Long Term Disability Insurance

Long-term disability coverage explained

All disability coverage is designed to replace earned income in the event of illnesses or injuries that disrupt or preclude the insured’s employment, professional practice, or occupational pursuit. To obtain the best long-term disability insurance for your particular needs, you must understand some key differences between available coverage.

Types of protection

Disability insurance is commonly provided by employers, as part of employee benefit packages. Common types of employer-sponsored disability insurance are: short-term disability insurance and paid sick leave, as well as long-term disability insurance. The Government also provides disability insurance.

Public and employer-sponsored disability coverage has major drawbacks. The primary disadvantage is the inability to tailor individualized coverage to suit individual needs. In general, most public and employer-sponsored plans offer insufficient coverage for most wage earners’ needs.

Private long-term disability insurance

Long-term disability insurance polices are available for purchase through the private insurance carriers. Private disability insurance is a popular choice for the self-employed or employees of firms that do not provide this benefit. It is important to understand some critical differences between disability insurance polices, as their terms of coverage and premiums vary widely.

There are a number of factors that will affect your premiums:

1) Time before pay out

Most disabilities are temporary. Thus, long-term disability policies feature varying lengths of time that an insured must wait after a disability occurs before benefits commence.

2) Dollar amount of benefits

Disability insurance policies usually provide periodic benefits of a fixed dollar limit, or specific percentage of earned income replacement.

3) Maximum length of time for which benefits are payable.

Long-term disability insurance policies might pay periodic benefits as little as 1-2 years; or, benefits might continue until the insured reaches retirement age.

Advantages of private long-term disability insurance

Types of work engaged in, and personal finances vary from person to person. Those with substantial financial reserves can afford to wait longer before collecting benefits, and will not require them as long as others of less modest means would. Similarly, those engaged in lucrative professional practices or high-risk occupations seek higher coverage limits than others of more modest means.

The next step

Regardless of your personal circumstances, it is vital that you prepare for an eventual income disruption caused by disability. Consult an insurance professional today to insure that you and your family’s needs will be adequately met if should you ever experience a disability. Accidents have become more commonplace than ever in today’s complex society. You do not want to find yourself finically disabled from insuring that your basic needs continue to be met.

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