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 a disability drop significantly below pre-disability earnings by a given percentage, the insured may be considered totally disabled.

Usually short-term policies cover non-occupational disabilities, 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. It can be as short-term as 13 weeks or as 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, it 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.

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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