Disability Insurance: Protect yourself and your family from loss of income

Becoming disabled is not fun, but in spite of pain, limited movement or inconvenience, the worst part of being disabled is the financial inability to take care of yourself and your family. Most people who are disabled are not so thoroughly incapacitated that they can't do anything at all, but they may have problems finding employment because of the need for special provisions or because of a perceived liability on the part of the employer. article continued below »

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For example, if you have artificial knees with limited feeling in your feet, you may be unable to find work simply because employers don't want the responsibility of a fall. If you have epilepsy—even if it is well controlled—employers may tell you that they lack the medical facilities to help you in the event of a seizure. Other situations can be equally frustrating.

You may be unable to perform your regular job if you become disabled, but unless you are "totally and permanently disabled" such that you are unable to perform any "gainful employment," (those are terms used by Social Security) you will be disqualified for social security disability. The disability wage—if any—offered by your employer will give you an income for a very short period of time, usually two months to two years, and will be provided under the assumption that you will be returning to work. If you cannot return to your regular job, you will eventually be terminated.

Fortunately, you can prevent the devastating loss of income, home, and pride that often comes with disability. Long term disability insurance will replace up to 80% of your income, depending on your premium. The premium itself is based on the danger of your current occupation, your age, and the desired replacement percentage. If you ever need to use the benefit, the actual payment at that time will be an average of the salary of your last three working years. The premiums are usually very reasonable and do not increase on a yearly basis with most companies. You can, however, experience a rate increase if the company simply needs to update its policies to maintain pace with the economy.

Work with a live agent when you purchase disability insurance. The policies can vary widely. You need to know exactly how and when you can use your policy and how long you will be able to draw a benefit. Ask the following questions when choosing your disability insurance coverage.

1. What conditions are required for benefits to begin?

2. How long will the policy continue to pay?

3. Is the policy renewable; that is, if I recover and stop drawing benefits, can I reuse it at some point in the future if I experience a new disabling condition?

4. Do I have to continue to pay the premium once I start receiving benefits?

5. If I qualify for Social Security disability, will I be able to receive a private insurance benefit as well?

6. If I never use the benefit, is there a premium refund feature?

7. Does the policy itself expire at age 65? Can it be converted to Long Term Care Insurance?

8. Can I receive benefit if I am able to work part time?