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 can be costly and life-changing, whether caused by illness, injury, or accident.
Occupation workers can purchase disability insurance 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 quotes in multiple states across the country. Don’t see your form, contact us, and we can refer you to a reputable agent who can 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 time that the disability insurance policy will pay out is called a benefit period. A benefit period could be for a short period, say a couple of years, from 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. The IRS or state governments do not usually tax disability income. There are some caveats, so that may or may not apply 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 ensure 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 essential to understand what a policy will and will not cover. For example, the following are two important definitions used in disability policies:
- Own Occupation: This is also referred to as total disability. This type provides benefits if the insured cannot perform their specific job duties.
- Any Occupation: This type provides benefits if the insured cannot perform the duties required of any occupation to which they are reasonably suited to do.
What is Total Disability
Total disability, as defined by the policy, provides the most benefit to the insured. It will payout for a set period if the insured cannot perform the duties of their current occupation. These policies are less common, more expensive, and usually have a limited period 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 they are reasonably suited.
However, policy language often provides benefits based on a combination of the two definitions. A modified policy might only pay for a set time, say two years, if the insured cannot perform their “own occupation” but would not continue to pay if the insured can perform the duties of “any occupation” to which they are reasonably suited.
Details, Details, Details
They say the devil is in the details. You are responsible for understanding 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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A disability can be a significant financial burden for many individuals and families. Worker’s compensation, Social Security Disability, or savings may help to replace some lost wages for some time. However, an individual disability income insurance policy is a secure way to replace lost income. No matter what your profession is!
Contact us today, and let’s fill your income gap together.