Insurance Blog

Securing Your Future with Insurance After Divorce

Individuals facing a divorce and an uncertain future for themselves and their family need to make some important financial decisions. A crucial part of any financial plan is to plan for risk and worst-case scenarios. Therefore looking at two important types of insurance that every person in the workforce should carry is crucial. These are life insurance and disability insurance.  

Life Insurance Concerns Following Divorce 

Life insurance will pay your survivors a pre-set amount of money in the case of your death. This is extremely important to carry if you have a family. If you have become the main source of income in the family due to divorce, you may need additional life insurance coverage. If you pay child support, you should establish a life insurance policy which will continue those payments if you were to die. If your former spouse pays child support, consider making such a policy a part of the divorce agreement.  

Be sure to change the beneficiary of your life insurance policy following the divorce. Even if you have a policy in place to continue your child support payments, do not have your ex-spouse as the beneficiary. It is also important to remember to review all other beneficiary designations following divorce. Most people prefer to remove former spouses as beneficiaries but it can easily be overlooked especially with older policies.  

 

 

Understanding Disability Insurance 

Disability insurance will provide a monthly income for you if you become unable to work due to illness or injury. The insurer that you pay your premium to each month will pay out disability benefits if you need them. Surprisingly those between the ages of 25 and 55 are at double the risk of becoming disabled compared to dying, however fewer of them carry disability insurance than life insurance. Disability insurance is a very necessary type of coverage for most people of that age group to carry because they do not have the financial security to live for long periods of time without an income. This is especially true following divorce. 

There are different types of disability insurance policies. How a policy defines a disability affects the price and allure of it. If an insurance policy has a broad scope it will allow for disability payments to be paid as long as the individual cannot perform usual tasks of his or her job. This is the more expensive type of disability insurance. The cheaper kind limits the definition of disabled, so that the policyholder must not be able to perform any type of gainful employment in order to receive benefits.  

When purchasing disability insurance it is important to consider your monthly expenses in order to figure out how much coverage you will need. Tally the basics and then consider additional expenses that may increase due to a disability. Subtract any investment income, disability benefits from your employer and other income not affected by your ability to work. This will tell you how much individual disability insurance you need to purchase. Insurers usually allow you to purchase coverage for 60 to 70 percent of your regular gross income, as an incentive to return to work. However, if you have paid for your premiums with after-tax dollars, you will be receiving your benefits tax-free.  

If you consider Social Security to be your own method of disability insurance, you might want to reconsider. It is very hard to qualify for those benefits. Typically you must have a fatal illness or be completed incapacitated so that you can do no work of any kind for a minimum of 1 year. It also takes approximately 6 months to receive any payments.  

If you are under the age of 65, you have twice the chance of suffering a disability that will last three months or more, than you are of dying. For this reason, it is important to carry disability insurance. Following a divorce it is even more critical. Without the security of a spouse's income to help cover necessary expenses, they all fall on your shoulders. Protect everything you have worked for with an independent disability insurance policy.

Understanding Women's Need For Disability Insurance

Statistics prove that women have three times the chance of suffering a disability that prevents them from working as men. The Bureau of Labor Statistics has observed the growth of women in the workforce is twice as fast as that of men. Today, women supply 30 to 40% of the average household's income. These are significant numbers. The Journal of the American Society of Certified Life Underwriters states that professional women who are 35 years old have three times the risk that their male counterparts have of becoming disabled for 3 months or more. These factors all contribute to the increasing need for women to carry individual disability insurance.   

Disability Insurance Through Your Employer 

Despite the real risk of disability, a significant number of companies do not offer any sort of disability insurance because the law does not require them to. If you happen to work for a company that does offer coverage, it is important to be aware that employer-provided disability insurance is often minimal at best. Typically it covers only about 60% of your gross income, which is inadequate for most people. It is important to fully understand the limitations and restrictions of your workplace policy, and to know how much you would actually receive if you needed those benefits.   

Disability Insurance Through the Government 

There are many men and women who think the government will take care of them in case of disability. They are relying on Social Security benefits to replace their income. The amount that would come from such benefits is typically inadequate to cover monthly expenditures, even for those who qualify. However, qualifying is the most difficult part. In order to be eligible for benefits, five calendar months must have passed, the disability must preclude all types of employment and it must last for a minimum of 1 year or be the individual's anticipated cause of death.  

