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SolveYourProblem
eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how
to choose the right policy
( 18 pages )
PRESUMPTIVE
DISABILITY INSURANCE
There are some
disability income policies that use another criterion to
classify total disability. This is called presumptive
disability and automatically qualifies the insured for
total disability classification. These conditions are:
- Loss of use
of any two limbs
- Total and permanent
blindness
- Loss of speech
and hearing
Presumptive
disability may also be decided by using a loss
of income test. If the earnings after disability significantly
drop below pre-disability earnings by a given percentage
the insured may be considered totally disabled.
Usually short-term
policies cover non-occupational disability but most long-term
policies cover both occupational and non-occupational sickness
and accidents. Bear in mind, however, that occupational benefits
are usually reduced by benefits received form workers compensation
and social security.
Other considerations
are the probationary period, elimination period and the benefit
period.
Some disability
policies use a probationary period that begins when a policy
goes into effect and no benefits are paid during this period.
It varies but is often 15 or 30 days and sometimes up to
60 days for long-term policies.
In addition to
the probationary period some policies also include an elimination
period. It begins when the policy goes into effect and can
last for any length of time even up to a full year. This
is usually left to the insured to decide as it is based on
how long the insured can go without income after becoming
disabled.
The primary advantage
to a long probationary period is a low premium and allows
the insured to use premium dollars to purchase a benefit
that best suits their needs.
The benefit
period, which is the length of time, can vary
depending on the needs of the insured. They can be as short-term
as 13 weeks up to long-term as long as age 65.
As a general rule
the longer the benefit period, the higher the premium. Same
as everything in life, we get what we pay for.
Benefit amounts
for both short-term and long-term policies range from 50%
to 66 2/3% of earnings with a cap on the maximum amount to
be paid.
Other disability
categories are confining vs. non-confining, partial, residual,
recurrent, delayed, combined accident and sickness and non-disabling.
We won’t cover
definitions of each category here, but do be aware of their
existence and check your policy for a definition of coverage
for these types of disability.
Most companies
offer optional short-term benefits for an additional cost.
A typical disability income policy might include all, some
or none of the items below so it is important to discuss
these with your agent. These options are:
Supplemental
income – sometimes called an additional monthly
benefit rider, provides additional income during the first
several months of a long-term disability.
Hospital
income – pays a stipulated amount per day when
hospitalized extending for a certain period and can be
up to 12 months.
Elective
benefits or indemnities – provides lump-sum payments
for certain injuries like fractures, dislocations, sprains
or amputations of toes or fingers and is elected by the
insured in lieu of weekly or monthly benefits stated in
a contract.
 
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