Many of us are aware of the need for disability insurance. This means we can understand both its importance and what it is intended for. It is easy to understand that disability insurance exists in case something were to happen to us. It is essentially a safeguard for our paychecks. <\/p>\n\n\n\n

Even so, many of us may be left wondering. How does disability insurance actually work? Who will pay me? What type of injury or disability must occur? Does it expire and how long before I receive any payment? <\/p>\n\n\n\n

These are all valid questions. As just like with any other form of insurance, understanding all the ins and outs can take some time and research. Additionally, there is more than one type of disability insurance to consider. <\/p>\n\n\n\n

Is There More Than One Option? <\/strong><\/h2>\n\n\n\n

Similar to the option of choosing between multiple types of homeowners and automobile insurers, there are many options available when shopping for disability insurance. As there are several types of disability insurance factors to consider. <\/p>\n\n\n\n

You will want to examine and understand each of the different kinds of disability insurance options available to you. Although the options can seem extensive, it can be fairly easy to understand each. <\/p>\n\n\n\n

We will walk you through how all disability insurance works, the different types of disability insurances and how you can obtain disability insurance. Helping you make an informed decision about your coverage options, is what we do best. <\/p>\n\n\n\n

So How Does Disability Insurance Work? <\/strong><\/h2>\n\n\n\n

Disability insurance is an agreement made between two parties.The insurer and the policyholder. As a policyholder you agree to pay a monthly premium in exchange for coverage.This coverage exists to protect you and essentially pay you a supplement of your income. This coverage would kick in the event that you become unable to work due to a disability. <\/p>\n\n\n\n

It is designed to replace a percentage of your income when you are unable to work. This coverage can provide the extra financial help you may need to continue to pay your bills, put food on the table and cover any other expenses. <\/p>\n\n\n\n

Each individual policy crafted by the insurance companies, will typically spell out the following items:<\/p>\n\n\n\n

\u25cf How much you will pay. <\/strong><\/p>\n\n\n\n

\u25cf Factors used to defines disability <\/strong><\/p>\n\n\n\n

\u25cf How much your benefits will pay you <\/strong><\/p>\n\n\n\n

\u25cf Duration of benefits <\/strong><\/p>\n\n\n\n

What does it cover? <\/strong><\/h2>\n\n\n\n

Disability insurance will cover more than just freak accidents and rare birth defects. It is there to help all those who cannot work due to a disability. This extends to even common issues which can render you unable to work. <\/p>\n\n\n\n

Some of the common mental and physical illnesses which can prevent you from working include: <\/p>\n\n\n\n

\u25cf Arthritis <\/p>\n\n\n\n

\u25cf Back Pain <\/p>\n\n\n\n

\u25cf Cancer <\/p>\n\n\n\n

\u25cf Depression <\/p>\n\n\n\n

\u25cf Diabetes <\/p>\n\n\n\n

\u25cf Heart Disease <\/p>\n\n\n\n

\u25cf Stroke <\/p>\n\n\n\n

In fact, according to the Council for Disability Awareness in 2018 (resource #1), 90% of long term disability claims come from individuals that are suffering from a medical illness. This means that disability insurance is something you may want to consider if you are currently suffering from any of the previous conditions. <\/p>\n\n\n\n

Defining Disability <\/h2>\n\n\n\n

Defining disability is not always that simple. It is not a one size fits all product. Each insurance company may define disability using varying terms. This is why it is important to shop carriers before quickly jumping on a plan. <\/p>\n\n\n\n

Different Types of Disability Insurance? <\/h2>\n\n\n\n

There are five types of Disability Insurance which you will want to consider before making a final decision. The key is to familiarize yourself with each of the five in order to understand which is best suited for you. <\/p>\n\n\n\n

Long Term Disability Insurances<\/h2>\n\n\n\n

Long term disability insurance is designed to protect those affected by a disability for a longer period of time. This is for individuals who are unable to return to work quickly proceeding their disability. The reasons they are unable to return to work may vary. <\/p>\n\n\n\n

For some, a quick return could pose a risk for further injury. Others could be at risk for making their current injury significantly worse, if returning to work. <\/p>\n\n\n\n

When do long term benefits end? <\/strong><\/h4>\n\n\n\n

The benefits you obtain from Long Term Disability Insurance ends as soon as you recover from the injury up to a max period. For example, you could be covered for up to five years. This amount of time may vary drastically by insurer or plan.You can also set your benefits period to withstand a certain number of years or until you hit a specific age. <\/p>\n\n\n\n

While you are receiving benefits, Long Term Disability Insurance will pay you anywhere between sixty to eighty percent of your normal income. If you have to take a lower paying job while you are receiving benefits from this plan, some companies will pay the difference from your previous job. <\/p>\n\n\n\n

Short Term Disability Insurance <\/strong><\/h2>\n\n\n\n

Unlike Long Term Disability, Short Term Disability Insurance is for people that are experiencing temporary injuries or ailments. Typically, this is the type of ailment that takes at most six months to recover from. <\/p>\n\n\n\n