Determining How Much Disability Coverage To Get 

Prior to taking out a disability insurance policy, be sure to analyze exactly how much you need in order to cover your monthly expenses. This means you will need to tally how much you spend on transportation, housing, food, utilities and other expenses. Subtract any income that is not affected by your ability to work. A point to remember is that benefits are tax free if you have paid for them with earnings that have already been taxed. 

How To Save Money on Disability Insurance 

Women should expect to pay higher premiums than men for disability insurance simply because there are more at risk of needing it. In fact, premiums for women are approximately 40% more than for men. For this reason, it is necessary to try to get discounts on premiums. One particularly good way to obtain a discount is to use insurers who offer unisex rates. You may also be able to get a group rate if more than one person from the same employer applies for a policy. Therefore, find a colleague, preferably male, and apply for disability insurance together for maximum savings.  

With a disability insurance policy in place, women can feel secure in their future, despite their higher than average risk of needing to draw disability benefits.  

Disability Insurance: A Significant Choice

Your income-earning potential is one of the most important assets you have, whether you realize it or not. If suddenly you could not work, how would your lifestyle suffer? Do you have enough money to continue living as you do now? Could you support yourself and your family? If so, how long could you continue to do so? These are all valid questions that should be considered by any adult who is in the workforce.  

The facts are startling. One of every seven employees will be disabled for five years or more, with 2.5 years being the average. This chart breaks down the causes of disability for individuals. These numbers are significant because the things that we typically insure against have much lower rates of incidence. The chance of your home being destroyed by fire is 1 in 1200 and the chance of completely wrecking your car is 5 in 1200. Disability is typically caused by very common things like illnesses such as heart disease and cancer. Because it is so common, it is important to consider disability insurance as a normal part of your financial plan.  

Governmental Disability Coverage  

There is state disability coverage that pays 55% of an individual's income for up to one year. However, that amount is typically insufficient and does not last long enough. Social Security is another option. However, only 39% of those who applied for it in 2008 qualified to receive it. With an average of $1004 per month paid out, it is also very inadequate. In addition, both these types of coverage can take months before payments actually begin to arrive.  

Individual Disability Coverage 

Individual disability insurance coverage is a much more realistic way of replacing your income if you become disabled. It is paid out in addition to governmental disability coverage and is not limited to a certain percentage of your income. You can insure yourself for as much as it takes to be able to pay your bills and relieve yourself and your family of the stress and worry that comes with illness or injury.  

Before you look to buying individual disability coverage, you will need to find out if you already have coverage through your employer. If so, take the time to review the policy so you know the terms and conditions of the policy, as well as how much it would provide for you if you were eligible for benefits. Often such plans have a time cap or a maximum amount payable, so it is important to understand the policy fully. Talk over your options with an experienced insurance agent.  

Know What You Are Getting 

It is equally important to understand the details of an individual disability insurance policy before taking one out. This is a relatively expensive insurance plan, as it is meant to replace your income and is more likely to pay out than many other types of insurance. Do not let yourself be tempted by policies that are much less expensive than other disability insurance policies as they often have limitations and restrictions that make it more difficult to get paid. You don't want to be stuck having to work in a field you are overqualified for just because you can no longer work in your chosen career but your insurance is too restrictive to pay you benefits.  
 
Next to health insurance, disability insurance is the most important type of insurance you can invest in. Check it out today.

The Secret of How To Replace Your Income When You Can’t Work

Losing your ability to earn an income due to an illness or injury is one of the most devastating things that can happen to an individual. In addition to the fact that you cannot fulfill your financial obligations, even those people with good health insurance will end up incurring new bills from co-pays, out-of-pocket expenses and additional medical care needs that are simply not covered by your policy. When you need to replace your income because you are incapable of working, disability insurance will provide it for you so you can pay those bills, as well as your regular monthly expenses.  

With disability insurance you can feel confident that your financial situation is secure, should you become unable to work. Long-term disability insurance coverage allows you to meet your financial obligations without having to drain retirement funds, college accounts or other savings you may have. You can continue to contribute to your household and your family, despite disability. However, you must have the forethought to put such insurance in place.  

