Key Parts Of A Disability Insurance Policy
Disability insurance is one of the most important insurance products you can buy, yet most people know little about it. What sorts of provisions do you need to look for when purchasing a disability insurance policy?
It's important to know how the policy defines disability. Are you considered disabled when you cannot perform your own job, or any occupation that you are qualified for? Does your policy allow for partial disability payments if you return to work part time? It's also important to know how much of a percentage of your income will be retained. The cap on disability income can range from 60-80 percent. Your full income is never supplied so as to encourage workers to return to their jobs.
You'll also need to choose a waiting period. This is the deductible for a disability insurance policy. They can have different lengths such as 30 days, 60 days or even 180 days. Generally, the longer the waiting period, the lower your disability insurance premiums.
Other key factors to remember when purchasing a disability insurance policy are the length of time benefits are paid out, and if you'll have to pay premiums while disabled. The length of the benefit period can be a few years or a lifetime, and the premium cost will reflect the duration of time you choose. Longer benefit periods will be more expensive. If you are disabled and are receiving less income, paying premiums could be a burdensome expense. Some policies have a waiver of premiums clause, which specifies after a certain length of time being disabled you no longer have to pay premiums on your disability insurance policy.
Sources
- Guide to Disability Income Insurance. Retrieved April 28, 2008, from http://www.ahip.org/content/default.aspx?bc=41|329|352#policy
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