Image via WikipediaIts something most of us don’t want to acknowledge, but we Boomers are getting older and so to plan for any unforseen incidents disability insurance is a must have.
Having a disability insurance policy could be a lifesaver if you cannot work for a period, especially with a family; a scenario where a person, who brings money into the home, cannot work is one that is played out by thousands every day. For many people, protection against disability can be a lifesaver if you can’t get to work and earn an income. In fact there is a higher probability of a person requiring some form of protection against disability before they retire than the likelihood of dying.
The problem is that life insurance is the number one consideration for most people, especially when they have dependants, without even looking into the benefits of covering themselves against disability. If you are aged 40 for example, there is a higher chance that you will be disabled, and thus unable to work for a period of 90 days or more, than of you dying before the age of 65. The problem is disability insurance costs more than basic life cover as it is costlier to provide.
Unlike life cover, disability rates are based on the potential income lost as well as, age, occupation and general health. One method of lowering the policy premium is arranging for the plan to ‘kick in’ only after the incapacity has lasted for a set period of time. so effectively reducing the possibility of claiming on the policy. The other is opting for a shorter period of cover; although you need to bear in mind that once your period of benefit ceases you would have to support yourself.
Insurance company policies will differ but the majority will only pay a percentage of your lost income so it is a good idea to choose the best one for you and in this instance, the cheapest may not necessarily be the best. There are two policy options available; the first is short term disability insurance which only covers the claimant for a few months of incapacity. If someone wants to claim total disability and be completely covered financially, they will have to prove that they are unable to perform the majority of the tasks they could previously.
Irrespective of the type of policy you have, payments for disability are made regularly, every week or month until the end of the incapacitation or the policy, whichever come first. Other key points to consider when looking into health policies are if there are restrictions on:
- Attitude towards pre-existing conditions
- Is the benefit taxable?
- When do the payments stop?
- Are you employed in a high risk occupation?
The level of cover provided for your original salary will differ with each insurer’s disability insurance policy. With some providers giving 70 percent of the original salary, you will have to watch out for those who will only provide you with a very low 40 percent which could cause financial hardship. This needs to be checked thoroughly especially if you have a family with large financial commitments each month.