Some financial experts would argue that Short Term Disability is not worth the money. Due to the fact that the premiums do not pay as much as some other options. You can expect anywhere between forty to sixty percent of your income when you go on Short Term Disability; that is twenty percent less than Long Term Disability. <\/p>\n\n\n\n

When can I collect my short term benefits? <\/strong><\/h4>\n\n\n\n

In most cases, you cannot start collecting Short Term Disability until at least fourteen days after you have obtained your injury. <\/p>\n\n\n\n

Because of how costly Short Term Disability can be, most financial experts recommend that you only obtain this service if you are going in on a Group Disability Plan. If you are not going in on a Group Disability Plan, it is better to start an emergency fund that you can fall back on. <\/p>\n\n\n\n

Social Security Disability Insurance<\/h2>\n\n\n\n

This type of insurance is a government program that is administered by the Social Security Administration. It is the most difficult type of insurance to qualify for because they will require you to have done the following: <\/p>\n\n\n\n

\u25cf You must have worked in jobs covered by Social Security <\/p>\n\n\n\n

\u25cf You must have worked long and recent enough under Social Security<\/p>\n\n\n\n

\u25cf Must meet Social Security’s definition of disabled <\/p>\n\n\n\n

Your condition must prevent you from doing any of the following: <\/strong><\/h4>\n\n\n\n

\u25cf Lifting <\/p>\n\n\n\n

\u25cf Standing <\/p>\n\n\n\n

\u25cf Walking <\/p>\n\n\n\n

\u25cf Sitting <\/p>\n\n\n\n

\u25cf Remembering <\/p>\n\n\n\n

How to qualify for SSDI <\/strong><\/h4>\n\n\n\n

On top of those conditions, the Social Security Administration does not consider you to be disabled if you are earning at least $1,220 a month. Additionally, if you can adequately perform any type of job, you will not be considered disabled. This can also include jobs not in your field. If this is the case, it is often recommended that you find another job you can perform even with your injury. <\/p>\n\n\n\n

When determining if you are injured or not, the Social Security Administration will examine the following: <\/p>\n\n\n\n

\u25cf Your Medical Condition <\/p>\n\n\n\n

\u25cf Age <\/p>\n\n\n\n

\u25cf Education <\/p>\n\n\n\n

\u25cf Past Work Experience <\/p>\n\n\n\n

\u25cf Transferable Skills <\/p>\n\n\n\n

State Disability Insurance <\/strong><\/h2>\n\n\n\n

<\/figure><\/div>\n\n\n\n

State disability insurance or (SDI) offers disability insurance paid for by the state. Unfortunately, only five states currently offer this type of insurance. They are:\u00a0<\/p>\n\n\n\n

\u25cf California <\/p>\n\n\n\n

\u25cf Hawaii <\/p>\n\n\n\n

\u25cf New Jersey <\/p>\n\n\n\n

\u25cf New York <\/p>\n\n\n\n

\u25cf Rhode Island <\/p>\n\n\n\n

In order to receive any benefits from your State Disability Insurance, you will need to prove that: <\/p>\n\n\n\n

\u25cf You are incapable of performing your job <\/p>\n\n\n\n

\u25cf You are under the care of a health professional <\/p>\n\n\n\n

\u25cf Have previously contributed to State Disability by having a wage taken from your paycheck <\/p>\n\n\n\n

How much will the state cover? <\/strong><\/h4>\n\n\n\n

The qualifying conditions for SDI will vary by each state. The amount of compensation you receive, the number of days you can collect benefits and how long you have to start collecting is different in all six areas. If you live in one of these locations, you should take the time to review your State Disability Insurance programs. While it can be difficult to qualify for these programs, it never hurts to review all options. <\/p>\n\n\n\n

Worker Compensation Insurance <\/strong><\/h2>\n\n\n\n

Most people refer to this as Accident Insurance, because it is paid for by an employer. This means that it only qualifies if you get into an accident at work. Because your time is being purchased by your employer, they are responsible for your well being while you are on the job. Worker Compensation Insurance covers the following items: <\/p>\n\n\n\n

\u25cf Medical bills or rehabilitation costs in relation to the injury that occurred on the job \u25cf Partial lost wages <\/p>\n\n\n\n

If you have a generous employer, they may also purchase Death Benefits with your Worker Compensation Insurance plan. But this is not a required expenditure by employers and therefore can be hard to come by. <\/p>\n\n\n\n

Workers comp incidents must be immediately reported in order to qualify. Meaning if you are on the job when you become injured, you must be sure you report it to your employer as soon as possible. Medical bills are already tough to cover as is; and workers comp could help lessen the costs in some situations. <\/p>\n\n\n\n

How can you acquire Disability Insurance? <\/strong><\/h4>\n\n\n\n

There are two ways you can obtain Disability Insurance \u2013 as an Individual or in a Group. Both options have their pros and cons. <\/p>\n\n\n\n

Individual Coverage<\/h2>\n\n\n\n

As an individual, you can work with a licensed independent insurance agent or directly with an insurance company. From here you can obtain a quote for disability insurance options. <\/p>\n\n\n\n