Factors To Consider 

If you are looking to put an individual disability insurance plan in place, there are several factors you should look at. Start by speaking with a licensed financial professional in your area, who can counsel you on the regulations for your state. He or she can also help you select a disability policy that best meets your needs, as they vary from company to company.   

You will need to know whether or not you already have disability insurance through your employer or another group you belong to; how much coverage the policy provides; and if there are any restrictions concerning eligibility. By knowing how much you would receive in case of disability, you can best determine how much extra, if any, additional disability insurance you need.  

Before choosing an individual disability insurance plan, you need to know how much the premiums will cost. You should also know how much you would receive in case you need the benefits. You also need to know whether or not basic healthcare costs are covered by the policy you are considering. By carefully considering these variables, you will be best able to choose the disability insurance policy that meets your needs.  

No matter how busy you are, don't put off investigating the need for disability insurance. You secure your own future and that of your family by making sure that your income will continue even if you can't earn it.

The Facts About Women and Disability Insurance

FACT:
Women are at a threefold risk of becoming
disabled in the workplace compared to men.  

Practically, any woman in the workforce today is in need of disability insurance. From young, single mothers just starting out to established professionals and business owners, disability insurance is an important investment. In fact, as more women realize the importance of it, increasing numbers of companies that care, and especially those run by women, reimburse the cost of individual disability insurance. This allows benefits to be paid tax-free, which is not the case if the company foots the bill through payroll.  

Women in the know should even consider maintaining individual disability insurance in cases where employers provide benefits. Upon investigation, it is found that many employee disability plans have tighter restrictions on eligibility than individual plans.  

Disability Defined 

Essentially, if a policyholder is unable to perform the tasks of her job, due to illness or injury, she is considered disabled and benefits should be paid under disability insurance. However, many policies differ and contain restrictions concerning the degree of disability required.  Some policies will not pay out if you can still perform some of your work tasks. This means that if you are bedridden but can talk on a phone and that is a part of your job, you can be denied benefits.  
 
By understanding the fine print that comes with disability policies, you can avoid being stuck in this type of situation. Make sure that the individual insurance policy that you take out covers you adequately and does not make unreasonable demands of you in the case of needing benefits. This may make the difference between being able to follow your doctor's orders or not. In the case of being put on bed rest during a pregnancy, that can make the difference between the life and death of your child.  

Women Are More At Risk 

Today's women make up 30 to 40 % of household income. In fact, the total of women in the workplace is increasing twice as fast as the number of men in the workplace, says the Bureau of Labor Statistics. However, women are at a much higher risk than men of becoming temporarily or permanently disabled during their work life. Statistically speaking, a 35-year-old professional female has three times the chance of being disabled for a period of over 90 days than a male, says the Journal of the American Society of Certified Life Underwriters.  

Unfortunately, there is no law requiring companies to provide long-term disability insurance. Because of this many companies do not do so. If you are lucky enough to work for one of those that do, be sure you understand the policy completely. Apart from restrictions concerning eligibility, many plans pay only up to 60% of your salary. This is often insufficient, especially if you are the primary income in the family.  

Another misconception that women must become aware of is that Social Security benefits will take care of them in the case of disability. The 1998 Social Security Handbook outlines the fact that the federal government will only be able to provide benefits after five calendar months have passed. The disability must also stop you from doing any type of paid work. It must also be at least 12 months in duration or be expected to cause death.

How To Determine Sufficient Coverage 

Recommendations from the California Department of Insurance on how to figure out how much disability insurance you need begin with a total of all your monthly expenses for necessities. This includes home loans, transportations costs, groceries, utilities and childcare costs. If you have other income such as investment income, you will need to subtract it from this total in order to arrive at your necessary monthly expenditures that need to be covered in the case of disability. 

Next you need to total your household income if you were unable to work. This typically includes your spouse's income and any disability benefits you would be eligible for from your employer. If this is equal to or surpasses the monthly expenditures for your household, your coverage is sufficient. If not, you should look at getting disability insurance coverage to at least take care of the difference.  

As women become an increasingly important contributor to the family budget, having disability insurance to insure that contribution is a necessity and something that should not be simply overlooked.

