Long Term Disability Insurance

If you are currently physically fit or healthy, you may feel that disability insurance is not necessary. However, becoming disabled, either permanent or temporary, can occur to any person. And when that happens, you will need money to cover your expenses when you have been sidelined. Long-term disability insurance is specifically designed for such situations. It will protect you and your family by providing you with some income so that you can continue meeting your financial obligations and goals – until you can recover and get back to work.

How Does Long Term Disability Insurance Work?

When you purchase a long-term disability insurance policy, you will be paying premiums of approximately 1% to 3% of your salary. In case you become disabled, this insurance policy will pay you a monthly income. The benefits you will receive are approximately 60% of your gross income. Maximum monthly payments range between $500 to $20,000, depending on your occupation and income. You can choose a policy that aligns best with your income and personal situation.

Types of Long-Term Disability Insurance

When shopping for long-term disability insurance, you will come across two main types; own occupation disability insurance and any occupation disability insurance. So, how do the two types compare:

• Own occupation disability insurance: As the name suggests, this is an inability to work at your own or regular occupation. This policy gives you the right to claim disability benefits even if you are earning money doing something else instead of your most recent job. Own occupation disability is the most common type of long-term disability insurance.

• Any occupation disability insurance: This is also known as full disability insurance, meaning you are incompletely incapacitated. The bar for claiming this type of disability is relatively high. In fact, most carriers will be hesitant to approve your application for any occupation disability insurance, since it’s quite costly to payout. You will have to prove to the insurer that you are entirely unable to work before they can approve your benefits.

Applying for Long-term Disability Insurance

The application process for long-term disability insurance is easy and straightforward. First, you need to shop around and compare different quotes and policies. There are numerous comparison tools that you can use for this purpose. Once you choose your preferred policy, you will then start the application process. The insurance company will require you to provide necessary information such as an employment offer letter, as well as your latest tax returns.

You may also be required to sign some paperwork allowing the insurance company to access your health records. After that, a representative from the insurance company will call you and ask some follow up questions about your travel, hobbies as well as medical history. Your insurer will also make some arrangements so that you can undergo a medical examination to ascertain that the information on your medical records is accurate.

During the medical exam, your height, pulse, weight, and blood pressure will be measured. The examiner will also take urine and blood samples and ask some additional questions regarding your health. Your medical information will then be sent to your insurer and confirmed one last time. The insurer will use this information to assess the amount of money you will be paying for your policy.

Once your insurer has approved your policy, they will then send you copies of the paperwork so that you can sign. From there, the policy will be activated, and you will be eligible to receive benefits in the case you become disabled.

Waiting Period

The waiting period refers to the duration between when you are incapacitated and start receiving the benefits as indicated on your policy. In short, it’s how long you will have to wait before your insurer starts paying you. It’s important to note that you will not be working during this waiting period, which means you will not have an income. So, the longer the waiting period, the longer you will struggle to pay your bills. However, you should also note that you will be paying higher premiums when you choose a short waiting period. To determine your waiting period, you should consider your financial obligations, your other sources of income, the amount of money in your savings, and the number of sick leave days you have. But to be on the safe side, you should always choose a short waiting period once you decide to buy long-term disability insurance.

Filing a Claim for Long-Term Disability Insurance

After you suffer an injury or illness that makes it impossible to continue working, you should then proceed to claim your long-term disability insurance. First, ensure you review your policy so that you can be fully versed on the time limits, policy requirements, as well as the waiting period. Once you’ve reviewed this information, you should then proceed to file a claim with your insurer. It’s highly advisable to file your request as soon as possible so that you meet the time limits.

After filing the claim, you will then have to wait for approximately 30 days or more for the elimination period to lapse. When the elimination period is over, and your claims are approved, you will start receiving monthly benefits. The amount of money you will receive will depend on the terms of your policy.

In general, you will stop receiving benefits when you are fit and healthy to return to work or when you turn 65. Some policies may allow you to continue collecting benefits if you start working in a different occupation or when you return to work but in a limited capacity.

Closing Remarks

Any person can get injured or ill at any point in their lives, rendering them unable to work. Unfortunately, your bills will not stop just because you are unable to work, thus the need for long-term disability insurance. When you have long-term disability insurance, you will continue getting an income to help you meet your financial obligations, even when you are not able to work. However, always ensure you read the fine print so that you don’t encounter any issues when you are filing your claims.