Disability Income Insurance Tips

Disability Insurance

Author: California Department of Insurance
Published: 2011/11/24 - Updated: 2020/12/22
Contents: Summary - Introduction - Main - Related

Synopsis: Insurance Commissioner Dave Jones provides tips about disability income insurance and encourages consumers to examine and understand their options. According to the U.S. Census Bureau, one in four of today's 20-year-olds will become disabled before reaching retirement age An individual may obtain disability income insurance coverage in two ways - either through a group-sponsored setting or purchased as an individual.

Introduction

According to the U.S. Census Bureau, one in four of today's 20-year-olds will become disabled before reaching retirement age; however, only 32 percent of U.S. private industry workers have long-term disability income insurance as part of their benefits package.

Main Digest

"In a down economy many people may not think their most valuable asset is their ability to work," said Commissioner Jones. "But if illness or injury were to keep you from earning a living you would still need to pay your bills. Disability income insurance could be a viable option for people and their families, and that's why consumers need to take the time and evaluate their options closely."

An individual may obtain disability income insurance coverage in two ways - either through a group-sponsored setting or purchased as an individual. Group insurance is available through an employer or an association, and these policies may offer short-term and long-term coverage. Short-term disability income insurance typically replaces a portion of the policyholder's salary up to a year following the disability, while long-term disability income insurance may begin six months after the disability and can last a few years or even until retirement.

Individual insurance is coverage that can be purchased from any insurance company that offers it. The terms of the policy, length and type of coverage are negotiated between the individual and the insurance company and are generally subject to underwriting requirements. When considering disability income insurance policy options there are definitions and benefits consumers should carefully compare.

Determining How Much Coverage You Need

Before purchasing disability income insurance, determine how much income you need to meet critical financial obligations such as rent/mortgage, food, fuel/transportation, utilities, etc. An easy way to do this is by adding up your monthly expenses and comparing them with the income from any existing disability coverage, plus any income from other sources, such as personal savings.

Becoming disabled can also bring with it increased or additional expenses like health care costs, assistance with daily activities, even home modifications. Keep this in mind while evaluating the amount and type of coverage you could need.

The amount of benefits you receive is based on a percentage of your pre-disability earned income. The benefit amount received can be reduced by other sources of disability support such as Social Security disability payments, employer long-term disability insurance, among others.

If the long-term disability income insurance coverage your employer offers is not enough to cover your needs, there are options for purchasing additional coverage.

When it comes to insurance, your options can be confusing and it can be difficult to determine your family's needs.

Life Insurance Calculator: Calculate Amount You Should be Insured For : Free online life insurance calculator provides the amount you should be insured for in event of your death accident or disability.

Attribution/Source(s):

This quality-reviewed publication was selected for publishing by the editors of Disabled World due to its significant relevance to the disability community. Originally authored by California Department of Insurance, and published on 2011/11/24 (Edit Update: 2020/12/22), the content may have been edited for style, clarity, or brevity. For further details or clarifications, California Department of Insurance can be contacted at insurance.ca.gov. NOTE: Disabled World does not provide any warranties or endorsements related to this article.

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Cite This Page (APA): California Department of Insurance. (2011, November 24 - Last revised: 2020, December 22). Disability Income Insurance Tips. Disabled World. Retrieved July 17, 2024 from www.disabled-world.com/disability/insurance/important.php

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