The ability to earn an income is the lifeblood of your financial well-being. Without it, you can’t pay your bills, keep up with your debts, and save for the future. Long-term disability insurance (LTD) provides a benefit that replaces your income, allowing you to pay bills and repay loans or put money into savings. It can be offered through your employer or purchased privately.
Business owners work tirelessly to establish and grow their businesses. Unfortunately, unexpected disability can derail these plans. Having the right disability insurance firm in place can make all the difference.
While most people understand the need to get life and health insurance, disability insurance can be a complex subject. Unlike workers’ compensation insurance, which only covers injuries on the job, disability policies cover many illnesses and injuries that prevent you from working.
Many individuals buy their disability insurance through their employer as part of a group policy. While these plans are cheap or free, they offer very little protection to the individual. Individual disability insurance provides superior protection and can be tailored to specific needs, such as the definition of disability (own-occupation vs. any-occupation). Other policy provisions include the elimination period, which is how long you must wait before disability benefits start. This will affect premium costs; a more extended elimination period can reduce premiums, while a shorter elimination period can increase them.
Many people invest in life insurance to protect their families against the risk of death. It makes sense to also protect against the risk of disability, which can derail your life plans and leave you with no income if you are unable to work.
The best way to decide which type of coverage you need is to consult a financial professional. You will want to consider the benefit amount and period, the definition of disability (own-occupation vs. any occupation), the company’s financial strength ratings, optional provisions (or riders) such as cost of living adjustments, and more.
Group disability coverage is typically offered through your employer or a professional association. Individual disability insurance is generally purchased through a financial professional and can help cover more than just salaries by including bonuses, commissions, and other variable income. This is especially useful for small business owners, self-employed certified professionals, and those who generate income from sources other than straight salaries.
Policyholders can often customize their policies with optional provisions or riders. These typically come at an extra cost but can provide valuable added value. These include an elimination period (how long you must wait to receive disability benefits), a benefit period, and a strict definition of disability.
Whether you’re looking to safeguard your financial future or your family, disability insurance is a significant investment. A severe illness or injury can derail all your big plans if you can’t earn an income.
A financial professional can provide a disability insurance quote to help you select the proper coverage. If you can access group disability coverage through your employer or a professional association, consider starting there; premiums are typically lower for group policies, and the company may subsidize a portion. If not, an individual policy may be a good option and guarantees renewalability. The best policies have an own-occupation definition of disability and offer a benefit period that can last decades or more.
The firm you choose should have a strong understanding of the nuances of each disability policy. They should also be well-versed in the terminology used by each insurance company. This helps them interpret medical records and understand the impact of a claim.
Some policies, particularly those offered as part of an association plan, have a weaker definition of disability than individual policies. They also typically have a broader definition of their occupation than separate policies.
Whether you are self-employed or working in a professional association, they can provide options to help you save money in the long run. They also have more leverage to negotiate terms for their clients.
The firm you choose should have a solid reputation for handling the claims process efficiently and effectively. Check out their reputation on your state’s insurance department website or with independent reviewers not affiliated with any particular disability insurer.