Disability insurance available through an employer comes in two general types – long term or short term. Short term disability insurance is usually coverage for up to a year and usually has a short “waiting period” i.e. the time before benefits start after the inception of disability. It is almost always a group policy or through a state run program.
The value of short term disability insurance is to provide workers, who may not have short term reserves, money to live on for that initial period of time. In some states, such as California, a short term disability insurance policy is provided by the state and paid for automatically by you through your payroll taxes. The problem with short term disability insurance coverage is that without also having long term coverage, the money will stop if the disability incurred is serious.
Long term disability insurance, as the name implies, is insurance for a longer period of disability – 5 years, to age 65 and even in some cases for a lifetime. This is much more important. The financial devastation due to loss of income can be prevented by carrying a long term disability insurance policy. Professionals may carry life or health insurance to protect themselves and their families. But what if you develop a serious disability and cannot work? White collar workers who are used to earning comfortable incomes run the risk of financial hardship if they don’t have professional disability insurance. One’s income is what maintains lifestyle for both basics and comforts. It doesn’t have to be said that without an income one doesn’t survive; and professional disability insurance can help ensure that you and your family receive benefits. If you are a professional, we have professional disability insurance to meet your needs, whether you are established in your profession or just starting out in your career.
Long term disability insurance is available through an employer as a group disability insurance policy and also as an individual disability insurance policy. The value of an individual disability insurance policy is that you own it; it’s portable and if it’s a non-cancelable policy rates are locked in and as the name implies, it can’t be canceled.
Long Term Disability Insurance Strengths
Long term disability insurance can provide you with coverage until you are 65. The amount of disability insurance coverage is usually higher, up to 60% of your income.
Since you’re covering a large amount of income (A $5000 per month policy for a 35 year old to age 65 will pay up to $1,800,000 in total benefits) the overall cost of a long-term disability insurance policy is going to be higher. Even though this type of disability insurance does cost more, long-term disability insurance will more than pay for itself in the event you are disabled and unable to work. Professionals will want to ensure that they are able to maintain the standard of living that they are accustomed to. A professional disability insurance policy will help ensure that your lifestyle is protected. One additional reminder is to make sure that you purchase a disability insurance policy that is both non-cancelable and guaranteed renewable since these types of policies lock in the premium for as long as you have the disability insurance policy and also can not be canceled by the insurance company for any reason.