All about Private Disability Insurance

When somebody is injured or can't work due to some other form of disability how do they pay their bills? If you are not working, you are not earning and the burden of your expenses won't just go away. That is why private disability insurance was created. Private disability insurance will pay a benefit of 50 to 70 percent of a person's income that was earned before the disability occurred. This will help the person be able to make ends meet until they are able to go back to work.

While some may think they do not need it, everyone should consider it. Married couples may think that they simply do not need it because they will always have each other to rely on. But as hard as it is to get by these days on two incomes, imagine the burden of only one. To that end it is even more important that single people look into the coverage as they only have themselves to rely on. What would you do if you lost all of your income in the blink of an eye?

When you think about disability insurance it is important to note that there are different kinds. First off there is short-term disability insurance which will cover you if you are injured or disabled for a short amount of time, usually up to six months. These benefits typically start at your whole income and work their way down to 60 percent.

Then there is long-term disability insurance which is designed for exactly what it sounds like; the long-term. This type of insurance will pay benefits anywhere from a period of 5 years to 10 years unless otherwise ended by a provision such as age.

There are actually three types of long-term disability insurance coverages and the type depends on the party footing the bill. There is employer paid, which is usually of a shorter duration and only covers up to 60 percent of lost income. It is also important to mention that if your employer pays for your disability insurance all benefits that are paid out to you will be taxable. Next there are Social Security benefits which can be hard to obtain and will have many rules and provisions about keeping it coming in for an extended period of time. Also, the money that you receive from Social Security will depend on how much you contributed over your working life. The last type is private long-term disability insurance and is paid for by you so you therefore dictate the coverages.

The best way to be sure that you will be covered until your retirement age is by obtaining a private disability income protection plan. This can come in many different forms such as a rider to your existing life insurance policy, as an individual policy, as a group policy, as a group association policy, or as a specialized group policy. It is important to know that policies will vary according to your needs and of course the providers themselves. Many will offer to cover you if you cannot go back and perform the exact same job as you did before you were disabled and others will not. Some will start out one way and convert to another way. The bottom line is that it pays to know what you are getting into. Before you leap into coverage you will want to explore all your available options and be sure that the plan you are going to go with will provide you and your family with everything you will need should you become disabled.

Your most valuable asset that you have to offer both yourself and your family is your ability to go out and earn a living in order to be a provider. Because of this your family is dependent on you to earn a living and if that is taken away due to a disability you will want to be sure that you are covered so that your family doesn't have to suffer any undue hardship. While it is certainly not mandatory to obtain such coverage and it will represent yet another bill to be paid, it will also bring you a very welcomed piece of mind; and that in itself can be priceless.

Group And Individual Disability Insurance The Differences

Many times when people find that their company LTD just went up in price they will seek out prices for an individual disability insurance plan thinking that they are one and the same. They will want t to know if the deal they are getting at work is a good one. The answer to that question every time is that it all depends on your definition of a good deal.

Sometimes there is a good deal on the price and sometimes there is a good deal on the coverage, but the two rarely are said about the same plan. Cheap policies are not usually very good and very good policies are not usually very cheap.

Often people get woken up to this fact when their LTD at work shoots the price of the premium through the roof. It creates a sort of shell shock. But most group plans will start out with a lower rate for a set amount of years and then after that they are free to jack up the rates as they see fit. When this happens the employees will often pass the payment through to the employees.

While an employee who was getting coverage for free may not have cared about the cost, that same employee will bark up a storm when $20 per paycheck is coming out. Even if the employee was paying all along and then sees an increase it is likely to cause questioning.

In both cases the employee may seek out an individual plan to sort of test the waters a bit thinking that if they have to pay something they want to pay less. The problem is that there is no individual plan that will cost less than a group LTD plan. As you can already feel there are going to be differences in the two types of plans but if you are looking for a cheaper route with an individual plan you are out of luck.

The natural reaction after learning that an individual plan will cost much more than the group LTD is the thinking that the group plan is a better deal because it is cheaper. This is false. The only way this thinking pans out is if they never get disabled to which they would have paid far less for coverage through the years. But if they are one out of every seven Americans who become disabled for more than 5 years then that ‘good deal' just got really bad in a big hurry.

