Insurance Blog

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.