Disability Insurance

Many policies will allow the insured to increase the monthly coverage annually for the first two to four years for up to 10% without getting a new physical. The cost of the premium will increase, but you will only be paying extra for the added coverage, not for a whole new policy! After this period of time, the insurance company will also allow you to increase the amount of the new coverage, but you may have to take another physical examination. However, if your policy is a 'guaranteed future insurability', you will be able to increase the policy every time you get a raise. Be prepared to pay extra every time the policy limits are increased. Many policies have a COLA (cost of living) rider. When the cost of living increases, you can increase the coverage with no additional physicals.

Always get a policy that is 'Guaranteed Renewable'. Otherwise, the insurance company can cancel the policy. If it is guaranteed renewable, the only reason for cancellation is non-payment of the premium. Also, try to get a policy that is “noncancelable”. This means that the premium rate stated on the policy can never be raised.

Disability Insurance is the single most important piece of protection an individual can have!

While most Americans insure their lives and material assets like their homes, cars, etc., many overlook the need to protect their most valuable asset - "The Ability to Earn an Income." In fact, fewer than 20% of all working people have a personally owned disability income policy, insuring their incomes against the threat of an unexpected accident or illness. Yet, insurance claims studies indicate that the probability of becoming disabled for 90 days or longer are much greater than dying during one's work years.

What would happen if you were no longer able to provide for yourself or your family? What would you do? How would you pay your bills?

Disability insurance replaces your income should you become disabled and unable to work. Many people have some form of disability insurance through their employer. However, you should check the type of coverage your employer offers, very carefully. The employer’s policy may not be just what you need. In this case, you will probably want to supplement the employ

er's policy with an individual policy of your own. Generally, there is a period of time (elimination period) you must be disabled before you can begin collecting disability payments from the insurance company.

The premiums for a disability policy are based on age, occupation, and income. Insurance companies will allow an individual to take out a policy covering anywhere from 50% to 70% of the last monthly income.

Keep this in mind. If your employer pays your disability insurance, you pay tax on that income. If you pay for the disability insurance yourself, the disability income is tax-free. For this reason, it may be beneficial to you to ask your employer if you can trade their disability coverage for cash in order to buy your own coverage.

Most of the time, insurance companies either consider you good enough or not good enough to work. You're either disabled or not disabled. However, since most of us don't live in the Insurance World, we live on the planet Earth, we know that many times one can return to work part time and ease back into the swing of things. The insured can add on what's called a Residual Rider. It may add about 20% to the cost of the policy, and therefore, it might not be worth it to you. However, it will allow you to return to work part time, collect part of your salary, and receive a partial disability payment.