Disability Insurance Articles

3 Questions To Ask Before Buying Disability Insurance

2010-07-08

Disability insurance may not be at the top of your list of priorities, but most financial experts would advise that you should consider purchasing it as a safety net. If you are in the market for personal disability insurance, there are three important disability insurance questions you should ask: Could the terms of the policy change, could I work in a different occupation while receiving benefits, and does it cover my income during the disability period.

Could the terms of the disability insurance policy change? Yes, unless your policy type is non-cancellable and guaranteed renewable. There are three levels of renewability; conditionally renewable, guaranteed renewable, and non-cancellable and renewable. Unless you choose a policy that is non-cancellable, you could be setting yourself up for changes in coverage without your prior approval.

In the event of a disability, could I work in a different occupation and still receive my benefits? Many people experience disabilities that prevent them from returning to their previous job, but would like to return to work in some other capacity, if possible. If your policy is an any-occupation policy, you will only receive disability insurance benefits if you are unemployed and not working at all, in any job. The best policy you can purchase is own-occupation disability insurance. With this policy, you will have the option of returning to work in another field, if you so choose.

Will my income be covered during the period of my disability? What you are looking for here is called residual disability insurance. For example, if you have a disability for which you have to work reduced hours for a period of time, the residual benefit will pay you benefits for the hours you are unable to work, to make up for the pay difference. It may be beneficial to consider residual disability insurance coverage for loss of income, not just time and duties. For example, you are back to work full-time after a disability, but in a different position. If this position pays a lower income than you previously received, the loss of income policy would pay you benefits for the difference in pay.

Disability insurance can offer you much needed financial protection if you should need it. However, poor coverage could be a complete waste of your money. Could your policy benefits change after you purchase it, would you be permitted to work at all, and will the policy benefits replace your income, are the three most important disability insurance questions you must ask before purchasing a policy.