Disability Insurance Definitions

Be Certain Your Disability Policy Will Pay

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Disability Insurance has been around for very many years. It used to be referred to as income replacement insurance by some insurance companies. Because some of the definitions can be quite unintentionally misleading I ask you to take some time to absorb each detail of this article. Knowing what you are buying can save you a lot of money.

• Definition Of Disability

  If a person is incapacitated in any way and as a result is unable to work in the occupation which he or she has enjoyed or has become accustomed that person is considered disabled. There are companies today still defining disability as not being able to work in any occupation after becoming ill. The scary thing is that people live under an illusion that they are covered with disability insurance. Please pay special attention to definition before you buy a disability insurance policy. The policy must say own occupation.

  It is also of great importance that the policy is non cancelable and guaranteed renewable. This indicates that the disability insurance policy cannot be canceled by the company except for non payment of premiums and the terms of the policy itself cannot be altered in any way.

• Elimination Or Waiting Period

  The elimination period of your policy is the period of time you wait before payment of the benefits begin. This is an agreement by contract that is selected when purchasing the policy. You may choose an elimination period of 30 days, 60 days, 90 days, 180 days, 360 days or 720 days. The shorter the elimination period the higher the premium. Most people choose an elimination period of about 90 days as they feel pretty certain that they can hang on for at least that period of time before they are in need of additional cash.

• Benefit Period

  The benefit period is the period of time that you will be paid an income during your disability. This period may vary but most life insurance companies pay a disabled person for 2 years, 5 years or to age 65. Some go beyond age 65. The longer the benefit period the higher the premium.

  People become disabled, at least for a short period of time, as many as 5 times during their lifetime. This in many cases mean a loss of income...which could be quite devastating to a person or an entire family. A disability insurance policy could be a secure hedge against such an eventuality. The amount of income that you are allowed to insure yourself for is between 40% and 60% of your gross income.