Disability Coverage
Disability insurance policies are designed to pay part of
your wages should you be injured in an accident or are unable to work because
of illness. Here are two types of policies available: long-term disability and
short-term disability.
Short term disability pays a portion of your wages should
you be out of work due to injury for up to one
year. Some employers pay for this benefit for their employees,
some offer it for employees to purchase.
If you have a pre-existing medical condition, the time to
enroll is during the initial enrollment period when a medical exam is not
required.
Replacement of wages is only partial; insurance underwriters,
as well as your employer, want you back
at work as soon as possible. Usually there is a waiting
period of 14 days in which you will not receive payment.
Long term disability policies are purchased to replace what
your potential earnings would be from the time you become disabled until age 65
when Medicare would be available.
For instance, if you are 55 and make $40,000 per year, you
should purchase a policy for $400,000.
You cannot get a long term disability policy if
(1) you are or are soon to be pregnant,
(2) make less than $18,000 per year,
3) are unemployed, or
(4) you are required to carry a weapon for your job.
Typically, the waiting period for long-term insurance to
kick is at least 60 days and as much as a year.
Disability insurance is an important aspect of your overall
insurance coverage plan, and if your employer
offers it as a benefit you should definitely consider it as
a wise investment.
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