Risk Of Long-Term Disability And Disability Insurance

We often think that advancement in medical sciences has served humanity immensely by reducing the mortality risks and indeed, lesser and lesser people are dying from serious illnesses or injuries. This, on the contrary, has increased risk of long-term disability. With tremendous progress in medical-care, diseases and injuries lead more often to pro-longed periods of (or life-long) disability/ incapacitation. Studies have shown that a 32 percent decline in mortality from heart disease, cerebro-vascular diseases, diabetes and hypertension (leading causes of death even a decade or two ago) has led to rising disability risks (to a total of over 55 percent).

This has a great social implication. Long-term disabilities make a person incapable of performing his/her job. The period of this incapacitation starting from a few months may run for years to come or even for the rest of one's life. This prolonged period of ill health (and hence of unemployment) ruins the sufferer financially, with a drop in income and increase in one's expenses (normal expenses plus treatment expenses), one's savings are all used up and one even risks personal assets for taking loans.

Disability Income Insurance : Your Way Out

Disability Income Insurance policy provides you protection against the risk of long-term disability by promising to replace a percentage of your salary (current monthly income) if you experience a long-term disability and find it impossible to continue working. Disability Income Insurance policies, however, stipulate an "elimination period" : say a time period of 30, 90 or 180 days for the disability condition to continue, as the basic eligibility to qualify for coverage.

Once you meet the criteria for disability coverage, the insurance policy will pay you monthly benefits for a definite period. The benefit period varies, some paying for one, two, five or ten years or even offering disability insurance until you reach retirement age, depending on your disability and the policy you opt for.

Disability coverage provided by an individual DI policy may cover up to 70 or 80 percent of your current income. An employer-sponsored policy usually covers you for less but then your employer can allow you to purchase extra insurance from the same company. Group insurance policies usually have fixed monthly maximums. This greatly reduces actual percentage of income, especially for high salaried employees earning $100,000 or more.

The disability insurance income percentage is generally determined at the time when the policy is purchased; however, some policies have provisions that allow for an increase in the value of the policy. This and many other aspects of the disability income policy call for cautious reviewing before you decide on purchasing a particular policy.

Things To Watch out for before buying your own Disability Income Insurance policy:

The first feature that demands your close attention is the very definition of disability. Every policy has a "definition of disability" that precisely defines disability in relation to your ability to work and/or your ability to continue working in your present occupation in the disabled condition. Thus, some policies provide protection against psychiatric disorders and yet others do not. Hence, you need a thorough scrutiny of each policy before accepting one.

Disability income insurance means that you will need to resume job (rather, start working) as soon as you are capable of working. If the policy states "any occupation", you will be required to commence work once you are able and that even if it is not in the same capacity as before. Only an own-occupation policy allows you the benefits of DI insurance until you are capable enough to resume your previous duties.

Policy options or riders too need to be examined. One such rider, the residual benefits, promises to cover you for the difference between your old income and new income in case your earnings in your new capacity is not at par with your previous income.

Watch out for terms like "guaranteed renewable" and "non-cancelable". If your policy mentions "guaranteed renewable", the insurance company cannot cancel your policy unless you falter with your premium payments. The term "non-cancelable" means that the policy premium the insurance holder should pay can never be raised.

Beware of the limitations:

Nowadays, the risk of long-term disability is a bigger threat for people aged between 20 and 65 than the risk of death. Whether you think in terms of the many benefits like tax exemptions, low premiums, or broader coverage and more, opting for individual long-term disability insurance at a comparatively young age is worthwhile.

Remember, your long-term disability insurance policy provides you coverage for risks and pre-existing medical conditions are not covered by the policy. Delaying the purchase of disability insurance may result in the risk of having future medical conditions excluded from coverage and higher premiums. Buy a policy in time and protect yourself and your dear ones from probable financial hardships. Again, the policy does not promise you a fixed monthly income for inviting a risk of long-term disability by engaging in dangerous activities!-------------------------------------------------------------------------------------------------------If you are a business owner get listed at Best Insurance Site part of Localwin Network.