Disability Insurance Articles

Finding Out How Your Employer Provided Disability Insurance Stacks Up

2010-12-04

Disability insurance is an essential tool if you are serious about protecting yourself and your family from an accidental loss of income whether temporary or permanent. If your employer provides it, that is an important asset, but you should know how that policy compares to others. Disability insurance premiums are usually reasonable, but the peace of mind that a high quality disability insurance policy brings is valuable for sure.

A qualifying event does not necessarily have to be an occurrence like a physical accident. Anything that prevents you from carrying out the regular responsibilities of your job has in fact disabled you. If you are a cheese taster and lose your sense of taste you are disabled. The first thing to find out when comparing policies is each insurance company's definition of disability because that is what will determine if you are eligible for payments in any particular situation and they are not all the same. Understand the difference between short term coverage which is for a period of up to two years and long term which can provide payments to the age of 65. Knowing these things provides a good foundation for all other comparisons.

Disability insurance is designed to replace part of your gross income, not all of it. The range is 40 to 60%. The methods of payment and the requirements for eligibility do vary a great deal between companies so make sure that you understand the terms used to define them. If you are not sure, ask questions until you are. Disability insurance premiums are calculated in part on how much coverage and the payment method you select so for valid comparisons the amounts and methods you want to compare must be the same. Flexible coverage, meaning the ability to choose those amounts and methods is a desirable aspect of a disability insurance policy. Find out if your employer's policy offers residual coverage which, in some cases can continue to pay you for a limited time even after you resume working. That may be important to you.

Some disability insurance policies are guaranteed renewable and some are not. The important consideration here is that yours is. Guaranteed renewable translates to non-cancelable which means that the insurance company cannot cancel your policy or raise your disability insurance premiums without permission. If it becomes necessary to find a new disability insurance policy it is a safe bet the premiums will be a bit higher as each year goes by.

You know what works best for you. If the policy offered by your employer fits the bill that is great. If not, you may want to keep looking for one that does.