A Quick Guide On Disability Insurance

You can find all the basic things about disability insurance in the FAQs given below.

What is disability insurance?

Disability insurance provides you with regular income should you meet with sickness or injury and cannot work for an income.

Disability can come in many ways; workplace injury, accident or a debilitating ailment. Disability insurance covers both permanent and temporary disability. It compensates you for the duration you are out of work.

Won’t Social Security help me if I get disabled?

Social Security norms are extremely stringent. You need to prove that you cannot perform any occupation, not just your present occupation. Even if you qualify for their compensation, it is nowhere near your usual income. The maximum compensation for a 30-year-old earning $6,000 a month is $1,600. Also, the waiting period (period after being disabled and before compensation begins) is around 5 months which can be unnerving.

How much cover will disability insurance give me?

Depending upon the policy you choose, you can get as much as what your present lifestyle demands.

When should I purchase disability insurance?

As with any insurance policy, sooner the better. If you purchase the policy when you are young and in good health, the coverage is least expensive. As you get older and start having problems, the chances of a good deal go down significantly. Disability can strike without intimation. And you cannot purchase disability insurance for a debilitating disability you already have.

What is ‘disabled’ defined as?

There are two types of disability definitions:

1.    Unable to continue with present occupation.
2.    Unable to do any occupation.

Always go for the first option when you select an insurance plan. Your present job is what you are most capable of doing and you get a salary proportionate to your skills. If you lose that job because of disability, your policy should give you roughly the same income.

The exact definition of disability or why you are unable to work varies from policy to policy; be sure to have it clearly stated in yours.

Do I need to fulfill any criteria to apply for disability insurance?

You are not eligible for disability insurance if:

•    you are unemployed
•    you earn less than $18,000 a year
•    you are pregnant or about to be pregnant
•    you carry a weapon to work

How long will I be compensated by my policy?

It depends on the plan you choose. The best plan would be the one that pays you until you are 65 years of age.

How much is the waiting period before I start receiving payments?

Between 28 days to 90 days. They need to check that you are disabled for the entire waiting period before commencing payment.

What if I am partially disabled?

If you are partially disabled in a way that you cannot earn as much as you could before the disability, you sometimes get ‘Residual benefits’ which augment your income by a certain percentage of your lost income.

What should I look for in an insurance policy?

Here is a checklist:

1.    Definition of disability
2.    Extent of disability
3.    Residual benefits
4.    Size of benefits
5.    Waiting period
6.    Length of coverage
7.    Inflation cover