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Disability Insurance

Disability Insurance. Elements of a Policy. How much?. How much does a disability policy pay? 40% -60% of salary at the time you became disabled Comprehensive policies can add cost of living adjustments. How soon?. Once you become disabled how soon will benefits start?

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Disability Insurance

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  1. Disability Insurance Elements of a Policy

  2. How much? • How much does a disability policy pay? • 40% -60% of salary at the time you became disabled • Comprehensive policies can add cost of living adjustments

  3. How soon? • Once you become disabled how soon will benefits start? • Choice of 30, 60, 90, or 120 days • Shorter the time to wait on payments, higher the premiums • Time from disability to payment is called elimination period • To determine appropriate elimination period, decide what other funds may be available

  4. How long? • How long will disability payments continue? • Policy may cover a specific number of years • 3 to 5 • Coverage to age 65 for additional cost • Most individuals retire at 65, no longer dependent on working income

  5. Defining Disability • Policy definition of “disability” important • Total disability – inability to perform the duties of one’s occupation • Total temporary disability – current disability is total, but you should recover at some point in the future • Total permanent disability – disability is total and permanent, and you will receive payments for the total period

  6. Defining Disability • Partial Disability • Disability that prevents you from performing one or more of the activities required by your job • May or may not be eligible for benefits depending on the policy • Could be classified as either temporarily partially disabled or permanently partially disabled

  7. Defining Disability • Residual Disability • Same as partial disability • Must suffer at least a 20% loss in income • May or may not be covered under a policy

  8. Defining Disability • Presumptive disability • Specific definition of total disability • Results from • Loss of sight • Loss of speech • Loss of hearing • Loss of use of two or more limbs • Under this designation you are “presumed” to be totally permanently disabled • May qualify for disability retirement

  9. Disability Insurance Summary • In considering a disability insurance policy you must consider • How much? • How soon? • How long? • The policy’s definition of disability

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