Here’s exactly why experts recommend buying one type of disability insurance over another

Tanza Loudenback

Long term disability insurance offers the most comprehensive income replacement coverage jacoblund / Getty

  • Disability insurance can help replace lost income if you cannot work for several months or years because of an injury or chronic illness.

  • Most traditional employers offer short term disability insurance at no cost to the employee, but it is probably not enough coverage.

  • Long-term disability insurance can pick up where short-term coverage and your emergency fund left off. The benefits of a private policy are generally greater and tax-free.

  • Long-term disability insurance premiums are generally between 1% and 3% of your annual pre-tax salary, but may vary depending on the amount of your coverage, your age, your location, your medical history and your profession.

  • Policygenius can help you compare disability insurance policies and rates to find the coverage that’s right for you ”

If you rely on a regular salary to support yourself or your family, it would be wise to protect that income with disability insurance.

In exchange for a monthly premium, disability insurance allows you to replace your income if you have a physical or mental handicap and cannot work for a few months to several years.

Most traditional employers offer short term disability insurance, but that usually only replaces up to 50% of your income for about three to six months, plus you’ll have to pay taxes on the payments. In addition, these policies depend on your employment with the company.

the Social security administration Also offers disability insurance, but the process to qualify as disabled and get approval for benefits is notoriously long and difficult to penetrate, and the payments are paltry compared to what you might get with a private policy.

This is why the experts at the insurance comparison site Policygenius recommend purchase long term disability insurance for the most “comprehensive and cost effective” coverage. Long-term disability insurance can effectively pick up where short-term coverage or your emergency fund left off, typically between 90 days and a year after the incident (this is called the period of time). elimination or waiting).

Despite popular belief, disability insurance is not just for workplace accidents. In fact, the the most common disability insurance claims after work musculoskeletal problems (think: carpal tunnel, tendonitis, and back pain) are for cancer, pregnancy, and mental health issues like depression and anxiety.

the premiums for long-term disability insurance policies are similar to short-term policies – around 1% to 3% of your annual pre-tax salary – but the payments are generally larger and tax-free, and the benefit period can last for decades, and even until retirement. You can also pay extra for specific policies, such as “own profession”, Which states that you will continue to receive full benefits even if you are able to work, although at another job.

If you are self-employed and shopping for disability insurance, you will need to provide income tax returns for the past two years as proof of income, according to Policygenius. You can also consider paying a higher premium each month to shorten your waiting period or the time you have to wait to receive insurance payments, since you don’t have short-term coverage from an employer for you. to help.

With long term disability insurance, you are responsible for choosing the amount of your coverage – the rule of thumb is around 60% of your gross salary; how long your payments will last, called the benefit period; and the waiting or waiting period, which is the time you have to wait until your insurance payments go into effect. All of these factors will affect how much you pay every month to keep your policy active, according to Policygenius.

Your age, location, medical history, and occupation will also impact the cost of your premium. So the longer you wait to purchase disability insurance, the more expensive it becomes.

It is important to note that some long term disability insurance policies exclusions for pre-existing health problems, explains Policygenius. Insurers will review your medical records and if you have had serious treatment for a previous illness or condition, it may be excluded from your coverage. In other words, if this specific condition prevents you from going to work and earning an income in the future, your insurance will not intervene.

About Antoine L. Cassell

Check Also

How Private Short-Term Disability Insurance Affects Public Disability Benefits

Forty percent of American workers have access to employer-provided short-term disability insurance (STDI). This insurance …

Leave a Reply

Your email address will not be published.