Disability Insurance
What is Disability Insurance?
We’re sure you have had loved ones, friends, or co-workers suffer from an accident or illness that prevented them from working for weeks or maybe even months. When unexpected events occur, it’s difficult to watch people struggle financially due to loss of income. It’s much more difficult to accept if the person is you or your family member. What will a loss of income mean to you and your family? It would most likely be unpleasant, irritating, and even frightening. The great news is that Long-term Disability Insurance benefits will fill a gap in your cash flow.
Your home, vehicle, or retirement fund aren’t your most important assets. The most important asset you have is your ability to earn a living. If you are unable to work for a long period of time due to illness or accident, disability benefits will cover most of your lost wages. If you are young and healthy, it’s easier to get disability insurance, but if you are older or have a pre-existing condition, you may face higher premiums or even be denied coverage.
Disability Insurance and benefits do not just cover unusual incidents. Many claims are for health issues you may not recognize as impairments, such as physical injuries, stress, cardiac arrest, cancer, or any event that your doctor requires you to have bed rest or time off from work.
This may happen to anybody, at any time, in any job. It’s not uncommon that your employer may offer Group Insurance disability benefits for their employees. If your work is primarily a sedentary desk job you may feel the likelihood of missed weeks or months of work due to an injury may seem improbable but stress and illness is very common amongst office workers.
Types of Disability Insurance
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Short-Term Disability Insurance
As the name implies, Short-term Disability Insurance is just that: short-term in nature. They have a very short waiting period that may be as little as a day or a week to two weeks before benefits commence and will last for just 16 or 17 weeks.
Alternatively, you could save three to six months in cash reserves, top pay expenditures, and create your own Short-term Disability emergency fund! If you are sick or hurt and have to miss a few weeks of work, this emergency fund would help your short-term disability until you get well again.
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Long-Term Disability Insurance
Short-term and Long-term Disability Insurance are the two primary types of Disability Insurance. During incapacity, both programs replace a percentage of your monthly basic pay up to a maximum of ⅔ of your income. After being on claim for a longer-term, some carriers will pay for extra services, like training to go back into the workforce.
A plan that no one should be without is a Long-term Disability policy (LTD). The phrase “long-term” refers to the benefit period of two years, five years or to age 65. In addition, some carriers will provide coverage and pay Tax-Free disability benefits past the age of 65. In the event that you take out your own insurance, coverage will follow you from one employment to the next. As the name implies, Long-term Disability Insurance is just that: long-term in nature. They have a longer waiting period that may be 30 days, 60 days, 90 days, 120 days or even longer, before benefits commence and will last for at least 2 years, 5 years, to age 65 or longer.
Looking at the figures, Long-term Disability Insurance is a necessary benefit for your financial future. If you want to protect yourself against long-term income loss, we recommend purchasing coverage for at least 5 years or longer.