When a physical injury keeps you from working, disability
insurance can help get the bills paid.
In reality, disability insurance is as important as
(and in some cases, even more important than) life insurance.
More become disabled than die that’s because
at any given age the odds of becoming disabled are much higher than
dying. In fact, every year 12% of the adult U.S. population suffers
a long-term disability. One out of every seven workers will suffer
a five-year or longer period of disability before age 65, and if you’re
35 now, your chances of experiencing a three-month or longer disability
before you reach age 65 are 50%. If you’re 45, the figure is
These odds would not be a problem if people had substantial
savings that could be drawn on in the event of a disability. But that’s
rarely the case, and any money that has been set aside has likely been
earmarked for goals such as college or retirement.
There are many kinds of disability policies and options,
however, the basics are simple. The first variable is the amount of
monthly benefit. Most disability policies have a fixed monthly benefit
that does not increase with time, although you can purchase extra coverage,
or riders, that offer higher payment schedules
The second variable is the definition of disability
-- whether it is “own occ,” or the inability to perform
the duties of your specific occupation, or “any occ,” the
inability to perform the duties of any job for which your education
and training make you qualified.
The third variable is the waiting period, or the amount
of time you must be disabled before benefits kick in. These waiting
periods can range from one week to two years, and the longer you wait
the less your disability policy will cost.
The fourth variable is the benefit period, or how
long you will receive monthly benefits once your policy starts paying.
The benefit period can range from six months to life, depending on
what you choose as well as what your insurance company is willing to
In addition to these variables, there are other coverage
options, as well as a variety of other riders. The most important is
a rider that pays if you can only remain or return to work part-time.
The Social Security offset rider guarantees that if you qualify for
disability payments under your insurance policy but not for Social
Security (a frequent occurrence) your disability policy will pay what
Social Security should have.
Another important option is the additional purchase
option, which guarantees you the right to buy additional disability
insurance in the future regardless of your health at that time.
If you have any questions about Disability Insurance
or not sure if you need coverage please contact us for a needs assessment.