Protects your most valuable asset and your ability to earn an income.
pays cash benefits to the policyholder in the event the insured is unable
to work due to sickness or injury. That cash benefit ranges from 50%
to 70% of income. The insurance company will not pay more than 70% of
income because there must be an incentive to return to work.
A disability policy is composed of various elements. Please be advised that the terms used below are not universal and that they vary among the various policie available in the marketplace.
Other Benefits that can be added to an individual disability policy,
but could also increase the cost:
Elimination Period - It is the period of time the insured
must wait after becoming disabled to receive benefits. Typical waiting
periods are 30, 60, 90,120,180, and 360 days. The longer the elimination
period the less expensive the policy.
Benefit Period - It is the period of time the benefits will
be paid following the elimination period. The benefit period could
be from 2 years to age 65 to lifetime. The longer the benefit period
the more expensive the policy.
The Amount of Benefit - The larger the pay-out the more
expensive the policy. The benefit will not normally exceed 70% of
Residual Benefit - If you return
to work and are still partially disabled and cannot return to work
full time or cannot earn your full income, if this coverage is individual it will often pay a benefit proportional to the amount of income lost due to the disability.
Own-Occupation - A policy with this language included will consider you to be totally disabled i you are unable to perform the material and substantial duties of your occupation.
Reasonable or Any Occupation - Pays a benefit while disabled,
but stops when you are able to return to work at a job that matches
your education and experience. This policy is less expensive than
an Own-Occupation policy.
Occupation - Occupation is a factor used in determining
rates. For example, a doctor's rate would be much lower than a blue-collar
Guaranteed Renewable - Guaranteed Renewable policies cannot
be cancelled by the insurance company even if a change in the insured's
circumstances would make him or her a greater risk. Plus, the insurance
company cannot make any changes to the provisions of the policy,
or add restrictions. When purchasing an individual disability policy
it should be Guaranteed Renewable.
Non-Cancelable - Guarantees future premiums will not be
increased. When purchasing an individual policy it should be Non-Cancelable.
Presumptive Disability - Presumptive disability often means that
you are considered total disabled and eligible for benefits for
the loss of sight in both eyes or the loss of two limbs. The better
contracts also presume total disability for the loss of hearing
in both ears, loss of the power of speech, or the loss of the use
of two limbs.
Protection Against Inflation - A benefit that can be added
that offers a cost-of-living adjustment for inflation during a long-term
Automatic Increase Rider - Automatically increases monthly
benefits for a specified period of time. A typical increase is between 3%-5% compound.
Future Increase Options - Allows the insured to purchase
additional benefit amounts without proof of medical insurability. The availability of additional coverage is subject to financial underwriting taking into consideration the insured's income and other disability insurance.
Capital Sum Benefit - Typically pays the insured a lump sum benefit
up to several times the monthly benefit if the insured lost the sight
of one eye with no possibility of recovery or has a hand or foot
severed. This benefit is paid in addition to the other benefits.
Rehabilitation Benefit - To help a disabled insured return
to work, this benefit will pay some of the expenses incurred when
the insured enrolls in an approved rehabilitation center. This benefit
is paid in addition to the other benefits.
Transplant & Cosmetic Surgery Benefit - Under this benefit,
any disability arising from donating a transplant organ, improving
your appearance or correcting a disfigurement will be covered by the
Types of Coverage
Social Security does not just provide for retirement income but disability income as well.
In 2009, the average monthly payment for a disabled worker was $1064; the average monthly payment for a family of a male disabled worker, young spouse and 2 or more children was $1670. See SSI Fact Sheet
Eligibility is based on being unable to perform any gainful employment.See SSDI Disability Planner
You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to last 12 months. See Waiting Period Question
Social Security disability payments are subject to federal income tax if your income exceeds $25,000 individually or $32,000 jointly. See Tax Question
Most employers are required to provide this coverage. The amount and
duration varies by state. Workers Compensation only pays if the disability
occurs on the job, and usually lasts for only a few years and the payments
For individual policies, the applicant needs to qualify and
go through an underwriting process, similar to the process required
for life insurance. The applicant could be subject to a higher premium
or even be declined based on his or her occupation, medical history,
or lifestyle. Individual policies are usually purchased by
high income professionals because of the cost.
Some states require employers to carry group disability insurance anywhere
from 26 to 52 weeks.
Group Long Term Disability (LTD)
Group LTD is carried by almost half of mid-size to large employers
and provides long term benefits for at least 5 years covering about
60% of salary. The premium is usually very low, does not require proof
of insurability, and often is fully paid by the employer. If you would
like to get a Disability Insurance Quote, click
Tom Maliskey, CSA
1137 Harrison Avenue, Ste 8A | Panama City, FL 32401
Phone (850) 785-8484
Fax (850) 769-7640
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