According to Marcy Pruitt, Managing Partner for Disability Insurance Services in Scottsdale, AZ, two features that should be included in a long term disability policy are "residual" and "own occupation" benefits.
Coverage for residual disability means that a partial benefit is paid if the insured person is experiencing a loss of time or income due to residual effects of illness or injury. Thus, just because the employee can work part time, he/she will not lose all his/her disability benefits.
Coverage for own occupation is paid if the insured is unable to perform his original job. Thus, benefits are not lost if the employee is able to work at a lower paying or less desirable job.
Another helpful feature for young professionals is the Purchase Rider, which allows the insured person to purchase more disability insurance without underwriting, as his/her salary increases.
There are many factors to consider when purchasing disability insurance. Here are some of the basics to keep in mind.
First how much money do you keep in saving? Could you pay your bills for 2 weeks, a month, 6 months or a year? This will help you determine your elimination period. This is the time that passes between your medical diagnosis of the disability and when you begin to receive benefits. The most common are 30-60-90-180-360 days with long term disability.
If you need benefits within days or a week, consider purchasing a short term disability plan to pay faster but only pays up to a shorter benefit period such as 6 months to a year. many people buy both short term and long term plans.
The last thing to consider is benefit amount. Disability plans can pay out as high as 70% of your current income. However, some plans only pay up to 50% or lower. Be sure the amount is correct.
I recommend using an independent disability insurance broker to shop for your options and find the right plan at the right price for your unique situation. Our advise is free and we are compensated by the insurance carrier.
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Coverage for residual disability means that a partial benefit is paid if the insured person is experiencing a loss of time or income due to residual effects of illness or injury. Thus, just because the employee can work part time, he/she will not lose all his/her disability benefits.
Coverage for own occupation is paid if the insured is unable to perform his original job. Thus, benefits are not lost if the employee is able to work at a lower paying or less desirable job.
Another helpful feature for young professionals is the Purchase Rider, which allows the insured person to purchase more disability insurance without underwriting, as his/her salary increases.
First how much money do you keep in saving? Could you pay your bills for 2 weeks, a month, 6 months or a year? This will help you determine your elimination period. This is the time that passes between your medical diagnosis of the disability and when you begin to receive benefits. The most common are 30-60-90-180-360 days with long term disability.
If you need benefits within days or a week, consider purchasing a short term disability plan to pay faster but only pays up to a shorter benefit period such as 6 months to a year. many people buy both short term and long term plans.
The last thing to consider is benefit amount. Disability plans can pay out as high as 70% of your current income. However, some plans only pay up to 50% or lower. Be sure the amount is correct.
I recommend using an independent disability insurance broker to shop for your options and find the right plan at the right price for your unique situation. Our advise is free and we are compensated by the insurance carrier.