Among the many insurance policies you must carry from auto insurance and home insurance to health insurance, disability insurance isn’t a common consideration. However, disability insurance can be crucial in case you are rendered unable to work due to a disability.
Some people believe that the government will adequately protect them through Social Security Disability Insurance (SSDI) after a disability and thus don’t need disability insurance. However, trying to get Social Security to recognize your disability and pay benefits can be a difficult process. Roughly 60 percent of applications are denied at the initial stage. Workers compensation is a possibility for some employees, but this form of insurance only pays if you are injured on the job, and the benefits are typically low.
Some employers purchase group disability insurance plans for their employees and many Americans rely on such coverage. But those benefits are tied to the job. If you change jobs or are self-employed, you cannot bring the insurance coverage with you. Such plans also may have limited benefits and may not adequately compensate you, depending on your profession. It is not surprising that many people increasingly turn to individual disability insurance.
What is Individual Disability Insurance?
Individual disability insurance covers you in the event that a disability prevents you from working. You need not depend on the government to pay it, nor must you be injured on the job. And you can claim benefits even if you change jobs or are self-employed.
How Long Will My Plan Pay Benefits?
The benefit period will depend upon the plan you buy. You have the option of purchasing either short-term disability insurance or long-term disability insurance. The maximum benefit period for a short-term disability plan is typically no more than two years. Long-term plans pay much longer, ranging from at least a few years up through the remainder of your life. Long-term plans will also typically carry a waiting period (sometimes referred to as an "elimination" period) of 90 days, sometimes longer. Long-term disability plans are the more typical insurance product.
When Will Individual Disability Insurance Pay Out?
This insurance will only pay out once a claim has been approved. This essentially means proof that your disability hinders you from doing a job. Some policies only cover disabilities that hinder you from doing any job at all while others cover disabilities that prevent certain occupational work. Be sure to ask your insurance agent about your disability insurance options.