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Determining the Amount of Adequate Disability Insurance

Posted on: Tuesday, March 16th, 2010

Just as we go through the steps to ensure that we have adequate life insurance coverage should something happen to us, so must we go through similar steps to ensure that we have enough disability insurance coverage should we become injured or ill. While many companies offer disability insurance plans to their employees, they are often far from substantial in providing adequate coverage. Therefore, it is often necessary to purchase additional individual disability insurance to protect the policyholder’s family in the event of the unexpected.

Essentially, if the policyholder is injured or becomes ill and is no longer able to return to work, the disability income insurance they have purchased will take the place of missed wages. The most significant part of purchasing a policy, therefore, is determining how much disability insurance is enough to sustain a family – either temporarily or until the age of retirement – if a paycheck is suddenly gone.

Therefore, potential policyholders should consider:

* The amount they pay out on a monthly basis in terms of mortgage payments, utilities, food, fuel, debt, and any other household expenses. This is an absolutely critical part of the process of applying for disability insurance. Consumers must be relentless in determining their monthly expenses, leaving no stone unturned, and being honest about what they spend. Putting everything out on the table will allow them to make more educated decisions.

* Their age of retirement. The average age of retirement is sixty-five but this certainly doesn’t hold true for everyone. Long term disability insurance policies are generally meant to cover policyholders up until the age of their retirement when retirement investments, savings, and pensions take over. Knowing the reality of their situation makes for better planning.

* Their budget. While we would all certainly love to have all the insurance we want, sometimes it’s unaffordable. Working with a reputable disability insurance agent will allow applicants to balance their insurance needs with their financial guidelines.

The Pros and Cons of Company Provided Disability Insurance Plans

Posted on: Tuesday, March 9th, 2010

When most people think of disability insurance they think of the disability plans that they are offered through their jobs. While this type of disability insurance is certainly beneficial in that it provides at least some semblance of protection should the employee become ill or injured, these disability insurance plans often have significant shortcomings that policyholders should examine closely. Such is the reason that so many people – even with company disability insurance plans in place – choose to protect themselves in a more comprehensive manner through individual disability insurance.

With company disability insurance plans employees are afforded the benefit of affordability. In some cases, employees are even given a small amount of disability income insurance at no charge. The problem is that the company may only offer disability insurance plans wherein the definition of disability is vague and will often only provide coverage if the policyholder is unable to complete any occupation following their illness or injury.

The reason that many people seek out individual disability insurance is because they can write the policy so that it makes sense for their own personal situation. Individual disability income insurance policies are offered through a variety of programs that will suit the policyholder in terms of providing coverage for longer periods of time and with broader definitions of disability. There are even those disability insurance policies that will continue to cover the policyholder if they are unable to continue their regular job due to illness or injury but are able to earn a wage doing another kind of job in another industry.

Disability insurance is meant to protect families in the case of a loss of wages due to injury or illness. But without examining the details of the disability insurance policy policyholders are left vulnerable to possible stipulations that will affect the policy payment, the length of time they are covered, and the conditions under which they are covered.

Disability Income Insurance Protects a Home

Posted on: Monday, February 1st, 2010

For most of us, our homes are the biggest financial investment that we will ever make; an investment that we need to protect as best we can. Throughout our lifetime there are a myriad of things that can happen that can endanger our ability to pay our mortgage, and before we know it we could be in a position where we are facing a foreclosure. When we consider the fact that most of us would be in serious financial trouble if anyone in our household were to lose their salary, then it becomes clear very quickly just how important it is to make allowances for those circumstances that we may not be able to anticipate.

Disability income insurance is a protective feature chosen by many people who want to protect their earnings should they experience an illness or injury and not be able to return to their current job. A loss of salary could be financially devastating for a family, and so policyholders put disability insurance into place so that they are not financial vulnerable if their physical (or in some cases, mental) condition causes them to have to leave work either temporarily or permanently.

Clearly the benefits of disability income insurance are numerous and most policyholders understand that by enacting a disability insurance policy they are protecting their family’s ability to continue to live their life comfortably. But beyond the ability to pay utilities, buy food, and pay for the day to day expenses that come with living a life, disability insurance allows policyholders to protect their financial investments. This protection is extended to everything from savings accounts and 401k investments to college savings and IRA accounts – anything that we would have to quickly access and ultimately deplete if we found ourselves without a salary for an extended period of time. But beyond that, disability insurance protects our largest financial investment – our home – from vulnerability.

Things to Consider When Looking for Disability Income Insurance, Part I

Posted on: Monday, January 18th, 2010

Applying for insurance of any kind requires research on the part of the applicant, in order for them to make the most informed decision possible. After all, not every insurance policy is the same as the next; when choosing between policies – especially those that pertain to our health, such as with health insurance and disability insurance – we need to make sure that we are comparing apples with apples. While one policy may have higher premiums, such premiums may afford us more comprehensive coverage in specific areas, so we need to know exactly what we are comparing.

