Disability insurance is a necessity for pretty much anyone who can afford it, but it should be even more of a priority than some other types of health-related insurance policies. In the event you become disabled and cannot work, it can be the difference between maintaining your lifestyle or quickly losing everything you’ve worked for over the years.
However, it can be a bit difficult to understand, and purchasing it can be even more complex.
So, here is a simply-worded guide to walk you through everything you need to know about disability insurance for individuals from all walks of life.
What is Disability Insurance?
Disability insurance is designed to protect workers from losing their income if they become disabled and unable to work.
Now, you may think of Worker’s Compensation when you hear that, and the two are similar, but they differ in a couple of major ways.
First and foremost, disability insurance is a private insurance policy that you pay for. It is also designed to help with disabilities in a more comprehensive and generalized sense, and you have more flexibility when it comes to how you purchase it.
With Worker’s Compensation, your employee pays the premiums, you only receive benefits if the disabling injury or disease is caused by your place of work, and there’s just one form of it.
While you have to for disability insurance yourself, this setup offers you some control over your coverage that you simply don’t get with Worker’s Compensation or government-funded programs ((1)).
What Does it Cost?
Private disability insurance for individuals can fluctuate in price based on a wide variety of variables. However, both types of disability policies generally cost between 1% and 3% of your gross annual income ((2)).
However, keep in mind that these two forms of disability insurance are sold (and charged for) separately. That means that to get full coverage in both short-term and long-term situations, you will be paying closer to 2% to 6% of your gross annual income.
What Can Raise My Disability Insurance Costs?
Your premiums are decided when you apply for a policy, and they’re based on many different factors.
While each disability insurance provider will look at things differently, the most common factors that go into calculating your premiums are:
- Job risks
- Pre-existing conditions
- Lack of regular medical treatment
- Undesirable medical history
If you work a risky job such as a construction professional or police officer, your disability insurance premiums can easily escalate towards the high end of the standard price range, and they may even go slightly over. However, they shouldn’t go over the industry’s standard too much regardless of those factors. You have various types of disabilities, including disability insurance for doctors.
What are the Two Disability Policies I can get?
As mentioned previously, there are two types of individual disability insurance options. The first is short-term disability insurance coverage, and the other is a long-term disability insurance coverage.
Both of these policies serve their own purposes and period of disability despite being very similar in function.
Short-Term Disability Insurance
Short-term disability insurance is basically what it sounds like. It’s there to protect you when you develop a disability that is serious enough to take you out of work for a while, but not serious enough that you expect the disability period out of work to be permanent or semi-permanent.
This is just short-term protection in case you’re forced out of work for a few months. You can always get long-term care plan on the other hand.
So, this type of policy only provides coverage for 3-6 months. If you are in the process of claiming a long-term policy, which can have an extensive waiting period to be approved, you might be able to extend your short-term benefit period to 52 weeks (or one year). This is a key feature that makes short-term disability worthwhile even if you never end up suffering from a short-term disability ((3)).
Short-term disability is also far easier to get approved for than long-term disability. Short-term disability usually only takes about two weeks to be approved.
Here are the various disabilities covered by short-term policies.
Pregnancy and Pregnancy Complications:
Believe it or not, you can claim a short-term disability policy for pregnancy. If you become pregnant and can’t safely work, you can use your policy to get the time period off that you need to focus on the health of you and the baby.
However, it doesn’t stop there. If you have your baby, whether you worked throughout the pregnancy or not, and you suffer complications that require a period of time for recovery or treatment, your short-term disability policy can cover your personal income for that, too.
You probably don’t think of mental health when you think of private disability insurance, but that is an eligible disability. If you suffer a traumatic event and need therapy, or something else affects you mentally for a few months, disability insurance will let you focus on the treatment you need rather than forcing yourself to work while your mental health degrades dangerously.
Not every bump or bruise will qualify as a disability, but if you suffer a serious sprain, broken bone, muscular injury, or any other industry that will take months to heal while also preventing you from working, a short-term policy will cover you financially.
Some illnesses can last months and prevent you from working without necessarily being as serious as cancer, heart failure, and other terminal problems. In this case, if the illness is expected to go away within six months, it qualifies for a disability claim.
Recovery from necessary surgeries can take months without necessarily going over the limits of short-term disability insurance. If your disability falls into that category, you can get the time you need to recover without sacrificing your income.
Long-Term Disability Insurance for Individuals
Long-term disability coverage is extremely similar to short-term coverage, but instead of focusing on somewhat minor disabilities you will eventually heal from, it focuses on more long-term situations such as terminal illness, life-long mental illness, and physical injuries you simply can’t recover from. You need to know the difference between long-term disability vs long-term care insurance.
Long-term disability insurance products are designed to protect your income from any unexpected disabilities that keep you from working for a year or more. If you suffer a life-long disability, you can receive benefits until the day you reach the age of 65 (or whatever the age is at the time. It is adjusted regularly).
The bad part of this is that it makes long-term policies a much bigger risk for insurance providers. If you take out a policy at 25, and you end up claiming it at 32, your insurance provider will end up paying your benefits for more than three decades. So, they take extra precautions.
