Disability insurance is like any other type of insurance in that one pays regular payments to an insurer in order to protect them financially against an unforeseen event. Disability insurance specifically helps in the event that one becomes injured and cannot work. While life insurance takes up the majority of headlines, many people in the insurance business claim disability insurance is just as important to financial well-being. In addition to all of the medical costs of injury, those who are on disability must be able to overcome the fact that they are not getting paid regularly from work. Thus, anyone who uses the money from their job to purchase essential items, like food or shelter, should take a hard look at purchasing disability insurance. Read below for specifics on long-term disability insurance.
First, it is important to check the disability insurance policy provided by employers. Many employers provide their employees with disability insurance, but it is often the bare minimum. Plus, disability payouts from a business get taxed, whereas checks directly to an individual do not get taxed. Thus, it may be a good idea to supplement one's business disability insurance with a more all-encompassing individual plan.
Long-term disability insurance is generally considered one of the most important types of insurance. It can be purchased for up to 75% of one's salary, although there is a limit on the amount of money that will be paid out monthly. Note that one's salary is "set" when the policy is purchased, so it is a good idea to look at increasing the policy if salary is increased. Long-term disability insurance is provided for absences of six months or longer, and it generally runs between five and 10 years.
Many companies stop paying out after the age of 65. Policies are usually either guaranteed renewable, which means the insurance company cannot drop the policy, or non-cancelable, which means they cannot raise the premium.