A disability policy is designed to replace
lost income when a policyholder is unable to work due to a covered
accident or illness.
Disability policies generally have:
How Do I Determine How Much Disability
Insurance I Should Buy?
- A waiting period-A
waiting period in disability insurance is like a deductible on
your car insurance. The difference is that while a deductible
for auto insurance is expressed in dollars ($250, $500, etc.),
a waiting period for disability insurance is expressed in time,
such as 60 days, 90 days, or longer. It is the amount of time
that you must wait before benefits will be paid. The longer the
time period, the lower the premium.
- A benefit period-A
benefit period can be two years, five years, etc. The most comprehensive
policy is one that pays benefits to Age 65.
- An occupational classification-Depending
on the occupational classification, the premium and the benefit
period will be determined.
- A monthly benefit amount-A
monthly benefit amount can be up to 60% of the present income.
Benefits are tax free on an individual policy. The older you are,
the more disability insurance will cost, but once a premium has
been established, it is likely to stay the same throughout the
life of the policy.
For a guide to determining how much you might
need if you were disabled, [click here]