Nifty Insurance Blogger

When you have a family, disability insurance is not a luxury any longer but a necessity; this can provide an income until you are able to return to full employment. A person who is not able to work can recover without the stress of financial responsibilities to worry about. In fact there is a higher probability of a person requiring some form of protection against disability before they retire than the likelihood of dying.

It is an unfortunate fact that most people think they have a greater chance of dying than being laid off work through disability so life insurance policies are more popular. For example for a forty year old there is a greater chance of a disability that requires at least ninety days from work, than there is of dying before the age of sixty five. The problem is disability insurance costs more than basic life cover as it is costlier to provide.

Although calculating the premium can be a complicated process, the largest factor involved is the income level the claimant requires. One method of lowering the policy premium is arranging for the plan to ‘kick in’ only after the incapacity has lasted for a set period of time. so effectively reducing the possibility of claiming on the policy. Alternatively the policy holder could request a shorter cover period which would only cater for short periods off work; this can be a risky move if the period of incapacity is longer than the period arranged for payment.

Irrespective of what plan you decide upon, most providers will only pay a percentage of your salary. Reduced period disability insurance is also known as short term disability and although it may only last a few months, the benefits can be greater to the claimant. The other option is total disability cover; this can provide a long term (but reduced) income although this is only granted if the person can show they are no longer able to carry out their previous job.

Irrespective of the type of policy you have, payments for disability are made regularly, every week or month until the end of the incapacitation or the policy, whichever come first. Other key points to consider when looking into health policies are if there are restrictions on:

• Restrictions on Pre-existing medical conditions
• Whether you will have to pay tax on the benefit
• Time frames before benefits are terminated
• Are you employed in a high risk occupation?

The level of cover provided for your original salary will differ with each insurer’s disability insurance policy. With some providers giving 70 percent of the original salary, you will have to watch out for those who will only provide you with a very low 40 percent which could cause financial hardship. More than any other factor, it is this one that you need to be sure of as once you have taken out the plan and found it necessary to make a claim, it will be too late for you to change it.