According to the U.S Social Security Administration Fact Sheet dated February 7, 2013 Just over 1 and 4 of today’s 20 year-olds will become disabled before they retire. A disability whether caused by illness, injury or accident can be costly and life changing.
Workers of any occupation can purchase disability insurance in order to provide guaranteed income during difficult times. Typically, DI insurance will replace a portion of the lost income depending on the person’s profession and income.
We can provide disability insurance quote in multiple states across the country. Don’t see your state, just contact us and we can refer you to a reputable agent that will be able to take care of your needs.
Understanding Disability Insurance Coverage
The primary purpose of disability insurance is to replace lost income due to a covered accident, injury, illness, sickness, or pregnancy.
The amount of time that disability insurance policy will pay out is called a benefit period. A benefit period could be for a shot period of time say a couple years, all the way to all your working years to age 67. We do know that people are working past age 67 and have options for those people.
When we design your disability insurance plan we will choose an elimination period (which is much like a deductible). Typically a 90 day elimination period is a good starting point for the elimination period. Disability income is not usually taxed by the IRS or state governments. There is some caveat’s to this of course, so that may or may not be applicable to your situation.
It is important to note that income provided by the insurance policy is usually not the whole amount of earned income but a percentage of income. When we get your policy we will make sure you understand how much this covers.
Definitions: Own Occupation vs. Any Occupation
Disability income benefits will vary depending on the type of coverage and the nature of the disability. Thus, like any insurance plan it is important to understand what a policy will and will not cover. For example, the following are two important definitions used in disability policies:
- Own Occupation: Is also referred to as total disability. This type provides benefits if the insured cannot perform the duties of his/her specific job.
- Any Occupation: This type provides benefits if the insured cannot perform the duties required of any occupation to which he/she is reasonably suited to do.
What is Total Disability
Total disability, as defined by the policy, provides the most benefit to the insured. It will pay out for a set period of time if the insured is unable to perform the duties of his or her current occupation. These polices are less common, more expensive and usually have a limited period of time during which it provides benefits.
In contrast, a policy with an “any occupation” definition accounts for more employment opportunities than an “own occupation” definition and is thus less lenient to the insured. A policy with an “any occupation” will only provide income if the sick or injured party cannot perform the duties of any occupation to which he or she is reasonably suited.
Often times, however, policy language will provide benefits based on a combination of the two definitions. A modified policy might only pay for a set period of time, say 2 years, if the insured is unable to perform his or her “own occupation,” but would not continue to pay if the insured can perform the duties of “any occupation” to which he or she is reasonably suited.
Details, Details, Details
They say the devil is in the details. It is your responsibility to understand what your policy says and how you will be covered in the event of a disability. A good disability insurance agent can help guide you through this.
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In summary, a disability can be a significant financial burden for many individuals and families. Workers compensation, Social Security Disability or savings may help to replace some lost wages for a period of time. However, a individual disability income insurance policy is a very secure means to replace lost income. No matter what your profession is!
Contact us today, let’s fill your income gap together.