With disability income insurance, there are specific things that potential policyholders should consider when comparing and contrasting policies including:

* The reputation and experience of the disability insurance company with which we are considering working. Any insurance agency that a consumer considers should have a healthy – and longstanding – reputation in the industry, as well as strong financial backing.

* The way in which the company defines a disability in its policies. Your idea of a disability may be a stark contrast to what is defined as a disability through a particular carrier. Be sure you know the particulars of what will qualify you to receive your disability insurance benefits.

* Whether the company requires a medical exam in order to be qualified for coverage; and whether ongoing medical examinations are required in order to maintain or renew the policy.

* The amount of coverage that you can afford in terms of premium payments today. In other words, how much coverage does your disability insurance premium payments afford you in terms of benefits?

* The wait time for benefits to being released. There are different wait times associated with different types of policies following the validation of a disability; be sure you know what you are facing under these circumstances.

Choosing a Benefit Amount for Your Disability Insurance Policy

Posted on: Tuesday, January 12th, 2010

Insurance policies share a common purpose in that they are designed to protect policyholders against the unexpected. Health insurance policies protect us in the face of illness or injury that requires medical attention, car insurance policies protect us in the event of an accident, and life insurance protects our families in the event of our death. Certainly the challenging part for any potential policyholder – of any insurance – is determining how much insurance they need; no one wants to be over insured and struggle to pay premiums, nor do they want to be under insured and left vulnerable in the case of something happening.

Disability insurance is similar to other insurance policies in that it is meant to protect policyholders against the unexpected; in the case of disability insurance the unexpected can be an illness or injury that prevents the policyholder from returning to their job and earning a salary. In such a case, the disability insurance policy would become activated and the policyholder would begin to receive their benefits to make up for their lost wages.

The price of a disability income insurance policy obviously differs from policyholder to policyholder depending on the benefit amount chosen, the length of the policy, and the time period that the policyholder is willing to wait between the time they are deemed disabled and the time that they begin to receive their benefits. Traditionally the longer the wait time the lower the premiums that the policyholder will pay for the disability insurance policy.

Choosing a benefit amount, however, is by far the most critical portion of applying for a disability insurance policy. In order to choose the most appropriate amount, a policyholder must take into account every last expense for which they are responsible including house and car payments, debt, utilities, food, fuel, and so forth. To this end it may be helpful for potential policyholders to put together a comprehensive spreadsheet where they track their expenses for a few months before applying for their disability insurance policy.

Turning Our Back on Disability Insurance, Part II

Posted on: Monday, January 4th, 2010

In the last post I related my family’s experience when I suffered a terrible car accident and was out of work for an extended period of time. My husband and I, even with two small children, had been convinced that disability income insurance was a waste of money and that we were better off putting those policy premiums toward something else.

In the wake of my accident I had enormous physical and emotional trauma to deal with; our finances were, quite honestly, the last thing on my mind and I know my husband did his best to hide a lot of what was going on from me so that I could just concentrate on getting better. But before long it became absolutely necessary that we turn our attention to our finances as we were beginning to receive notices from bill collectors and were even starting to get preliminary foreclosure notices on our home.

With no disability insurance we had been vulnerable to my loss of a paycheck and now instead of being able to focus on the task at hand – getting better and still parenting our children, even with limited physical abilities – I was worried about having our home taken away from us in the midst of this already stressful time.

We got enormously lucky. Our family came together and helped pay the back mortgage payments as well as the other outstanding bills that had come due while I had been out of work. And just a few short months later I was back to work and earning my paycheck again. I am still undergoing physical rehabilitation but I am getting stronger everyday and we are working our way back to being financially stable. Now, just as we pay our life insurance premiums, we are paying premiums on our new disability income insurance policy that we have taken out for both me and my husband so that we may never again face that kind of vulnerability.

Disability Income Insurance with Children, Part II

Posted on: Monday, November 9th, 2009

In the last post we discussed the failure of many households to purchase disability insurance – an insurance that is just as important in many ways as life insurance.Disability income insurance will financially protect a household should the policyholder become sick or injured and not be able to earn their salary.

Let us first consider the average American household with children. In many cases – as is the way of the world today – this household is reliant upon two incomes to keep up with expenses. In fact, very few households have extra money at the end of the month to put into savings plans or use towards discretionary purchases. This means that should the household lose one income due to a disability they are vulnerable to a host of financial disasters.

