Frequently Asked Questions About Disability Insurance

Disability Insurance is a type of insurance policy that will replace a portion of your income if you are unable to work for an extended period due to illness or injury. But it is not a well-known type of insurance, and many know very little about it. In this article, we will answer 8 frequently asked questions about disability insurance.

Is It Really Necessary?

You need to consider whether you will have the ability to pay your bills if you are off your feet for a long period of time. Disability insurance helps bridge that gap. It will cover you not only if you are diagnosed with a serious illness but also for common injuries and chronic conditions.

What is the Difference Between Long Term and Short Term Disability Insurance?

Short term disability covers you for a 3–6-month period and generally covers 60-70% of your lost income. Long term disability covers you for a long period of time, longer than 3-6 months. Coverage is limited to a specific time frame like 2-10 years or until you become of age to receive Social Security Retirement benefits. Long term disability usually has a 3-6 month waiting period you will be subject to before you can receive benefits.

Does It Cover All Disabilities?

Which types of disabilities you are covered for will vary from policy to policy. However, there are disabilities that are usually not recovered. These could include but are not limited to: injury caused by participating in a riot, intentional injury as the result of self-harm, injury from war or an act of war, injury that occurred during incarceration, injury from committing a crime, pre-existing conditions, things covered by workers compensation.

Can I Work and Collect Benefits?

Whether or not you can work while receiving benefits will depend on the terms of your policy. Typically, any income you earn from working will be subtracted from your benefit.

How Much Coverage Do I Need?

Your goal should be to replace up to 70% of your income. But you can purchase cheaper policies that will offer smaller benefits. You can choose depending on what your needs and budget are.

Do I Need a Policy If I Have a Disability Policy Through Work?

If your disability policy through work does not cover up to 70% of your income, you should supplement it with a personal policy. It is important to note group disability policies usually have lower coverage and leave you with no control over benefits.

What Are Riders?

A rider is a feature you can add on to your policy that changes your policies coverage terms. Usually these come at an extra cost. Some riders include:

• Catastrophic disability benefit: With this rider your policy will cover up to 100% of your income when you can no longer do two or more activities of living. This could include bathing, dressing, and using the bathroom.
• Cost of living adjustment: This increases your benefits each year to account for inflation.
• Future increase option: With this rider you can purchase additional disability insurance up to a specific age without having to go through underwriting again.
• Guaranteed renewable: With this the insurance company cannot change or cancel your policy if you are paying your premiums.
• Own-occupation coverage: This rider allows you to collect benefits if you cannot do your specific job, even if you can work at another one.
• Student loan rider: This contributes money to your student loans when you are receiving disability benefits.

How Long Does It Take to Get a Policy?

To get approved for a disability policy you will need to first complete a medical underwriting process. This is made up of medical tests that the insurance company covers. Approval typically takes 5-6 weeks. It may take longer if the insurance company requests more information.

Purchasing Disability Insurance

With your disability insurance questions answered you may wonder what the next step is. You will want to meet with a qualified insurance agent who can help you find the best policy for your needs.

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