Disability Insurance Articles
How Disability Insurance Claims Are Typically Paid Out
2011-08-09
In order to file for a disability insurance claim, policyholders must satisfy mandatory waiting periods and prove they are disabled or unable to work due to injury or illness. After the policyholder's health condition is established and the waiting period is satisfied, the disability insurance provider issues benefits in accordance with the policy terms. Most policyholders will receive 50 to 70 percent of their average income or the median salary for a given profession. In some cases, part-time employees will receive monthly benefits based on the number of hours worked. The amount of monthly disability benefits policyholders receive is determined on their annual salary, which is divided into monthly payments.
Whether you have an individual disability plan or employer-sponsored benefits, the requirements and payment options are very similar. If you are eligible for worker's compensation or disability benefits through the Social Security Administration, these benefits will also count toward the maximum benefit limit, which is generally between 50 and 70 percent of a policyholder's pre-disability income. Affordable disability insurance plans typically have longer waiting plans and lower annual premiums.
Short-term disability plans typically cover lost income after a 14-day waiting period. However, some providers may allow you to file a short-term disability insurance claim sooner. Short-term disability plans usually cover injuries and illnesses lasting for three to six months. Long-term disability plans cover injuries that disable the policyholder for a fixed period, which is typically two to five years, retirement age or in some cases as long as the disability continues. Long-term disability plans that replace income for longer periods are typically offered with waiting periods ranging from 60 days to one year. When comparing annual premiums, long-term disability insurance with longer waiting periods is more affordable than plans with short waiting periods.
Before approving your disability insurance claim, insurers require written proof of disability from a medical doctor. Insurers may also ask for copies of medical records or request that you undergo a secondary exam at the provider's cost. Policyholders with long-term disability plans can also benefit from securing a policy add-on with cost of living adjustments or partial-disability coverage that allows you to keep perceiving benefits as you get better and resume working in a limited capacity. Policyholders with short or long-term disability benefits can also supplement their insurance with own-occupation coverage that reimburses the earnings of trained professionals and skilled employees who have undergone years of schooling and on-site training.
Because disability benefits are based on a percentage of your annual income, it's important to select a plan that can cover your regular expenses as well as medical treatment and unexpected bills over an extended period of time.