10 Tips for Choosing the Right Disability Insurance


Choosing disability insurance can be challenging. There are so many options out there, and you don’t want to make the wrong choice or spend money on coverage you don’t need. If you’re shopping around, here are 10 tips that will help you choose the right policy with minimal hassle and maximum protection.

1) Who Do You Want to Protect?
As you shop around, be sure to determine what your needs are. If you have a family and are in a situation where your partner couldn’t work without you, then you might consider more coverage than someone who is single and doesn’t have children. You also need to decide whether or not you want critical illness coverage—this provides a lump sum if you suffer from an illness covered by your policy (i.e., heart attack or cancer) that prevents you from working.

2) Does it Cover All of Their Needs?
Before you buy disability insurance, make sure it will cover all of your bases. There are a lot of disability policies out there that only cover medical expenses or short-term leaves—not both. It’s not too hard to miss something like that when shopping around, but it’s critical to check before signing on with any provider. After all, you need peace of mind knowing your loved ones won’t be in financial ruins if you end up disabled and can no longer work.

3) Can it be Avoided if They Don’t Use It?
A key component to choosing disability insurance is determining whether you’re able to avoid having to file a claim by using other forms of health insurance. An individual can purchase extra coverage from their employer, or opt for an Individual Disability Insurance (IDI) plan. Both of these options add supplemental coverage that builds on whatever type of major medical insurance they already have.

4) Is There an Expiration Date?
If you have a disability in place and it has an expiration date, what are you going to do once it’s no longer effective? Also, if you have limited coverage (anything less than total and permanent), make sure that your health insurance covers long-term care or other critical areas. Ask your broker or carrier if they offer benefits such as vocational rehabilitation, home health aide coverage and medical supplies. And ask how much it would cost to reinstate lapsed coverage. Know thy options so you can plan accordingly.

5) Does It Have Any Waiting Periods?
If you’re disabled and suddenly unable to work, you don’t want to be in a situation where your disability claim is tied up in red tape while your health insurance premiums pile up. Make sure any disability policy you choose has no waiting periods before benefits kick in. That way, if something happens that causes you to lose income, you can get back on your feet and start earning money again quickly—and getting money into your bank account faster is always a good thing.

6) Are There Pre-Existing Conditions?
Most disability insurance policies will not cover pre-existing conditions if you wait until you’re already sick to apply for coverage. If you’re applying for health insurance and expect a clean bill of health, make sure your insurer won’t deny your claim after your coverage goes into effect. If a pre-existing condition is common in your family, or it comes with higher risk of getting sick, it might be worth considering how long you can afford to go without a policy before shopping around.

7) How Much Is It Going to Cost You on a Monthly Basis?
The best disability insurance policies come with an allowance that’s supposed to help you maintain your standard of living in case you can’t work. Depending on what other expenses you have, though, your monthly budget may be tight enough that anything from $1,000 a month (for individuals) to $3,000 or more a month (for families) won’t feel like enough money to live on.

8) What is the Deductible?
The deductible is a portion of your claims that you pay before your insurance coverage kicks in. As an example, if you have a $1,000 deductible and file a claim for $5,000 worth of services over a year, then you would need to spend $1,000 yourself first before receiving any reimbursement from your insurance company. Usually, plans with high deductibles tend to be cheaper than those with low deductibles; however, do not underestimate what it might cost you out-of-pocket each month if something happens and you need medical care quickly.

9) Does it Include You, Too? Or Just Them?
Just like in every other aspect of life, with disability insurance it’s important to remember that you and your spouse are two halves of a whole. If one person is earning more, or has more assets, they should purchase disability insurance separately from their partner. The same goes if one partner is more likely to become disabled than another—just because they earn less doesn’t mean they shouldn’t have access to disability coverage. It’s better for both people to carry coverage, but if a couple can only afford one policy, then it makes sense for that plan to be owned by the person who stands to gain from it most. (If nothing else, any additional income will help cover expenses without having a secondary income source.)

10) What Are Some of The Other Important Things To Consider When Deciding Which Policy Best Fits Your Family’s Needs ?
There are many different policy options available, so it’s important to consider what is and isn’t covered by each type of plan. The specific needs of your family will vary depending on your situation, but there are some basic needs that should be considered with any insurance policy. Some questions you might ask yourself include: Do I want a short-term or long-term policy? Which coverage amount do I need? What happens if my disability prevents me from working in my current occupation? What kind of flexibility do I want with my premiums? Can I afford higher monthly payments, or would a lump sum payment be better suited to my budget? How much do any deductibles affect my overall costs? Are there other benefits I want—like permanent life insurance protection?

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