When you look at LTD and individual disability insurance, or IDI, you have to look past the price tag. As with many things in life, you really do get what you pay far. The reason that polices are more expensive is due to the fact that they will pay more benefits in more situations. But the cheaper group plans have many holes in them and will not pay benefits where an individual plan will. Add to this the fact that most group plans provide adequate service for two years but then fall by the wayside and you begin to see why you pay more for IDI.

Here are some other factor that separate LTD and ID:

• Definition of Disability: Most group plans go with a modified own-occupation and switch to gainful occupation after just two years. This can leave you high and dry and dropped. IDI however lets you determine the definition right from the get go.
  
• Portability: If you switch jobs you will not be able to take your LTD with you as it is part of the group plan for where you work. IDIs however are owned by you and if you switch jobs there will be no lapse in coverage provide you always pay your premiums.
  
• Taxes: LTDs which are paid for at least in part by your employer will be fully taxable if benefits are paid, but with IDIs you pay the premiums so the benefits would be tax-free.
  
• Residual and Partial: Some group plans will pay residual disabilities for up to two years and many will not offer it at all. IDIs will typically have better overall provisional benefits that can be chosen.
  
• Mental: Most group plans will limit mental disability to only two years while many IDIs will not cap mental disabilities and treat them as any other disability would get treated.
  
• Monthly Maximums: Both plans have maximums that will be paid each month but the group plan is typically 60 percent of salary or $5,000 per month. With IDIs you can choose a higher percentage and caps are usually set at a much higher $15,000 per month.
  
• Covered Income: Most LTDs will only cover your base salary and will leave out commissions and bonuses where as many IDIs will include them.

Too many people get caught up with the perception that their group coverage will pay out as much in benefits and be just as adequate as an IDI but the reality is not so. While having group benefits is indeed a good start it is not going to offer you everything that an individual plan will. That is why many will ultimately choose to supplement with an IDI plan so that they can raise their percentage of coverage by another 10 to 20 percent.

The reality is that although IDIs are more costly, they offer far more coverages and should be utilized to ensure that you are always covered should you ever be faced with a disability. Though the difference may be an IDI costing $2,000 to and LTD costing $200, that is no reason not to be skeptical of the cheaper policy. If you saw a new television for $700 and the same one later on for $7.00 wouldn't you ask what was wrong with the cheaper one? Well long-term insurance polices should be no different.

Don't get caught up in price. The idea behind disability insurance is to protect yourself and your family should you become disabled and not be able to work. You have to be sure that you have coverage that will not just be there for the first two years but that will be there for longer if necessary. Don't take chances with your future because becoming disabled will be hard enough and you will not want to deal with the added stress of financial problems on top of everything else you will have to deal with.

Not Having Disability Insurance can Really Hurt!

You are young and vivacious and buying disability insurance is probably not very high up on your list of things to do. Besides, you work a desk job so what are the chances you will ever need it?

No one expects to become disabled, yet it happens every day and usually without warning. Having disability insurance is an effective way to protect your lifestyle in the event you are no longer able to earn and income.

  

  

What injuries and illnesses account for the most disability claims?

This chart is a breakdown of the types and relative prevalence of disabilities drawn from disability insurance claims at the end of 2006.

According to the Health Insurance Association of America your chances of having a disability that will last longer than 90 days is about 30 percent if you are between the ages of 35 and 65. You may think of a disability to be something major but did you know that many disabilities are the results of broken bones, troubled pregnancies, anxiety troubles, or other events of the like?

Unless you are rich beyond your wildest dreams then you need to consider having disability insurance. What would you do if your income suddenly stopped coming in? No coverage can mean your debt piling up and putting undue financial stress on top of your disability.

Many people think that just because they have disability coverage through their work that they do not need private coverage. But the problem with most work sponsored programs is the fact that they only pay out 60 percent of your salary and they typically cap the pay out at $5,000 per month or $60,000 per year. If you are a high salary earner you can see how this amount may in fact be less than 60 percent for you. Add to that the fact that all benefits paid out are taxable because the employer is the one paying for the plan. Now that percentage has dropped again.

There is Social Security benefits that can be realized to help, but they are among the hardest to obtain. Just to qualify you have to have been disabled for at least a year and have no hope of recovery. Even if you do meet the requirements, the typical benefit is less than $2,000 per month.

