Disability Insurance
Your
Ability to Earn is Your Most Valuable Asset
Disability insurance pays an insured person an income when that person
is unable to work because of an accident or illness.
What are the types of disability insurance?
There are two types of disability policies: Short-Term Disability (STD)
and Long-Term Disability (LTD):
Short-Term Disability policies (STD) have a waiting period of 0 to 14
days with a maximum benefit period of no longer than two years.
Long-Term Disability policies (LTD) have a waiting period of several
weeks to several months with a maximum benefit period ranging from a few
years to the rest of your life.
Disability policies have two different protection features that are
important to understand.
Non cancelable means the policy cannot be canceled by the insurance
company, except for nonpayment of premiums. This gives you the right to
renew the policy every year without an increase in the premium or a
reduction in benefits.
Guaranteed renewable gives you the right to renew the policy with the
same benefits and not have the policy canceled by the company. However,
your insurer has the right to increase your premiums as long as it does
so for all other policyholders in the same rating class as you.
In addition to the traditional disability policies, there are several
options you should consider when purchasing a policy:
Additional purchase options
Your insurance company gives you the right to buy additional insurance
at a later time.
Coordination of benefits
The amount of benefits you receive from your insurance company is
dependent on other benefits you receive because of your disability. Your
policy specifies a target amount you will receive from all the policies
combined, so this policy will make up the difference not paid by other
policies.
Cost of living adjustment (COLA)
The COLA increases your disability benefits over time based on the
increased cost of living measured by the Consumer Price Index. You will
pay a higher premium if you select the COLA.
Residual or partial disability rider
This provision allows you to return to work part-time, collect part of
your salary and receive a partial disability payment if you are still
partially disabled.
Return of premium
This provision requires the insurance company to refund part of your
premium if no claims are made for a specific period of time declared in
the policy.
Waiver of premium provision
This clause means that you do not have to pay premiums on the policy
after you're disabled for 90 days.
If you are like most people, every month you're reminded of just how
much depends on a regular paycheck - your car, utilities, rent or
mortgage payments - to name just a few obligations.
But have you considered the fact that an illness or injury could take
away your ability to work and earn an income while these expenses do not
go away?
All income is created in one of two ways, either from people at work or
from capital at work. Dividends, interest and appreciation are the
products of capital at work. Most people need disability income
insurance because they have not accumulated sufficient capital to
replace their current income.
If you are like most people, your income is the foundation that supports
all of your future dreams, hopes and expectations. Your ability to earn
an income is truly your most valuable asset.
With Permission © III - ALL RIGHTS RESERVED
Brier Payne Meade, Topeka – (785) 233-1717
Brier Payne Meade, Kansas City – (913) 402-9576
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