In this video Marc Whitehead, a Board Certified Disability Attorney, discusses ten important things to consider when choosing your Long Term Disability Insurance plan.
When looking through a disability insurance policy there are any things to consider. Since many disability plans offset or deduct Social Security benefits. There may be even more factors to consider when determining what disability insurance policy would be best for you. With so many different policy options, it can be hard to tell what is necessary and what isn’t.
To help you, we have narrowed it down to 10 things you should consider when choosing a disability policy.
1- Whether to purchase an Individual Policy or purchase a policy at work.
If you are thinking of purchasing disability insurance, you may have to option of obtaining insurance coverage through your employers group insurance plan. However, most of these policies limit your enforcement of coverage because they are governed under Federal ERISA law. A better option, if you can afford it, is to purchase your own individual policy. Under this option you have the advantage of enforcing your policy should you ever need to use it.
2- The Definition of Disability
There are many different ways to define disability. Most policies define a two teared definition of disability. With the definition shifting to a more difficult standard after a period of time. Initially the definition will be defined as an insured worker being unable to preform the duties and the responsibilities of their own occupation. Meaning the job they were preforming at the time of them becoming disabled. After some defined period, usually 24 months, the standard of disability will usually shift to a more difficult standard defined as an insured working being unable to preform any occupation.
3- Portability
If you purchase your disability insurance through your employer, you must find out if you are able to keep that insurance if you leave the company. If you insurance is non-portable it will not follow you if you chose to leave the company.
4- The Premium
Premiums vary depending on the insurance provider. Some policies allow you to lock in a premium, others don’t. Also, you can get a non-cancel-able policy or a guaranteed renewal policy.
5- Cost of Living Benefits.
Though cost of living is not included in most policies, adding this is definitely something you will wanna consider when making your choice on what disability insurance. Cost of living benefits are meant to provide financial stability by offering an increase in benefit over time.
6- Residual Benefits
This will help you make up your income if you can only work partly. Meaning you are not able to work your previous job but you can preform a lesser paying job. Be careful because some insurance companies put restrictions on residual benefits, or tweak the definition to their liking.
7- Collection Time Period
With some policies your could start collecting as soon as 30 days after your disability has been filed. The collection time can range from 30 – 700 days.
8- Coverage Changes
Many policies could be changed by the insurance company at any time over the course of your coverage. This gives the insurance company the freedom to raise your coverage rates whenever they want despite whether your policy is up for renewal or not. Like wise insurance companies can change the terms of your insurance coverage without letting you renew.
9- Future Coverage Increases
Although the future increase is in addition writer to your disability coverage. This is something worth considering if you think your insurance will increase over time. With this you are able to increase your monthly benefit of the policy while disregarding the status of your health. Without this policy your coverage will not protect your future income.
10- Renewability Provisions
How long you can expect to be covered. A guaranteed renewable policy can’t be canceled by the insurance company, even if an adjustment to a situation puts you at a greater risk. If with a guaranteed renewable policy the insurance company can still change your premium.
