Disability Insurance Articles
Knowing Your Options On A Disability Insurance Policy
2010-12-11
Disability insurance protects an individual in the case of illness or accident that results in the inability to work and earn a living. When looking for an individual disability insurance policy, the consumer has many insurance options to consider. Before purchasing a disability insurance policy, it is important that consumers consider their individual needs and price points to choose the right options.
Disability insurance provides the policy holder with a percentage of their monthly income if he or she becomes injured or sick and unable to work. One of the most important insurance options to consider before purchasing a policy is the level of coverage needed. There are very few disability insurance policies that offer more than seventy percent of a policy holder's monthly income. One of the key reasons that insurance providers limit the amount of coverage is to encourage policy holders to return to work as quickly as possible. While insurance providers put an upward ceiling on coverage payout, consumers do have the option to purchase less coverage. This may be the best option for consumers who have another type of safety net. Because policy premiums are set based on the insurance provider's risk of incurred cost, a consumer who purchases a policy with lower coverage options will pay a lower premium. The important thing to consider when deciding on the amount of needed coverage is how much cash would be needed to pay bills and living expenses if the policy holder became unable to work.
Another important option to consider is how the disability insurance policy defines disability. The way that disability, and hence what conditions would result in coverage payout, vary widely between insurance providers. The definitions that can be used by disability insurance providers include the Social Security definition, own occupation definition, any occupation definition, and modified any occupation definition. Each of these definitions uses a different set of criteria to determine what is a debilitating illness or injury and what constitutes the inability to work.
When looking at insurance options, it is important to review the definition of disability offered by various policies. Some definitions are more lenient than others as to what conditions will or will not result in a policy payout. The definition used by the insurance provider can impact the cost of the insurance policy premium.
When a consumer is looking for the right disability insurance policy, they should take into consideration individual circumstances and needs. Each policy need is different and for that reason there are a variety of options available to the consumer. It is important to consider the coverage amount offered by any potential policy and the circumstances when that policy may become active.