What to look for in a Disability Insurance Policy


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Income protection insurance will protect your income even if you are unable to work. These are the five main features of an individual disability policy. They can protect you and your loved ones.

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Unexpected events can have a devastating effect on financial stability and well-being. This was evident in the COVID-19 pandemic. There may be family members or friends who were affected financially and physically by the coronavirus. You may also have been affected. Although no one can predict the future, there is some protection you can take to protect your family and yourself from the unforeseeable.

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You’ve probably thought about how life insurance could help your family in the event of your unexpected death. Have you ever thought about what would happen if you were unable to earn your normal income due to illness or injury? What would happen to your family if you were unable to pay your monthly bills? How would your family maintain their lifestyle?

Many employers offer disability income protection benefits, including group short-term or long-term disability insurance. You might think that you are covered. The short-term disability policy usually provides benefits for a few months to help you if you become disabled and then long-term benefits kick in. You may not be aware that long-term disability insurance usually pays only 40% to 60% of an employee’s base salary, up to a maximum.

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What is income protection insurance?

Individual disability insurance is also called income protection insurance. It pays additional benefits to long-term disabilities, and will provide more income coverage. Individual disability insurance policies may also cover commissions, bonuses, or any other incentive compensation that is not covered by long term disability insurance. You can get more benefits by adding income protection insurance. This will allow you to pay your bills on time and preserve your lifestyle.

Your monthly benefit amount is determined by your income at the time of policy purchase. Benefits will start after you have completed a benefit waiting period. You will receive benefits until you are able to recover or until the maximum benefit period expires, whichever comes first.

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You can choose the benefit waiting periods and maximum benefit periods that are most suitable for you when you apply. To lower your policy’s cost, you might be able to choose a longer benefit wait period if you have substantial savings. These options should be available in all income protection policies, but not all policies. These key policy features will ensure that you are protected when you most need it.

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You Earn More Coverage

As you make more money, you’ll want to purchase a policy that allows you to increase your coverage. You would be eligible for a monthly benefit that is based on your income if you bought a policy today. What monthly benefit could you expect to receive 10 years down the road? If you have a $100,000 annual salary today, and get a 4% increase each year, you will make $148,000 over 10 years. You should be able to adjust your coverage to meet your needs and to support your lifestyle over the course of the policy’s life.

Benefits that Keep Up with Inflation

Your benefits should keep up with inflation. The United States continues to experience high inflation levels even after the pandemic. The Bureau of Labor Statistics reported that the consumer price index rose 7.9% in March 2022, compared to the previous twelve months. It is important that benefits increase in inflationary circumstances. You should look for income protection policies that include a rider to adjust the benefits every year in line with the consumer price index.

Coverage that pays when you can work but not at your full capacity

A residual disability rider can help you fill the gap if your disability is temporary. Up to a specified time, some residual riders will pay half of your monthly benefit. Others pay proportionately to your income loss. Some will also pay a benefit if your earnings are still below the level due to your disability.

Catastrophically Disabled Patients Get More Coverage

A catastrophic disability rider is a benefit that will provide additional benefits to your monthly benefit if you are severely disabled. For example, if you lose your sight, hearing or one or more limbs due to a severe illness or accident. This could allow your family to pay for additional care, such as a home healthcare aide.

Protection that pays when you take care of a loved one

Imagine your spouse or children becoming seriously ill. You had to make a choice between working full-time or staying home to care for them. A policy that includes a family benefit will pay benefits to you if you are unable to work or lose your earnings in order care for a loved one, such as a spouse, parent, or child. Even if you are not the one suffering, a family care benefit may be of assistance.

What Does Income Insurance Cost?

Income protection insurance doesn’t cost much. The average cost of income protection insurance is 1% to 2%. Premiums can be adjusted by selecting shorter, longer or greater benefit waiting periods. Maximum benefit periods can also be chosen. An income protection policy is yours, and not your employer’s benefits. You can switch jobs and keep your insurance policy. As long as your premiums are paid, your coverage will continue until your termination date which is usually around retirement age.

Protecting against the unforeseeable is crucial in these uncertain times. Income protection insurance will ensure that your family has a steady income regardless of whether you are disabled or sick. Discuss income protection insurance with your financial advisor to determine the right policy for you. It will be a wise decision.

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  1. About the Author
  2. Jeremy Horner
  3. Vice President, Individual Disability Insurance and Business Transformation Office

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Vice President Jeremy Horner is responsible for The Standard’s individual and business disability insurance divisions. Horner joined The Standard as a vice president in 2009. For the first nine years, Horner held various leadership positions in the Corporate Financial Services division. He has been involved with all aspects of IDI since March 2018. Horner is a Certified Public accountant and holds a Bachelor and Master of Accounting from Brigham Young University.


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