Disability Insurance Explained

Throughout your working lifetime, you are three times more likely to become disabled than you are to die before age 65. Makes a convincing case for having disability insurance, right? Why then is it that people have historically been more likely to buy life insurance, not disability insurance?

Why?: People are confused about what disability insurance is. There are so many terms to understand that people typically give up, and end up not purchasing coverage at all. So what is disability insurance anyways?

What is Disability Insurance

Disability Insurance ensures that your income is protected if something happens and you can no longer work due to an injury or illness. If you search the internet you’ll see a ton of different results from companies and brokers claiming to offer the best policy, but it’s important that you understand this type of coverage before you make a decision.

There are two different types of disability coverage:

Long Term Disability

Long Term Disability (LTD policies have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.

Short Term Disability

Short Term Disability (STD) policies have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.

Important Disability Insurance Conditions

When you speak with an agent about your policy, there are a few conditions to be aware of.

Non-cancelable

This means the policy cannot be canceled by the insurance company, except for nonpayment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.

Guaranteed renewable

This gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, your insurer has the right to increase your premiums as long as it does so for all other policyholders in the same rating class as you.

More Things to Consider

In addition to the traditional disability policies, there are several options you should consider when purchasing a policy. Other things like coordination of benefits, cost of living adjustments, return of premium, etc. All of the additional things are important, but you don’t have to worry about it. An experienced agent should walk you through other things to consider & your options.

The team at Thams Agency is here to walk you through all of it and take care of everything. If you have any questions at all, call our office or email us at team@thamsagency.com.