How Does Disability Insurance Work?
Your disability insurance policy will replace your income up to a certain amount, depending on what type of policy you have. The length of time your policy will last varies, with short and long-term coverage options currently on the market. Each type of disability insurance has different benefits, they are as follows:
The average short-term disability insurance policy will replace a large portion of your base salary, but only for as long as one year. In order to collect on these benefits, you may need to wait a short period for the insurance company to confirm your disability then they will disperse benefits payments. These payments often range between 60 and 70 percent of your salary.
Long-term disability insurance policies pay out smaller amounts than short-term contracts, but the benefits can be collected indefinitely under certain circumstances. Some long-term disability insurance plans allow you to collect benefits until your disability is gone, while others only pay for a certain number of years. Reaching retirement age may also mark the end of your disability insurance coverage. If you do become disabled and intend to collect from your insurer, the usual waiting period is 90 days after confirming your disability.
What Are The Rules Of Disability Insurance?
The rules of your disability insurance contract will vary based on who your insurance provider is and what type of policy you purchase. How different organizations define “disabled” also varies across the board, so it’s best to work with an insurance agent to determine which policy suits your needs best. Even if you are only partially disabled, you may still be able to collect benefits with some kinds of disability insurance.
How To Choose Disability Insurance Plans
When shopping for disability insurance, there are a few different metrics you should consider, including the following:
- Your age and health
- Your gender
- Smoker status
- How the insurer defines disabilities
- How long the average waiting period to collect benefits is
- Your income
- How long benefits will last
- Additional benefits