Long Term Disability Income Insurance

Financial Protection for You & Your Family

A serious illness or injury can harm more than your health-it can have an impact on your ability to work and meet your family's living expenses.

Long-term disability income insurance helps you pay living expenses while you are unable to work.

It offers paycheck protection providing cash directly to you for spending on mortgage payments or rent, groceries, utility bills, car payments, or whatever else you choose. A policy also can pay for training or other assistance you may need to return to work.

Before purchasing an individual long term disability income insurance policy, evaluate the benefits you may already be eligible to receive from your employer, the government, or other programs.

Features of Disability Income Insurance

Not all individual disability income insurance policies are alike. Consider these features when comparing policies:

Some policies pay benefits if you are unable to perform the duties of any occupation for which you are reasonably qualified by training, experience, and education. Other policies pay benefits if you are unable to perform the major duties of your own occupation. Many policies combine these features, providing "own occupation" coverage for an initial period, such as one or two years, and "any occupation" coverage after that. Some policies also pay benefits if you become ill or injured and are unable to earn a specified amount, such as 80 percent or less, of your income.

The amount of income you would receive when disabled varies by policy. However, benefits from all sources are usually limited to 70-80 percent of your monthly salary. Policies that pay 50-60 percent of salary are most common. Most policies do not replace commission or bonus income.

The length of time that benefits can be received varies by policy. Some individual policies pay benefits for a specified period of time, such as two or five years, while others pay benefits until age 65 or your retirement age under Social Security.

Some policies require total disability before payment begins, while other policies cover partial disability.

Some policies pay "residual" benefits. These benefits make up for any loss of income if you are still able to work but your disability keeps you from performing all of your normal responsibilities.

Under some policies, the insurer pays for job training or other assistance you may need to return to work, such as modifications to your work environment.

Some policies offer cost-of-living adjustments in the amount paid to the insured as an optional benefit.

Most individual policies are either non-cancelable or guaranteed renewable. With a non-cancelable policy, premiums can never be increased. Under a guaranteed renewable policy, premiums cannot be raised based on an individual's circumstances, but they can be increased for an entire class of policyholders. A guaranteed renewable policy may define how a class is determined for example, all policyholders in a state who own the same type of policy might constitute one class. Ask about the circumstances under which premiums can be raised and how classes are defined.

Most companies review an individual's medical and financial history and consider any other disability coverage that person has before issuing a policy. Based on this information, an insurer may offer limited or modified coverage.

If you purchase your own policy, your disability benefits typically are not subject to income taxes. Benefits are taxed, however, if your employer pays for the disability insurance coverage.

Policies have either level premiums (intended to stay constant over the life of the policy) or premiums that increase as you age. If you plan to keep your policy in force long-term, a level premium policy may be appropriate. If you are uncertain about how long you will need the insurance, a policy with premiums that
increase with age may be the better choice.

Policies have different waiting periods (called elimination periods) before you begin receiving benefits. You can lower the premiums you pay by waiting 90 days, six months, or even longer before starting to receive benefits.

If you go back to work after recovering from a disability and suffer a relapse within a specific period of time, such as six months, most policies do not impose a second waiting period.

Before you agree to a DISABILITY insurance policy from an insurance broker - check the broker out first on the web.