Disability Insurance Articles
Assessing The Value Of Your Disability Insurance Coverage
2010-08-14
The Social Security Administration reports that 30 percent of Americans will become disabled, perhaps only temporarily, before retirement. Understanding the impact of this statistic places into sharp relief the value of what was once considered an optional benefit-disability insurance coverage. Furthermore, given that less than 10 percent of disabilities are related to occupational activities, it becomes even more important to understand what disability insurance can provide and to make plans to have good disability coverage in the event of a serious illness or injury.
Disability insurance coverage is valuable in one situation and one situation only-when the insured becomes unable to generate income produced by gainful employment. Disability insurance coverage is not to be confused with health care insurance, long term care insurance or life insurance; it is a separate insurance policy specifically related to injury or illness that causes an insured to become unable to work. A valuable disability insurance policy will contain key components that will provide the insured total peace of mind about how, when and for how long insurance benefits will be paid out in the event of a disability. The most valuable policies will likely carry slightly higher price tags; however, the upfront expense is more than justified if the policy is ever needed. Good disability insurance coverage will define disability by the individual's inability to carry out the duties of his or her occupation, sometimes called "own occupation" policies. Some policies may offer a combination of "own occupation" and "any occupation," but the most valuable policies assess apples to apples, in other words, the insured's inability to continue in his or her line of work.
The value of the disability insurance coverage is further enhanced when there is a shorter waiting period, often called an "elimination" period. Again, the price tag upfront may increase slightly with lower waiting periods, but because these waiting periods are what separate the insured from his or her benefits, it is advantageous for the waiting period to be reduced. When a disability occurs, medical bills won't wait, so why should benefits? A valuable disability insurance policy will take this into account. Of even more value is disability insurance that is auto-renewable with no cancellation policy. This ensures that, up to the maximum payout expense and time limit caps, the policy will be available to the insured as long as the premiums are paid in time and in full.
When shopping for good disability coverage, pay careful attention to how disability is assessed, what kind of waiting period is required, and how renewals are handled, because disability insurance coverage is more than just a piece of paper; it is a lifeline in the event that a disability occurs.