Individual Disability Insurance or Disability Insurance, also called personal disability insurance provides income to an individual during disability. An individual may not be able to work as a regular employee due the disability. The disability may be due to any illness or accident which prevents a person to work. This Disability Insurance pays monthly benefits to the insured, which helps the disabled individual to pay for expenses and to continue the standard life.
How Individual Disability Insurance Work.
Individual Disability insurance can replace about 45% to 65% of individuals gross income. Its tax free benefit as the individual has paid to the plan after tax deductions. The policy pays monthly benefit to the insured who can earn the regular income in their occupation.
Some employers have plans for worker compensations to help their employees during disability. The gross amount and the scope of the coverage may fall short to what is needed as a bare minimum. These employer plans forms part of a suite coverage and may not offer enough benefits needed. Moreover, these plans covers only injuries during work and do not cover the injuries out side of work area.
Small business may not have any of these plans. Individuals employed under such units have to bear the brunt for themselves , even if the injury is work related. Such individuals must take the Individual Income Insurance.
Types Of Disability Insurance.
Disability Insurance can be of two types, short term and long term. Both covers a part of income during disability up to a maximum of $10,000.
Short term policy can provide you 60% to 70% of base income and the paid benefits lasts for few months to one year. The wait period to get the benefits are as short as two weeks after the claim for benefit is applied.
Long term disability insurance can give you 45% to 65% of base salary. The benefits to the insured are paid till the disability ends. If the disability continues for prolonged period, the benefits end after certain number of years. The usual wait period to get the benefit is 90 days after the claim is applied.
How To Buy Disability Insurance.
You need to buy a Disability Insurance if you don’t have enough disability coverage at work. If you working in a employed in a small firm which does not have any such coverage, you need to this Disability Insurance. If you need a monthly benefit that far exceeds the cap of insurance benefit, you need to buy the Disability Insurance to cover the gap income.
An insurer, who sells the insurance, determines the maximum coverage you can buy. The benefit or supplementary income cannot exceed 75% of your income of all coverage combined.
You can buy the Disability Insurance from any insurance company which offers you a best offer. You can customize the coverage to include add on features, keep the coverage when you change jobs. The coverage continues as long as you pay the premiums and collect a tax free benefit when you need it most. An employer offered disability coverage ends when you leave the company or if the employer stop the disability benefits.
Cost Of Disability Insurance.
The price for a long disability insurance usually costs 1% to 3% of your annual income. The cost, or premium, can vary depending on various factors including your age, health, gender, smoking habits, occupation. If you want to cover a wide range of disabilities or you want the benefits for longer duration, the price you need to pay is higher premium. Finally, it also depends on your annual income. If want the policy to adjust against inflation, you may need to pay higher cost of premium.
How To Claim Long Term Disability Benefit.
To apply for benefit of a long term disability benefit, the primary statement needed is your doctors opinion about your condition. Even though your doctor certify your condition as critical, the claims administrator needs other relevant documents like clinic notes, lab results, X-Rays, MRI, exam findings and surgical reports. You need to continue your treatment for your doctor to receive the benefits non stop. Otherwise the insurance company stops their benefit payment on grounds of failure to continue treatment.
Social Security Disability and Workers Compensation.
Most of the disability policy require you to file for a social security disability and insurer can offset the amount paid by Social Security Disability. Hence, a insurance company has significant interest in you filing for a social security disability. Similarly, if the disability is during work, you may be required to file for Workers Compensation. This payment is offset in the Long term disability benefit.