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SolveYourProblem
Article Series:
Health Insurance
Individual
Disability Insurance Types
You are throwing away money when buying the
cheapest policy on the market. The odds of getting paid a monthly
benefit under that contract may be extremely lower than receiving
benefits from a quality contract. Individual disability insurance
is designed to replace anywhere from 45-60% of your gross income.
This is designed on a tax-free basis should a sickness or illness
prevent you from earning an income in your current occupation.
Every disability insurance plan has a different definition
of total disability in the policy. There are three basic types:
Own-Occupation Disability Insurance
If are deemed incapable to perform the duties of your regular
occupation, the company will pay the claim. You are even allowed
to get another job in a different field and still be paid.
This is the only plan that does not penalize somebody for going
back to work in a different occupation while on a claim.
Income Replacement Insurance
This is the most common definition of total disability in
the last few years. Most insurance carrier has moved to an
income replacement definition, if they stopped offering own-occupation
disability insurance. You will be penalized or lose the benefit
if you work while on a claim.
Gainful Occupation Coverage
This is a very common definition in an employer sponsored
long-term disability policy. This is also very popular with
property and casualty insurance companies who have decided
to release a disability insurance policy to offer more options
to their clients and put a foot in the market. This is the
worst possible definition and leaves whether you are disabled
or not up to the insurance company itself.
The first aspect of any disability insurance policy one needs
to understand is the renew ability feature. Non-Cancelable
and Guaranteed Renewable guarantees you that after you purchased
the policy there will be no changes to your premium schedule,
monthly benefits, or policy benefits to age 65 or whatever
age you elected. The insurance company legally cannot change
anything concerning your policy unless you want them to. A
Guaranteed Renewable plan states that an insurance company
will probably not change anything about the policy, but they
can if they choose to at anytime. A Conditionally Renewable
plan is a policy that offers you virtually no guarantees for
your disability insurance policy. Stay away from these policies;
you will get burned. Next you will need to know what you can
expect if you get disabled.
There will be a period of time from the on set of your disability
till you receive a benefit check. This is called the elimination
period. The industry has made the most common offer a 90-day
elimination period for an individual disability insurance policy.
You can expect a high charge if you choose to go with a shorter
elimination period of 30, or 60 days. Most companies will also
give you a price break if you can go longer than 90 days. Now
once the checks star coming you have moved into your benefit
period. Choosing this is most important. You don’t want to
be left with out money to live on if you are disabled forever
and picked a five-year policy. This is time frame you will
be getting a check, think long-term, if you don’t need it than
who cares, you might sometime later. Once the elimination period
has been satisfied, monthly benefit checks will begin to come
in at the end of each month. Your benefits will stop when you
return to work in your occupation, or another occupation making
the same income. The most popular choice for a disability insurance
policy is to age 65. Some people prefer to go with lifetime
with a higher premium.
A Cost
of Living Adjustment is a rider that kicks in if you
actually go on a disability insurance claim, it will increase
your monthly benefit every year while you are on a claim along
with the CPI up to the maximum you elected. You have to be
disabled for more than a year to use it. A Future Increase
Option is a rider locks in your insurability for a certain
period of time (normally to age 55). So, as you increase in
age, and increase your income level, you can increase your
monthly benefit regardless of any health changes. An Automatic
Increase Rider increases your total monthly benefit each year
for about five years. Your premium will go up with this rider
each year because you are buying more disability insurance
coverage. Make sure you look at these carefully and pick one
that is best for you if you want the extra coverage.
Click here to to view health insurance quotes, compare plans side-by-side and apply for the most affordable health insurance within your budget. I did this myself (June 17, 2011) to change my health insurance policy. Saved me $84 per month (or $1,008 per year). It's my SolveYourProblem recommendation.
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by SolveYourProblem.com
: 2006
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