Frequently Asked Questions
- What is Disability Insurance?
Disability is a form of insurance that pays you a percentage of your wages if you become too injured or sick to perform your duties. While recovering from an accident, you can receive disability insurance to pay for your expenses until you are able to return to work.
- Who needs disability insurance?
Anyone in an occupation that requires specialized schooling or training to qualify for that does not receive sufficient insurance through their employer should seek out additional disability insurance services. Should an accident disable you and prevent you from working for an extended period, you will want the peace of mind that you have a policy to help cover your expenses until you are healed.
- What type of medical exam is required?
Depending on the insurance company, you will be required to provide a medical examination report from a licensed doctor. This is often called an Attending Physician Statement (APS) and is a basic medical review of current and past medical history. The policy you obtain will not cover outstanding injuries or illnesses, only ones obtained after signing up for your policy. Ask your provider for more details.
- What are the maximum benefits I qualify to receive?
The maximum benefits do not exceed the amount of the actual income you would normally receive. They are generally in the range of 50-80% of your monthly income, depending on your provider and premiums. For own-occupation disability insurance, when you return to work at your new job, your benefits will adjust to ensure that the sum of your new income plus benefits does not exceed your previous income.
- When do I qualify as disabled?
Depending on the policy, the definition of “disabled” could vary greatly. Certain policies pay benefits when an individual is unable to perform the duties of his or her own specific job, while others will only pay if they believe the person is unable to work any job suitable to their training, education, and experience. For example, if you are a dentist and you break an arm, you will not be expected to work in retail, because your schooling has prepared you for dentistry.It is worth noting that many policies do not cover disabilities from suicide attempts, war, drug abuse, or injuries attained while performing a criminal act. Disabilities from pre-existing conditions are typically excluded or require higher premiums.
- When can I work another job while disabled?
Own-occupation disability insurance allows you to work a more suitable job while still getting compensated for the position you are too injured to work at. These benefits may only qualify for a set period of time, after which you must return to work or re-define your occupation. Some policies will not let you be employed at all while collecting benefits.
- When will I start receiving benefits?
When you sign up for a plan, you select a waiting period, after which you will begin receiving your benefits. Most waiting periods are around three to six months, although you can choose for it to be shorter if you cannot manage that long without a paycheck. In general, the longer the waiting period, the lower your monthly premiums will be.
- How long do I receive benefits from an injury?
Upon signing up, you choose the benefits period. This is the maximum amount of time during which benefits will be paid out for a disability. The most popular maximums are 2 years, 5 years, and until age 65.
- How much disability insurance should I get?
IT really depends on your savings and monthly budget for DI, but typically you will need 60-70% of your income in order to pay expenses and maintain your standards of living.
- To estimate the number, consider how much you need to pay the minimum number of bills and expenses. Would this number go up with extra medical costs? Would your work expenses, like gas and coffee, decrease? How much could you dip into savings or borrow from family members? Using these guidelines, you should be able to roughly calculate a necessary percentage of your taxable income to receive individual disability insurance on.
- How do I file a claim?
Most insurers require written documents to file a claim, including proof from your doctor with details about the disability. They may also run additional tests at their own expense to verify authenticity. Premiums are usually waived while disabled, but you will not collect benefits until after your waiting period and may forfeit them if you return to work.
What are some other tips for buying individual disability insurance?
Buy when you’re young: Younger people get lower rates because they are generally healthier. Lock in a low rate while you can still get one.
Make comparisons: Look at price, “disability” definition, and whether the policy is non-cancelable or guaranteed renewable.
Increase the waiting period: A longer waiting period usually means lower premiums. This is an excellent option if you have money saved to prevent the necessity of immediate funds after an accident.
Choose a non-cancelable policy: This means that the provider cannot cancel your policy if you pay your premiums on time, which is especially beneficial if you lock in low premiums at a young age.