Selecting An Individual Disability Insurance Policy


Disability insurance is a means by which you are insured against loss of income due to disability. When you become unable to earn due to illness or accidents, the insurance company replaces a definite amount of your gross income. This is done at a tax-free basis.

There are a number of issues that you should be aware of if you want to insure yourself against disability. These points are usually in fine print and it will be to your advantage to get to know about them.

What you get as benefits from the company varies depending on your income during the period you have been working. In general, you are paid an insurance amount that is approximately  40 to60% of your gross income. This can be of considerable help in overcoming financial constraints.

There are various types of insurance policies available. Some of the policies are inexpensive and require you to pay a small sum as a premium. On the other hand, some policies require a substantial outlay on a periodical basis. People generally opt for the inexpensive policies because of the low premiums.

However, the catch is that the performance level of the cheaper policies is also low. If you opt for an insurance policy, you will naturally expect substantial returns. This is where inexpensive insurance policies come a cropper. The rate of return is proportional to the value of the policy and the premium. Therefore, if you want better returns it is advisable to opt for a high value policy, which will naturally have a higher premium.

The insurance companies are law-bound to incorporate such details in the insurance forms for the knowledge of the customer. You should always go through the form in detail before making a decision. Reading the fine print is always necessary before opting for an insurance policy.

One should always keep in mind that the policies of different companies are very different from each other. Hence, you should not assume that terms, conditions, and rate of returns will be the same.

You should compare policies of various insurance providers before zeroing in on a specific provider. Making an informed decision is of utmost importance in this regard.