There may come a time in your professional or business life when you get hurt or sick which prevents you from working to earn money for your family. Before this happens, you must purchase disability insurance to provide them with a safety net that guarantees financial security.

What Is Disability Insurance?

As the name implies, disability insurance is a kind of insurance product that allows for financial gain in the circumstance the policyholder is unable to work and earn money due to a disability caused by illness and injury.

The US government provides disability insurance through the Social Security System, which is run by a federal agency called the SSA (Social Security Administration). They provide retirement and survivor benefits, and income for workers living and working in the US who have become disabled.

Who Is Disability Insurance For?

Disability Insurance is for workers who depend on the income they make through work to pay for their expenses. It will assure them of receiving payment if they get sick or injured.

Why Is Disability Insurance Essential?

Accidents, injuries, or illnesses happen, and you can’t always anticipate them. It is the main reason why it is necessary to get disability insurance to help pay for your bills and expenses in case something happens to you that prevents you from working.

How Does Disability Insurance Work?

Most of the time, an insurance product will protect against a particular loss, similar to when a property and casualty insurance plan compensates the policyholder for the amount of stolen property. But for disability insurance, the compensation incurred relates to the lost income caused by the sickness or injury.

For instance, if a worker has annual earnings of fifty thousand dollars before becoming disabled and the disability hinders him or her from continuing working, the disability insurance will compensate for the portion of the lost income, provided that he or she qualifies.

The policyholder for government-sponsored disability insurance (like the US Social Security System) must comply with the many conditions to receive compensation.

To qualify, he or she must prove their disability is so severe that prevents from doing any kind of work at all.

The Social Security System also requires the policyholders to establish that their disability is expected to last for at least twelve months or lead to death.

In direct contrast, some private disability insurance plans only need the policyholders to demonstrate they can no longer engage in the same kind of work they were previously in.

What are the Types of Disability Insurance?

1. Short-term – It has a waiting period of zero to fourteen days with a maximum benefit period of no longer than two years.
2. Long-term disability insurance – It has a waiting period of a few weeks to a few months (depending on the adeptness of the insurance company) with a maximum benefit period that ranges from a few years to the rest of your life.
3. Individual – It is ideal for people who don’t receive disability insurance through work. It is also another alternative for high earners wanting extra coverage. You can get this on your own and stays with you if you change jobs.
4. Group (through work) – It is an employee-sponsored coverage through work. Most employers that provide disability insurance pay some or all premium costs. You have the option of buying it through work, and some employers do not pay for it but offer it as a voluntary benefit, which will let you buy coverage through their insurance broker at a group discount.
5. Supplemental – You have the option to add extra coverage on top of your long-term disability insurance plan if you want more protection. Supplemental disability insurance can be a beneficial add-on for employees who want to protect a bigger percentage of their earnings.

Two Different Protection Features of Disability Insurance

1. Non-cancelable – It means the insurance policy cannot be canceled by the insurance provider.
2. Guaranteed Renewable – It can give you the right to renew the insurance policy with the same benefits and not have it canceled by the insurance provider. Yet the provider has the right to increase your premiums as long as it does as well to all other insurance policyholders in the same rating class as yourself.

How Much Will Disability Insurance Cost?

There are a few factors that will impact the amount you will pay:

• Age – If the applicant is young, it will mean lower payments and more financial leverage, since there are fewer premiums to achieve payouts.
• Benefit Amount – The amount is relative to your current income.
• Benefit Period – The duration your insurance provider will pay your benefits.
• Health History – Your family history will have an impact on the cost.
• Elimination Period – It is the time after you become sick or disabled that you begin to receive benefits.

Other Options to Consider When Purchasing Disability Insurance

• Coordination of Benefits – How many benefits you will receive from your chosen insurance provider will depend on your preferred policy due to your disability. Your policy will specify a target amount you get from all the combined policies, so the policy will constitute the difference not paid by other policies.
• Additional Purchase Options – Your chosen insurance provider will give you the right to purchase additional insurance later.
• Residual or Partial Disability Rider – This option allows you to return to work on a part-time basis, receive partial disability payment, and collect a portion of your salary if you are partially disabled.
• Waiver of Premium Provision – This option means you would not have to pay premiums on the policy after you have been sick or sick or disabled for ninety days.
• Return of Premium – This option requires your chosen insurance provider to refund a portion of the premium if no claims are done for a particular period declared in the policy.

Conclusion

Disability insurance is a useful option in today’s increasingly uncertain times. It will provide a financial guarantee that your family is well taken care of, while you focus on getting healthy and be in tip-top shape again.

Email us at sales@ascend99.com if you’re interested.