Of course, most of us have vacation time and sick time that we are able to call upon from our employment. But what if the disability is such that we are not able to return to work for many, many months – or not at all? Where does this leave our household in terms of mortgage payments, utilities, debt, and the day to day expenditures associated with running a modern household?

This is the situation that many young families with children find themselves in when there is no disability insurance. They may find themselves facing foreclosure, bankruptcy, and severe financial stress on top of an already physically and emotionally stressful time.

With disability insurance in place, however, we are able to protect our families from financial disaster. Should we become disabled, our disability insurance will begin paying out so we are able to meet our financial obligations head on and make other arrangements concerning long term plans. This is absolutely priceless protection for those who have children as they do not have to face moving homes, changing schools, and the other repercussions of losing an income during an already difficult time.

Disability Income Insurance with Children, Part I

Posted on: Wednesday, November 4th, 2009

There are certain things that we, as parents, do when we have children. After all, our lives have changed considerably and now we are responsible for lives other than our own. We may move our residence to somewhere safer or to an area that has better schools; we research those activities and day care situations in which we may enroll our kids and look at them from all angles to ensure that they are appropriate for our kids and will ultimately meet their needs, and we set about making financial choices that will protect our children in a variety of circumstances – including savings accounts, college funds, and life insurance.

Life insurance is especially important, we consider, because this will financially cover our kids should we die while they are still dependent upon us. We carefully choose guardians for our children and make sure that the life insurance money is guarded and carefully administered by a trusted executor. But we seldom – unfortunately – give the same thought to what would happen to our children if we were still here but unable to provide for them financially; a predicament that many families find themselves in when they are without disability insurance.

Disability income insurance is provided to protect its policyholders in the event of an accident or injury that leaves them disabled and unable to return to work for a particular period of time (that period which is defined by the policy). Households that are dependent upon their incomes – and less face it, who isn’t – must look to protect their interests if they were to lose one or multiple incomes. Disability income insurance accounts for this loss and pays out to the policyholder the money that will keep their household afloat during this difficult time.

In the next post, we’ll delver further into how disability insurance can protect families with children.

Disability Insurance After a Car Accident, Part 2

Posted on: Wednesday, October 28th, 2009

In the last post we started talking about the importance of having disability insurance as protection and peace of mind so that a car accident will not financially devastate your life.

Consider Lynn, a single mother of three who was the sole breadwinner in her household. Not only was Lynn working a full time job but she was paying for child care in order to be able to work the hours she needed to work. Like most American families every paycheck was stretched to its limits in an effort to keep up with the bills associated with everyday life. There were no extras and Lynn and her family walked a very fine line of barely making it; something that is all too common these days.

On an average day, with no hint of bad weather or anything out of the ordinary, Lynn was struck by an out-of-control driver and her car flipped while she was going 50 mph on her way to work. Her car was totaled but even worse was the fact that Lynn sustained life-threatening injuries in this accident and received treatment in the hospital – including rehabilitation – for nearly two months.

Following her return home, however, life was very different, as she was unable to walk on her own and had to be assisted in basic functions. Lynn was not only unable to return to work in the short term but she needed help to meet the needs of her family on a day to day basis. If she did not have the disability insurance policy she had purchased just a few short months before her accident her family would have been financially unable to recover from this event.

But because of the disability income insurance that she had Lynn was able to continue meeting her financial obligations so that she could concentrate on her recovery.

Disability Insurance After a Car Accident, Part 1

Posted on: Monday, October 26th, 2009

Car accidents are certainly not expected events. We may head out in the morning as usual and everything will be going along smoothly until a mistake on the road – or something completely out of anyone’s control – causes a series of events could very well alter someone’s life.

Certainly no one anticipates such an event but as responsible people we prepare for the possibility of something like this happening – so that we are financially and physically protected. Car insurance is something that is required but law but it is also something that insulates us and our families from the financial ramifications of a vehicular accident, regardless of who is to blame.

But far too few of us take the next steps in protecting our families from the possibilities of long term consequences of a car accident. The fact of the matter is that over one-hundred people are killed each and every day on U.S. roadways; our busy lives and crowded highways have exacerbated an already significant problem.

The best that we can do in order to avoid injury or death in a vehicular accident of our own is to take control of our own driving and be on the defensive as much as possible against other drivers who could cause us harm. Observing the rules of the road is important in order to protect our own safety and the safety of other drivers. But there are other steps that we can take in order to protect ourselves financially if we do sustain injuries – including disability insurance.

Disability income insurance is a provision put into place for those who may find themselves out of work due to an illness or injury. Disability insurance plans are available to run the gamut of possibilities including a short term absence from work, a gap policy that covers a waiting period that may be built into company-sponsoreddisability insurance plans, or longer term policies that cover policyholders who are permanently disengaged from their jobs because of a sustained illness or injury.