With individual coverage as long as you are paying your premiums, you will have coverage as outlined in your contract. This coverage will follow you even if you change your occupation or place of employment. Even then the terms of your Disability Insurance will not change. <\/p>\n\n\n\n

The only time the terms of the contract will change is if you decide to make any alterations to the original document. Whether you decide to take something off or put something on, you will need to sign a new contract. <\/p>\n\n\n\n

How to obtain individual coverage <\/strong><\/h4>\n\n\n\n

When you do start the process of obtaining Individual Coverage, you will need to go through the Underwriting Process. During this process, a Licensed Independent Insurance Agent or Insurance Company will perform a deep dive into the following items: <\/p>\n\n\n\n

\u25cf Age <\/strong><\/p>\n\n\n\n

The older you are, the more likely you are to get injured and will need to stay out of work for any amount of time. <\/p>\n\n\n\n

\u25cf Gender <\/strong><\/p>\n\n\n\n

A woman can pay up to forty percent more than a man with the same bill of health. Statistically, women do file more claims than men. <\/p>\n\n\n\n

\u25cf Health History <\/strong><\/p>\n\n\n\n

What do insurers want to know <\/strong><\/h4>\n\n\n\n

They will require you to take a health assessment so they can determine how likely you are to get sick. The Insurance Companies will want to know: <\/p>\n\n\n\n

\u25cf Your current or past history with tobacco <\/p>\n\n\n\n

\u25cf If you have any Chronic conditions <\/p>\n\n\n\n

\u25cf Your Family’s Medical History <\/p>\n\n\n\n

\u25cf Your Height and Weight <\/p>\n\n\n\n

\u25cf The results of a Blood or Urine test <\/p>\n\n\n\n

Other factors determining your premium<\/strong><\/h4>\n\n\n\n

Any odd determinant in these factors could increase or decrease your premium. Oftentimes they may cause your premium to rise due to assumed risk. Meaning that based on your information, insurers may conclude that you are likely to use the insurance you are purchasing. <\/p>\n\n\n\n

Other factors determining your premium include : <\/h2>\n\n\n\n

\u25cf Current Occupation <\/strong><\/p>\n\n\n\n

Some jobs are much more susceptible to injury or illness than others. Additionally some occupations may take a longer recovery period before resuming work. For example, someone who works in an office may be more capable of returning to work in a wheelchair following an injury. Whereas a Plumber or a Construction Worker may be unable perform their job in a similar condition.For those with multiple jobs insurers, will look at the occupation that poses the greatest risk. <\/p>\n\n\n\n

\u25cf Annual Income <\/strong><\/p>\n\n\n\n

All Disability Insurances will pay based off of a percentage of your income. So if you make more than the average policyholder, they will be cognisant of the possible higher payout should you become ill. <\/p>\n\n\n\n

\u25cf Location <\/strong><\/p>\n\n\n\n

If you live or work in a high reported crime area, insurers may also consider you to be a high risk candidate. Additionally the cost of Living and the Regulations of your residence may also be examined. <\/p>\n\n\n\n

Group Disability Insurance <\/h2>\n\n\n\n

Group disability insurance is typically obtained through your employer. It can also be obtained through an association with a group like the SAG\/AFTRA guild. These policies can usually offer more favorable rates as well. <\/p>\n\n\n\n

The way it works is, a group (your employer) obtains a contract for a large group of people instead of one. This splits the risk pool amongst more than one individual which is actually favorable. A good comparison to make is the effects of a large pebble when thrown into a small puddle versus when thrown into a large lake. The damage done from the pebble into the small puddle is far greater than when thrown in the lake. <\/p>\n\n\n\n

Who pays for group disability insurance? <\/strong><\/h4>\n\n\n\n

The employer or group you have obtained a group disability insurance plan from may often pay some or all of your premium costs. Additionally with a group plan you will not have to go through<\/p>\n\n\n\n

the Underwriting process. This means that all who apply for coverage will be automatically enrolled. <\/p>\n\n\n\n

Unfortunately, your continued enrollment on this plan is contingent on your employment or membership status to the group or employee associated with the plan. This means that if your employee or group decides to change or cancel the Group Disability Insurance plan, you will no longer have insurance yourself. <\/p>\n\n\n\n

So to quickly break down the pros and cons of the two ways you can acquire Disability Insurance \u2013 as an individual, you are always guaranteed to have your insurance for as long as you want but you will need to go through the Underwriting process and it might cost more money. Going in on a Group Disability Insurance plan allows you to skip the Underwriting process and obtain a cheaper plan, but that plan is contingent on your status with the group or employer. <\/p>\n\n\n\n

Start shopping <\/em><\/strong><\/h3>\n\n\n\n

Now that you know how Disability Insurance really works, you are ready to start shopping around for a plan that works best for you. Remember to look into the five types of Disability Insurances, and to keep your mind open to all Individual and Group plans that are available to you. Do you have any additional questions in regards to anything mentioned above? If so, please leave a comment. <\/p>\n\n\n\n

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