Disability Coverage
Disability insurance policies are designed to pay part of your wages should you
be injured in an accident or
are unable to work because of illness. Here are two types of policies available:
long-term disability and
short-term disability.
Short term disability pays a portion of your wages should you be out of work due
to injury for up to one
year. Some employers pay for this benefit for their employees, some offer it for
employees to purchase.
If you have a pre-existing medical condition, the time to enroll is during the
initial enrollment period when
a medical exam is not required.
Replacement of wages is only partial; insurance underwriters, as well as your
employer, want you back
at work as soon as possible. Usually there is a waiting period of 14 days in
which you will not
receive payment.
Long term disability policies are purchased to replace what your potential
earnings would be from the time
you become disabled until age 65 when Medicare would be available.
For instance, if you are 55 and make $40,000 per year, you should purchase a
policy for $400,000.
You cannot get a long term disability policy if
- you are or are soon to be pregnant,
- make less than $18,000 per year,
- are unemployed, or
- you are required to carry a weapon for your job.
Typically, the waiting period for long-term insurance to kick is at least 60
days and as much as a year.
Disability insurance is an important aspect of your overall insurance coverage
plan, and if your employer
offers it as a benefit you should definitely consider it as a wise investment.