Why you need disability insurance cover?

As an employee working in a corporate organization or as individual, you may have got health insurance and (or) life insurance policy, meaning that you and your family are covered for medical expenses, and in the event of the unexpected your family will get compensation. The question is, is that enough insurance for all you need? The answer is real “NO”.

Suppose you suffer an injury or long-lasting illness that makes it impossible for you to work, what happens? While your health insurance coverage will take care of your medical expenses, and your life insurance provide for your family, you will be facing debt and potential financial instability if you have no way of replacing your income while you are disabled.

Disability insurance is one of those things that no one ever thinks they need. But you need to know that you could still pay your bills if you were to become temporarily or permanently disabled.

In this situation,  three types of insurance are necessary and no one replaces the other. Ask your insurer for life insurance cover and disability insurance cover, whereas your Health Management Organization (HMO) will take care of your health insurance.

Why you need disability insurance

One can never anticipate when tragedy will strike. Whether it is a car or household accident or a diagnosis of heart disease or a herniated disc, unanticipated misfortunes are the reasons it makes sense to have disability insurance. This type of insurance replaces a portion of your income if injury or illness renders you unable to work

Premiums for disability coverage vary based on your age, income, the type of work you do, and the policy provisions you choose. In general, the greater the coverage, the higher the premium. Here is what you need to know to get sufficient coverage at an affordable cost, according to the American Institute of Certified Public Accountants

Benefit amount

Disability insurance typically pays you 60 to 80 percent of your income should you become disabled. This coverage is designed to provide you with adequate income to cover your basic needs if you cannot work.

Term of benefits

You may choose disability coverage that pays you for a year, two years, five years, until age 65, or even for life. The longer the benefit period you select, the higher the premium you can expect to pay.

Elimination period

The elimination period is the waiting time between the onset of your disability and when you first start receiving benefits. You can save money if you agree to a longer waiting period before benefits are paid. The industry average is 90 days, but most policies allow you to choose a waiting period of anywhere between 60 days and two years. If your employer provides paid sick time, you should consider this in selecting an elimination period.

Noncancelable

“Noncancelable” means that, once the insurance company has approved you, it cannot cancel your policy unless it stops covering everyone in your occupation. It also means the company cannot raise your premiums. You are likely to pay more for this type of policy than others.

Guaranteed renewable

A guaranteed renewable policy cannot be canceled, but the company can raise the premiums, provided that it raises the rates for an entire class of policyholders. Premiums for guaranteed renewable policies can be less expensive than noncancelable policies.

Own occupation or any occupation

Own occupation coverage pays you benefits when you can’t work in your specific occupation. Many professionals, such as physicians, dentists, and attorneys, choose this type of coverage. With an “any occupation” policy, to collect benefits you must be unable to work in the occupation(s) for which you are reasonably suited based on your training and education. Own occupation policies are more expensive than those that consider you disabled only if you cannot work at all.

Employer coverage

Many employers provide some form of disability income, either in short-term disability, sick pay or a group disability policy. Find out exactly what benefits are provided, how soon they would begin after you become disabled, and how long the payments would last. Some employers allow you to buy more disability insurance at your expense. Buying extra coverage through an employer group plan is almost always less expensive than buying an individual policy.

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