Do You Need Disability Insurance?

On average 1 out of every 3 Americans will, at some point in their career, become disabled for at least 90 days. This is a very frighten statistic because most people do not carry appropriate disability insurance. Some companies offer a built-in disability insurance plan but those types of plans often provide minimal coverage. The fact is, if you are disabled for 5 years you may risk losing your home, lose the ability to pay bills and lastly to the ability to provide for your family. The best thing you can do to prevent this is to apply for disability insurance through a private company. Most private disability insurers will pay up to 80% of your salary as opposed to company policies which only offer about 60% of salary.

There are several disability insurance types. You should be familiar with them so you can understand what your company does or does not offer.

Short Term Disability Insurance

Almost all large companies and most small companies offer short term disability insurance. This means that you will still receive a portion of your pay if you have an illness for up to a year. A common reason for needing short term disability insurance is having a baby, which most women take a 3 month maternity leave. Often times the amount of time you will receive will be dependent upon how long you have worked for the company. It should be noted that most companies do put a cap on how much disability salary they will pay. Unfortunately, the cap is often set very low so you may end up making 10% of your normal yearly salary if you are disabled for a year.

Long Term Disability Insurance

Long term disability insurance covers people who are out of work for more than a year. Some companies do not offer this type of insurance because it can be very costly to provide to their employees. If a company does offer a long term disability policy, the most you can make in relation to your regular salary is about 60%. Like short term disability insurance, companies can set a cap on how much they will pay you long term. Since this is the case, it may be beneficial for you to obtain your own insurance policy so you can avoid losing out on such a large amount of pay.

Benefits of Individual Plans

There are many benefits to individual plans because they offer a lot more flexibility and coverage at a more premium price. One of the major benefits of individual plans is the ability to receive disability pay on bonuses above your salary. The majority of company policies do not offer this because it becomes extremely expensive. Also, you can always take out a small individual policy to enhance your current company policy. This way you can get the benefits from having 2 policies as well as saving money by only having a limited individual policy.

Additional Resources:

• Insurance Advice
• Disability Insurance Fraud

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