Without disability insurance, disability can be a financial disaster for you and your family. If you become disabled during your working life, you lose your earning power, but you continue to have the same living expenses along with mounting medical costs.
If you decide to purchase disability insurance, ask the following questions to make sure you get the coverage you need. If you ever become disabled, the right disability insurance policy can help you avoid financial ruin while you recover your health.
How does the disability insurance plan define disability? Some disability insurance policies consider you disabled only if you are unable to perform the duties of any job, which means you may not be eligible for disability benefits if you can still manage a low-skill, low-wage job. Better disability insurance plans pay benefits if you are unable to perform the duties and fulfill the responsibilities of your usual occupation.
When do disability insurance benefits begin? Most plans have a waiting period after an illness and before payments begin. Find out how long you will have to wait before you start receiving benefits if you are disabled by an illness or accident, and make sure you always have enough money in savings to cover your living expenses for at least that long.
How long do the disability insurance benefits last? After the waiting period is over and you start to receive disability benefits, most disability insurance policies continue to pay until you reach age 65, although shorter and longer terms are also available.
What much money does the disability insurance policy promise? Can your disability insurance benefits be reduced by Social Security disability and workers’ compensation payments? Are the disability insurance benefits adjusted for inflation? Will the disability insurance provider continue making contributions to your pension plan so you have retirement benefits when your disability coverage ends?
For more information about disability insurance, visit the Insurance Information Institute or the America's Health Insurance Plans websites.