40 percent of your pre-disability income, then you will receive 60 percent of your monthly benefits.Make sure you add a residual disability coverage option to whatever policy you buy. Without it, if you can even work 1 day a week, you will not get paid a Disability Insurance payment. Be aware that many of these only last 6 months, so adjust it accordingly.

Elimination Period:Elimination period is disability terminology for deductible. How long you are willing to wait before coverage starts. The longer you wait the lower your insurance premiums.

Benefit Period:Benefit period is the duration you want a disability insurance paycheck, typically 2 years, 5 years, to age 65 or lifetime coverage. It is definitely best if you can afford it. 2 years seems inadequate because most disabilities last more than that.

  • Long Term Disability Insurance