This lengthens the claim approval process to anywhere from three months to a full year or more ((4)).
Here are the most common disabilities covered by long-term disability insurance.
Cancer has probably affected you in some way. Whether you suffered from it previously, or you had a family member affected by it. So, most people know what it’s capable of.
Luckily, disability insurance can give you the ability to focus on your treatment and recovery rather than how you’re going to pay your bills.
COPD, chronic bronchitis, and other lung-related issues are covered by long-term disability insurance when they prevent you from performing your job duties.
Heart Conditions and Strokes:
Heart attacks, strokes, heart failure, and similar issues can instantly take you from peak physical condition to being unable to perform basic tasks safely. Long-term disability can protect you from losing your income in the unfortunate event that you suffer from one of these problems.
Mental Health Issues:
Many mental health issues, from anxiety to PTSD, can worsen and suddenly be too much for you to handle even with treatment and medication. In this event, a long-term claim can be made to provide you with income until you retire.
While short-term disability insurance for individuals covers your basic stuff such as broken bones, muscular tears, and similar problems that heal, long-term disability can be used for very serious injuries such as lost limbs, paralysis, and similar problems.
Which Disability Insurance is Better?
Neither of these insurance types is better than the other. They both serve different purposes, and they can both be life-changing. In fact, it’s typically best to have one of each policy type to ensure you’re protected in any scenario.
Of course, since they’re purchased separately, this also means you’ll have to make a more substantial financial sacrifice for that high level of coverage.
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Things to Know About Disability Insurance
So far, you’ve learned about the price of disability insurance, how long you have to wait after making a claim, what each policy covers, and more. However, there are some less obvious things you need to concern yourself with.
They Want to Deny You:
When it does come time for you to make a claim, keep in mind that the disability insurer that has happily taken your premiums for years will do everything possible to delay, deny, or prolong a claim approval. To put it bluntly, they don’t profit off policyholders who actually use their benefits.
So, make sure you keep up on your regular medical checkups and treatments, keep records of everything, and make sure you have all necessary information available when you go to make a claim. Otherwise, you might be hassled into missing turn-in deadlines, denied on a technicality, or delayed for more than a year over a missing piece of paperwork that isn’t even necessary ((5)).
Every insurer you speak to will do things differently, and each policy offered will have different terms, requirements, benefits and monthly premiums. In short, no two individual disability policies are made the same so inform yourself on what does disability insurance cover.
So, you need to take the purchasing process seriously to ensure you’re getting a policy that’s monthly disability benefits will give you ample coverage when you need it, without weighing too heavily in the insurer’s favor.
You should be looking for an individual policy that almost feels custom-tailored specifically to you while remaining within your budget –within your price range, of course.
It’s Complex to Purchase on Your Own:
Simply researching insurance companies online and calling the one that sounds good to you is not the best way to purchase disability insurance.
Since there are so many ways that different companies and policies can differ, finding the perfect policy can be extremely difficult.
That’s why it’s recommended to consult a professional who isn’t attached to an insurance company. Policy Solver is a team of professional insurance experts who can assess your situation, sift through a massive network of insurance providers and policies to find the perfect policy for you, and then help you with the application process; all without having the incentive to push certain policies or features you don’t want or need.
When you go to purchase affordable disability income insurance, it is much easier to contact a professional consultant than it is to do it on your own.
It’s Necessary at any Age Regardless of Health:
As long as you’re under the age of 65 and work for a living, disability insurance is not something you want to go without so it’s good to think about aging and long-term care. It may seem as if you’re unlikely to use it, especially if you’re young and healthy, but life is unpredictable, and without disability insurance, your financial state can be destroyed long-term due to something as unpredictable as a car accident.
Regardless of your age or health level, you need disability insurance.
It Ends at 65:
Finally, while long-term disability policies can pay benefits for years, they do have an end date. That is the retirement age. Disability insurance is meant to replace your income when you’re unable to work, but at retirement age, you’re expected to switch to your retirement plan or draw social security income.
So, even if you claim a long-term disability policy at 32, you need to plan your retirement and make sure you’re ready for when your benefits cease.
Get Disability Insurance for Individuals, Toda
Disability insurance for individuals is a must-have form of insurance for anyone who works. However, it’s complicated to find the perfect policy for you, and it’s stressful to go through the application process.
If you are looking for disability insurance, contact Policy Solver and get professional help for the best results.
1: Taken from Investopedia, 03/07/2022, https://www.investopedia.com/terms/d/disability-insurance.asp
2: Taken from Meet Breeze, 03/07/2022, https://www.meetbreeze.com/disability-insurance/how-much-does-disability-insurance-cost/
3: Taken from Meet Breeze, 03/07/2022, https://www.meetbreeze.com/disability-insurance/short-term-disability-insurance/
4: Taken from Top Class Actions, 03/07/2022, https://topclassactions.com/ltd-insurance/how-long-can-you-stay-on-long-term-disability/
5: Taken from Disability Denials, 03/07/2022, https://disabilitydenials.com/blog/unum-disability-denial/