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It seems almost everyone has a family member, friend or neighbor that has struggled to gain disability income from the Social Security Office. Unfortunately, most of the stories are not anecdotal. The process can last up to two years and typically, an individual will be denied twice before income replacement kicks in. However, there is good news! While short term disability insurance is only available through employers; long term disability insurance or disability income insurance, as some refer to it, is available for individuals.
Take a few simple steps to protect yourself and your loved ones from lost income and The affordable rates will surprise you!
Make an Informed Decision! Understand how Disability Insurance works for you:
Simply put, private insurance companies offer long term disability insurance policies that ultimately serve as income replacement plans. These plans are put into effect, when due to a disability; an individual can no longer participate in gainful employment.
Like other insurance plans, a premium is collected and based on the level of coverage you are seeking. Keep in mind that there is a maximum benefit. Typically, this benefit is determined by calculating your average income over the three year period, immediately preceding your need for disability coverage.
One key is to locate a company that offers "true income replacement." Don't be fooled by this relatively simple phrase - it will ensure that should you be unable to perform your regular job and need coverage; you have it! For example, if your regular job requires lifting heavy objects all day, and you can no longer perform this function, you will have coverage until you are able to obtain employment that fits within your physical capabilities.
Also, keep in mind that there is no need to obtain multiple policies. You will be unable to collect any more income; as the two companies will simply coordinate benefits to offer you the same level of coverage, as if you only have one plan in place.
Do I really need Disability Coverage?
Surprisingly, if you are under the age of 40, statistics tell us that you have a 40% chance of experiencing either a temporary or permanent disability! Most people only consider disabilities in the form of an accident, but the likelihood of diabetes, heart attack or stroke is much higher. Regardless of what your disability may be, your Mortgage Company, utility provider and local grocer will still expect you to meet your financial obligations. Additional expenses may also have to be considered. Will you be able to clean your house, prepare meals and do laundry? Will you be able to drive? These are real considerations with serious financial implications.
Can I wait for Social Security to handle the expenses?
Ask anyone with a serious disability and you will be probably hear the same story: Social Security took two years to pay out any benefits. Also, you must be completely disabled to qualify for Social Security. If you are able to perform, in another role, you will be expected to. However, the silver lining is that if you should become completely disabled you may be able to collect from both Social Security and from your disability insurance coverage!
I am completely covered by my employer's health insurance plan, right?
This is a very common misconception! Yes, there are select companies that offer their employees short term disability coverage, along with healthcare. This type of coverage will provide you with a percentage of your salary for a few short months. If you are very lucky, you might even be offered long term disability, which may offer assistance for the first two years. However, you typically will not receive enough income from these plans to cover all your medical expenses, so most experts recommend that you maintain your group health insurance, as long as possible!
The reality is, if your employer does not carry disability insurance and you are unable to perform the job for which you were hired; you may lose your job. Losing your job and health insurance is unthinkable even when you are healthy, but coupled with a disability it can be devastating. Medicaid may be an option, but there are very strict limitations and its benefits do not extend to day to day living expenses.
So how do I protect myself and my salary?
Smart planning and forethought are your best defenses! No, you will not receive your entire salary from any disability insurance plan; however, there are plans that offer anywhere from 60% to 80% of your previous salary.
What should I look for in the "fine print?"
First, be sure to read the fine print! All the terms of your policy should be detailed, including anything that is not covered, such as deliberate acts of self-injury.
The majority of plans require an elimination period.
This waiting period ranges from 30 to 90 days and you will not receive any benefits, during this time. Be sure to always have savings set aside to provide for you and your family, for that expanse of time!
Generally, you will note that your disability policy will expire or reduce itself by half, once you attain eligibility for Medicare. There are select companies that offer you an opportunity to convert your disability insurance to a long term care policy without medical underwriting, once you turn 65.
Check out the Waiver of Premium section of your policy. Companies vary in their policy. Some charge for this option, while others automatically provide for it. If a company automatically provides for it, your premium will be waived once you are on disability for a set time period. You may even find that your company will refund all premiums paid, from the day you first claimed disability.
There are so many terrific insurance agents, who truly have your best interest at heart and are willing and able to help you translate all the "fine print". Take advantage of their offerings!
Will I be permitted to participate in gainful employment?
Typically, you will be permitted to work, at least part time. Again, read the fine print of your policy. You may find that your policy will reduce your disability benefit in direct correlation to your part-time earnings.
The bottom line is that if you are young and have a family to care for; disability coverage is a worthy consideration. Ask your employer what coverage, if any, they provide. Keep in mind that disability coverage is different than workman's compensation. The reality is that once you actually need it; it will be too late to apply!
How can I find rates that will work within my budget?
Request via our free online service.
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