Disability Insurance Articles

The Benefit Period And What It Means For Disability Insurance Payouts

2010-05-18

When taking out an insurance policy, always look at its terms and conditions so that you are sure about how much coverage you will receive. This is especially true for disability plans as there are a wide variety of them currently available. One of the most important attributes of one of these plans is the length of time in which you can actually receive benefits from the insurance company. This is termed the benefit period and is a vital component of any policy. Before signing any insurance contract, always make sure that this period of time is more than adequate to cover you in case of disability.

If you suffer from a long-term disability and wish to receive payouts for a lengthy period of time, it is essential that this be catered for in your insurance policy. Generally, most providers will only pay benefits until the insured is 65 years old, after which the payments will stop. Of course, this can easily be changed and most companies will be happy to provide you with lifetime coverage so that you will receive benefits from now until you pass on. This lengthy disability insurance term comes with an increased premium to balance out the additional money which your provider will be paying you over the years. If you wish to be covered for an extended period of time, the additional cost is well worth it.

If your disability will not affect you for your entire lifetime, you can opt for a shorter benefit period within your insurance contract. This will reduce the length of time in which you receive payouts but will reduce your premiums as well. Statistics show that the average length of a disability is about 3.2 years and a 5 year period of benefits will cover this easily. Just remember to think about other concerns such as the accumulation period when looking at these shorter timeframes. Waiting a long time before being paid may mean that the number of payouts received is drastically shortened. For this reason, it is important to match up the benefit and the accumulation periods.

There are a wide variety of disability policies presently available and some will provide you with benefits for longer than others. The number of payouts directly affects the premiums, however, and the right policy will be created from a balance of the two. After all, expensive premiums will reduce the effectiveness of any payouts which you receive over your disability insurance term. The best coverage will provide you with ample income while you are not at work and will have premiums which stay within your budget. Shop around and compare plans before you decide on any particular one.