When you think of disability insurance, what comes to mind?
For some people, it’s something that feels complicated and scary. But for others, it’s a way to protect their health and financial future without breaking the bank or taking too much time out of their busy schedules.
The good news is that it doesn’t have to be one or the other: You can make getting disability insurance as simple and easy as possible by asking yourself these seven questions before you buy your own policy.
1. Can I qualify?
The first step in the application process is to determine if you can qualify. How do you do this? You’ll want to determine the definition of disability and then determine if your condition meets those requirements.
For example, some policies use a “medical improvement rating system” that requires medical documentation showing a certain level of improvement before they will pay out benefits.
Other policies use a more strict definition, like having no ability to perform any work whatsoever due to illness or injury.
Some insurers allow members who’ve been denied twice before appealing their claim again within ninety days.
Others won’t let members appeal more than once per year after filing their initial paperwork. Make sure these details are spelled out clearly, so there’s no confusion later on down the road.
2. What type of benefit is right for me?
You’ll first want to determine which type of disability benefit is right for you.
Short-term disability insurance covers you if you cannot work due to a medical condition that lasts between 3 and 12 months.
Long-term disability insurance will cover your expenses if you cannot work for longer than 12 months due to a terminal or chronic medical condition.
Once you know what kind of coverage is best for your situation, it’s time to consider how long the policy should last.
3. How long of a benefit period do I need?
The length of your benefit period will depend on your needs. If you don’t have much money saved for retirement and are planning to work until age 70 or beyond, then a shorter-term policy may be better for you.
On the other hand, if you have had a stable career with long-term employment and are looking to retire early, then it might make sense to get more coverage.
One thing to remember is that some employer plans only cover workers up until they reach their mid-50s—that’s half as long as most insurance plans!
To be prepared for whatever happens next, talk with an independent agent about what options are available and how much coverage makes sense based on where you see yourself in the future
4. Am I insurable through an employer-sponsored plan?
Although getting disability insurance through an employer or union is possible, this is not the case for everyone.
If you’re unsure whether your job provides disability insurance, you should check with your employer.
In most cases, employers only offer this type of coverage if you have a certain number of years of service at the company and/or have been employed there for a while (five years or more), and you must work full-time.
5. How long is the waiting period?
Let’s say that you become disabled and are unable to work. You then apply for disability insurance benefits, and the insurer decides that you’re eligible to receive them.
But there’s a catch: your claim won’t be paid immediately. In most cases, you must wait until the period specified in your policy—the waiting period—before receiving any payments from your disability policy.
The waiting period cannot be avoided or negotiated; it’s built into every plan and can vary depending on the company offering it (most policies require at least 90 days of coverage before paying out).
6. How will my disability be defined?
Disability insurance companies generally define disability as the inability to work.
But now, what does that mean exactly?
Will they define it in a way that’s broad enough to cover you if you cannot perform the duties of any job in your field? Or will they narrow their definition and only consider whether or not you can perform the duties of your current job?
This can be an important point for people with specialized skills, who may be unable to do anything else because their expertise is so niche and valuable.
7. How much does it cost?
The cost of your disability policy depends on many factors.
The first part is determining how long your policy should last is deciding how much money it will take care of during each month that you can’t work.
The second is determining how much money it makes sense for you not to get paid.
In other words: How much are you willing to pay each month so that I don’t have any financial stress during those years of disability?
Try making your calculations with this handy insurance needs calculator.
Conclusion
Once you have answered these questions and reviewed your policy, it’s time to start.
The first step is to talk with your employer if they offer a plan. If not, you can start shopping for an individual policy online or over the phone with a licensed insurance agent.
Not sure where to start? Click here.
