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?
The answer is simple: insurance consumers are confused by disability insurance. There are so many terms to understand that people typically give up, and end up not purchasing coverage at all.
If that sounds like you, don’t worry. The team at Thams Agency is here to help.
Disability Insurance is critical in ensuring that your income is protected in the event 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.
The Two different types of Disability Insurance
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
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.
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:
Additional purchase options
Your insurance company gives you the right to buy additional insurance at a later time.
Coordination of benefits
The amount of benefits you receive from your insurance company is dependent on other benefits you receive because of your disability. Your policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies.
Cost of living adjustment (COLA)
The COLA increases your disability benefits over time based on the increased cost of living measured by the Consumer Price Index. You will pay a higher premium if you select the COLA.
Residual or partial disability rider
This provision allows you to return to work part-time, collect part of your salary and receive a partial disability payment if you are still partially disabled.
Return of premium
This provision requires the insurance company to refund part of your premium if no claims are made for a specific period of time declared in the policy.
Waiver of premium provision
This clause means that you do not have to pay premiums on the policy after you’re disabled for 90 days.
If this sounds confusing, don’t worry. The team at Thams Agency is here to walk you through your options and make sure you get the best possible coverage for your needs and budget.
How to get started on your quote
To get started on your quote, call our office or click over to our quotes page. Either way we’ll make the process simple!