To that end you may need to consider at least getting supplemental insurance or full blown disability insurance if you have none but the process can be daunting. Here is what you need to look for:

• Company Strength: Before you make any decision about which provider you go with check out resources such as moodys.com, standardandpoors.com, and ambest.com where you can go and see all the different providers strengths and weaknesses. At these online resources you will get an unbiased glimpse into the companies so that you can make an informed decision.
  
• Find Non-Cancelable: There are three types of terms that will determine how easy it is to renew your policy. The first is the non-cancelable contract and is worth it if you can afford it because it locks in your rate for a set amount of time and does not let the provider drop your coverage. The second, less desirable plan, is the guaranteed renewable plan which won't let the provider drop you but will let them raise your rates at their discretion. The last of the three and the one to avoid is the conditionally renewable policy which lets the provider put any conditions it wishes inside the plan.
  
• Define ‘total disability': Look for the terms ‘own-occupation' and ‘any-occupation' when obtaining a disability plan. This is how your disability will be viewed. If you get own-occupation you will get disability benefits if your disability stops you from doing the job you had before the disability occurred. Even if you are able to do other part time work somewhere else that is not related to what you were doing, you will still receive benefits. However, if you have any-occupation then your disability will have to be so severe that you are unemployed and unable to work at all. Many providers will start you off as own-occupation and move you later on to any-occupation so you have to be aware of that.
  
• Seek Partial Disability: Obtaining partial or residual disability means that you will get benefits if your disability still allows you to work but at a reduced capacity. For example, if you normally worked a 40 hour work week and your disability knocks you down to 20 hours, then you would receive benefits in proportion for the other 20 hours you cannot work.
  
• Disability Insurance Riders: Riders are provision put into your plan that allow for change down the road. These are a good idea if you are younger and two that you will want to take a good look at are the future purchase option rider, which will allow you to add coverage when you make more money, and a rider that will adjust with inflation.

While there is no set price for the cost of coverage, you can expect to pay between one and three percent of your annual income. That is because the price you will pay depends on your age, gender, health, coverages, and other factors of the like.

One big factor that determines the premium price you will pay is the elimination period. This is the time that it takes for your benefits to kick in after the disability has occurred. Most people go with 90 days but you can get anywhere from 30 days to 720 days. The longer the elimination period, the cheaper the premium. Just be sure you can cover the cost of everyday living until your benefits kick in.

Another big determining factor is the term of the plan. Most companies will offer to cover you from two to five years, or set the term by age like 65 or 67. Many people choose to go until the age of 65 as they will have Social Security to rely on at that stage in their lives. Basically, the longer term your policy is, the more expensive it will be.

Finally your occupation is a huge factor when it comes to coverage. Providers will look at what you do for a living and determine how likely it is that they think you could become disabled. The more likely they feel you could be disabled, the higher your premiums will be. If you have a job such as construction, you may not be able to get coverage with a top name provider. You will still be able to get coverage with a smaller provider but you will likely get a stripped-down plan without all the fancy provisions. Still, something is better than nothing; especially if you find yourself with a disability.

Disability Insurance after Divorce

When you determine what type of insurance coverage you need part of the process is to play the ‘what happens if' game; what happens if there is a fire, what happens if there is an accident, and so on. This rule applies to if you are recently divorced.

Being recently divorced probably means that obtaining insurance is right on the top of your list of things to do. When you do get around to sitting down with your insurance agent you should ask them about long-term disability, or LTD, insurance and how you could possibly benefit from it.

When most people think about insurance they think about getting, home, health, and automobile insurance, but what happens if you are hurt and can't go back to work for an extended period of time? Yes your medical insurance will pay the medical bills, but what about the rest of the bills that come in month after month?

When you are unable to work you are unable to make money and this can become very problematic very fast. If you do have savings it can be burned up rather quickly as you will need to pay the expenses of everyday living. If however you have LTD insurance you will not have to worry about this nightmare scenario. LTD insurance will give you the money you need to pay the everyday expenses should you find yourself not able to work due to cancer, injury, heart problems, and many other qualifying factors. You can use the money you receive to pay for things such as your phone bill, your electric bill, your mortgage, your food, your clothing, and any medical rehab not covered by your insurance provider. Put simply, LTD insurance can mean the difference between a normal life and a broke life.

