Disability Insurance

Disability is a state in which you are unable to carry responsibilities of your occupation. Disability insurance undertakes to reimburse your income (for a limited time period) if you are unable to carry out the responsibilities of your occupation as a result of sickness or injury. With a disability insurance policy you can have an enduring benefit providing a fractional benefit if your income goes down because of (temporary or permanent) disability. Have you ever thought about how you would cover your utility bills, mortgage payments and other expenses if you lose your income because of a (temporary or permanent) disability? Would you be able to maintain your living standard? In addition your probability of becoming disabled is higher than you consider it to be. Most of the disability insurance policies contain a time period after which the benefits payment starts. This waiting period is usually around 90 days but may vary from 60, 180, 365, or even 730 days. The waiting period depends on your ability to survive in case of an emergency. Premium on a disability insurance policy depend upon the length of the waiting period. Longer the waiting period lesser would be the premiums.

Individual disability insurance provides between 45 to 60 percent of your gross income (this benefit is tax exempt) in case you are disabled and are no longer able to work. However disability insurance policies vary from company to company and you should shop around to ensure you find an affordable policy that is also suited to your needs. Also compare premiums and benefits of different disability insurance policies. You may as well be wasting money by buying the cheapest disability insurance policy on the market. The insurance company may find several flaws evading making payments. The probability of receiving disability benefit is considerably lower for disability insurance policies from relatively new companies.

Most disability insurance policies allow you to choose the maximum tenure for which you would want benefit payments. The most commonly chosen periods are two and five years and up to age of 65. If you have opted for group disability insurance paid for by your company then the benefits are taxable. Before setting out to buy a disability insurance policy you should determine income needed to cover your monthly living expenses. Only after determining this income will you be in a position to accurately determine the amount of coverage you need in case of disability. Variations in the monthly expenses are usually dependent on the nature of expenses. For example medical cost would increase and the work related costs would go down with time. Also as you need to be trained to enhance your expertise so education expenses would go up. Some disability insurance policies may offer discount or cut offs on the premium amount.

Individuals may be entitled to get social security disability benefits before the age of 65 dependent upon the their salary and length of time they have been paying social security taxes. You are most likely to qualify for monthly social security disability payment if have a stable work record, you are critically injured or fall seriously ill before the age of 65. The monthly social security disability payment would be similar to the amount you would collect if you became disabled at the age of 65. To cover inflation disability benefits would increase with each passing year. Your disability benefit, on the other hand, would be decreased if you are disabled and have been getting a decreased retirement benefit and other disability benefits. Retirement benefits begin at the age of 65 the same age at which disability insurance payments stop.