Most people take it for granted that they can wake up every day and earn an income to support themselves and their families. The ability to be independent in this regard is one of your most valuable assets. Moreover, most people do not understand that the risks of becoming disabled at some point in their professional career are higher than they imagine. Therefore, disability insurance is available to protect your assets.
Disability insurance is insurance intended to replace your income if you become ill, disabled or injured, and the illness or accident prevents you from earning income in your occupation. Disability insurance will pay between 45% and 60% of your gross income while you are away from work.
It is important to note however that not all policies are the same. It is necessary to carefully examine the details and make comparisons when purchasing disability insurance. The cheapest policy is not necessarily a good choice. The chances of receiving a monthly benefit that will cover your cost of living while you are disabled are not improbable if you have purchased a low cost insurance policy.
The purpose of this article is to provide useful information on the features of disability insurance, so that you can make an informed decision when purchasing your insurance policy.
Types of Disability Insurance
Short-term disability is as the name suggests. This policy can pay benefits for two weeks up to two years. Usually, your employer provides short-term disability policies.
Long-term disability, as the name suggests, will provide benefits for an extended period. Long-term disability insurance generally lasts about 5 years. This type of insurance will also expire when the person turns 65. Some employers will offer this type of insurance as part of employee benefits or make it available at a specific cost.
The two main types of long-term disability insurance contracts are non-cancellable and guaranteed renewable. A guaranteed non-cancellable and renewable policy means that the insurer cannot cancel or refuse to renew your policy as long as the required premiums are paid on time. However, the significant differences between the two policies are that with a guaranteed renewable policy, premiums can be increased, but only if this affects the entire class of insured. In the context of a non-cancellable contract, the payment of the premium remains in force as indicated on the policy. Therefore, initial premiums for guaranteed renewable policies may be cheaper than non-cancellable policies.