If you get your disability insurance through your work health care plan then it is known as LTD insurance. If however you get disability insurance on your own it is known as Individual Disability Income, or IDI, insurance. When you are looking into either it is important to know what to look for and understand that not all disability insurance is created equal.

All needs are unique so it pays for you to shop around to ensure that your specific set of circumstances will be met. Here are some tips to help you decide what you need:

• What's the Wait: The waiting period is the time it will take for the disability insurance to fully take hold after the disability takes place. Most LTD insurance has a waiting period of 90 days but providers will vary. Typically, the shorter the waiting period, the more the premium.
  
• What's Covered: Before you decide on what coverage is right for you find out exactly what each providers definition of a disability is. The definition tends to vary greatly from provider to provider and also between employer sponsored plans and individual plans so be sure you ask all your questions up front.
  
• How Much Coverage and for How Long: You can obtain disability insurance that will cover between 50 percent of your pay all the up to 80 percent or more and everything in-between. Of course the higher the coverage, the more your premium will be. This needs to be considered though as you may not be able to get by on only 50 percent of your current income. You also need to find out how long you will be covered for. Some companies will cover you for up to three years and others will have a cut-off age so you need to find out ahead of time.
  
• Will Benefits Increase: As the cost of living goes up with each year that passes you may find that a standard coverage plan will not work for you. Some plans will go up with inflation and some will not. You must ascertain which ones are best for you before you decide.
  
• How Much is it: There are many factors that go into determining how much your premiums will be. Factor such as age, health, smoking status, coverage desired, and more all go into the process of determining what you will pay. It is also worth noting that LTD rates are considerably less than IDI rates in most cases.

One in three Americans will become disabled by the time they are 65. This may not be something that you think of when you are young but the fact is that the younger you are when you get disability insurance the easier it will be on your wallet. If you wait until you are older and have problems that are arising then you may be in for a much higher premium.

Most importantly, before you sign on the dotted line, be sure that the insurance provider you are going with is a reputable one. There are many cheaper providers that are fly by night and may not pay out in the end. A good place to look into the stability of an insurance provider is the Standard and Poors Insurance Rating Service or A.M. Best Company. Both can be accessed online and will give you a truly unbiased look at the different providers of disability insurance.

One out of five people will experience a long-term disability while in the workforce and with odds like that it pays to look into long-term disability insurance. This is especially a concern for those of you who are single parents and only relying on your own income to raise your children. Having long-term disability insurance will give you a better option for living rather than having to ask friends and family for money to help you in your time of need.

Just as with many types of add on insurance, LTD insurance and IDI insurance are totally optional. While it will represent another bill that must be paid month in and month out it will also represent piece of mind which you cannot put a price on. You will be able to rest easy knowing that should something happen to you and you are unable to work for an extended period of time that you will be able to maintain a normal life until you can successfully return to work.

Should You Buy Disability Insurance Riders?

When you have decided to get a disability insurance plan, you will then need to decide what riders or extras you want. Some of the riders will cost you, and cost you big, but they can be life savers. For example, ‘own occupation' coverage will cover you if you cannot perform the exact same job as you did before you became disabled. This can cost you an extra 40 percent on your plan but if you can afford it you may want it.

 

Other important riders to consider if you can afford them are things such as retirement age, cost of living adjustment, and future purchase option. These break down as follows:

• Retirement Age: Retaining your coverage until your retirement age will likely cost you up to an extra 15 percent.
  
  
• Cost of Living Adjustment: This may add 20 percent to the policy but will cover you when inflation makes your cost of living go up.
  
  
• Future Purchase Option: This is a big one and will likely run you an additional 25 percent but will allow you to increase your coverage at a later date if you are making more money with the best part being you will not be required to take another physical.

You should also be sure to check that your plan will not be able to be canceled at any time from the provider and that your renewal will renew at the same rate provided you pay your premiums on time. This type of coverage is usually automatic with most plans but it is certainly worth checking out just in case.

There are now many types of insurance that you can just go online to obtain. However, when it comes to long-term disability insurance it is probably in your best interest to sit down with a professional and thoroughly weigh out all of your options. Though the conversation may not be the most fun you can have it is most likely going to be one of the most important conversations you can have. If you end up being disabled it will end up being the absolute most import conversation of your life.