There will be a situation in life when you are injured or become sick. You can’t work and then the question will arise – How can you maintain your existing living standards without having any income at your disposal? You will find it difficult to pay your monthly bills. It will be a very worse situation if you are dependent on your daily income to meet your daily needs, expenditure. It is the situation you can land into, once or more in your life. The answer for this big question mark lies in short-term disability insurance.
As the name implies, in general, it is an insurance package that covers your disability period and can be a substitute for your income when you are unable to work due to illness or injury. Principally, it comes in two major types of coverage, namely short-term and long-term.
This type of plan provides an income for short term, ranging from two weeks to two years. It covers the early part of your disability. Often, it is included as part of an employee benefit plan. Again, the insurance makes a form of income security during the waiting period before long-term disability benefits start. Moreover, this coverage is voluntary, implying that the premium can be paid wholly by the employee.
Before choosing the right policy, it’s very essential for you to check the definition of disability in the policy.
The definition varies from policy to policy. A close look at it can help you to find the most appropriate insurance plan. Some plans identify your disability when you’re unable to continue your existing occupation. Thus, they will pay you if you are disabled to engage in the same occupation.
Other plans have a different definition, stating it as a stage when you are unable to continue any occupation that is best suited for you. These fields of occupations can be determined by your educational, professional qualifications, and your experience in various fields.
Generally, it is a common practice to use the definition of own existing occupation for the insurance. Some policies also require that you should not be gainfully employed while getting their benefits. Moreover, some plans can use the theory of residual benefit, which means that you will get a portion of your monthly benefit if the disability has resulted in reducing certain part of your monthly income.
Most of such plans exercise the concept of waiting period. The most common one is of 90 days. The length of this period is to be decided by an individual by assessing his own capability to pull on without payment in the period of disability. The longer the waiting period you decide, lower will be the premium.
Most of the companies that offer insurance plans also offer optional benefits to enhance the given policies.
Guaranteed Insurability Option
Also known as future purchase options, this rider comes with an additional facility to purchase extra disability income insurance with the increase in your monthly income. Even if at later stage, a situation arose to prevent you from getting additional coverage, still you can get your benefit increased.
This rider pays you a portion of your monthly income if you are witnessing reduced monthly income because of disability. In this case, you are required to comply with the minimum percentage of loss as a qualification. In most of the cases, it is 20% of your total income.
Cost of Living Adjustment
This rider provides an annual increment on a predetermined percentage, which can help you to overcome the inflation rate.
Riders often make lucrative offers. But, beware before opting for any of them; you have to compare the cost with the benefits you are getting and judge the probability of using the benefits of the rider in the future. There are numerous ways to get the coverage. Some companies offer a group plan for the employees. The purchase of an individual policy is always there. The premium varies according to your health, age, policy features, and risky nature of the job.
Before purchasing the policy, compare different offers from different insurers. Check whether the policy is guaranteed renewable or non-cancelable. Try to go for non-cancelable one. Try to buy the policy at younger age, so that your premium will be in low amounts and will be easy for you to pay them regularly in time. Look for that insurance company, which is financially stronger and have good claims paying history.
Before filing a claim, you will be required written documents showing your disability. They usually require letter from your physician, narrating the related details.
This insurance enables you to alleviate your financial worries during such tough times. So, you can concentrate your energy to improve your health and future.