A New Year, A New You! Evaluating The Purchase Of Disability Insurance
Studies show that 1 in 4 workers experience a disability before they retire.
• Construct your rights and economic future like LEGO bricks. If the option is available, be sure to purchase a disability insurance policy through your work or union private plans. If that option is not available, you can also utilize a licensed independent agent. Regardless of your preference, a provider must be identified, an application must be completed and signed, the premium must be paid and a claim filed when necessary.
• Evaluating the differences between short-term disability (STD) and long-term disability (LTD) policies is key. Coverage periods, waiting periods before coverage starts, insurance costs and the amounts of covered benefits differ greatly between plans. Also, some plans have different carriers for STD and LTD. Some LTD policies require that you are first approved for STD prior to obtaining LTD and some do not.
• STD kicks in immediately when an employee gets injured. Conversely, there is a waiting period of up to 7 days before STD for an illness. STD coverage lasts the entirety of the “established short-term policy,” generally under 90 days. Most STD policies contain a 12-month waiting period for any pre-existing health condition.
• Long-term disability (LTD) confers a longer waiting period for injury or illness. In cases where the employee has an STD paired with a LTD, the LTD doesn’t kick in until the STD lapses. The waiting period for an LTD policy can be 3-6 months, which may pose a financial burden. When receiving both disability insurance benefits, as well as State Social Security Disability Insurance (SSDI), amounts received from the state are deducted from amounts independent insurance companies owe employees.
• So how can consumers make an educated decision? Begin by calculating your needs considering additional policy inclusions as necessary. Getting comparable quotes promotes a rational evaluation as opposed to an emotional purchase. Some companies to consider include Northwestern Mutual, Guardian Life, and Principal Financial Group. Selecting an appropriate agent specializing in your area of expertise is worth their commission, as they share linkages to professional associations, hospitals, multi-life discounts, and state laws.
• Timing and tenure, personal and professional landscapes and monetary needs reign supreme. Short-term disability (STD) typically provides 60% of gross earnings usually for 3 to 6 months, for “qualified illnesses”. This would include sickness, infection, disease, or an abnormal medical condition. Purchase long-term disability policies at the beginning of your career, as they cover your whole salary when injured or unable to work, carrying you throughout your entire career track.
Bottom Line: Don’t come late to the party! Once you are injured or unable to perform your job duties, it is too late to act. Let 2022 be the start of “Safeguarding Income Streams.”