Losing your job and income due to a disabling injury or illness is a scary prospect. 3 in 10 workers will become disabled for some period of time before they retire. Yet people often overlook buying the insurance that replaces lost income. You can buy disability insurance as an individual or through an employer, trade association or other group, and there’s a range of options.
Here are tiny words that can have big dollar meaning, plus hints for asking the right questions when shopping for disability insurance:
- Caps? Are there benefit ceilings that apply monthly and/or lifetime?
- Any or All? Except for policies that focus on a specific profession (physician, lawyer, etc), most define “disabled” as not being able to perform “any of the usual and customary duties” or the “all of the material duties” of your occupation.
- Shifting definition? Many policies say that during the first 24 months after you’re disabled, you get benefits if you can’t do your pre-disability job. After that, you only get benefits if you can’t do any job at all.
- Offsets? Will your benefits be offset/reduced by Social Security Disability benefits or other sources?
- Discretionary clause? Does the policy have wording that gives the insurance company too much power to decide whether or not you’re disabled?
“The Questions and Answers on Disability Insurance Workbook”will help you assess your needs. For more insights read United Policyholders Disability Insurance Claim Basics.
We thank and acknowledge Alice Wolfson, Esq, Jim Plummer, Esq. and Tony Steuer, CLU, LA for contributing to this tip.
Originally publishedas part of our Tip of the Month series