Some day, you may not be able to work owing an accident or illness that prevents a normal life thus you should really think of disability insurance as the right thing to have. A scenario where a person, who brings money into the house, cannot work is one that is played out by thousands every day. A person who is not able to work can recoup without the stress of financial obligations to worry about. Statistics show that someone is more likely to have an extended break period from work, owing to accident or injury, and need disability cover, than they are to die before they reach 65 years old. The strange fact is that even though the risk of death is lower than disability, more individuals organised life insurance policies than disability coverage.
For instance for a forty year old there is a bigger chance of a disability that requires at least ninety days from work, than there is of dying before the age of sixty five. The problem is disability insurance costs more than basic life cover as it is more expensive to provide. The main reason these policies cost so much to administer is the possible loss to the provider when substituting the income of the claimant for a extended period. There are a few ways of reducing the costs with the main one being selecting a longer period of time or waiting period before the plan starts to pay,The provider would be less at risk if was only a short term incapacity.
The other option to this would be to reduce the period of payments for incapacity. This can be a risky move if the period of incapacity is longer than the period arranged for payment. Irrespective of what plan you decide upon, most providers will only pay a percentage of your salary. There are two insurance policy options available, the first is short term disability insurance which only covers the claimant for a few months of incapacity. Regardless of the type of policy you have, payments for disability are made regularly, every week or month until the end of the incapacitate or the insurance policy, whichever come first.
There are many issues to consider when exploring health plans which may impact the premiums and they include, in no particular order:
Any previous medical problems Monthly benefit payment is taxable or tax free How long the payments are made Are you employed in a high risk occupation? Remember that every disability policy is different and they will not all furnish exactly the same benefits, including how much they will pay as a percentage of your income. With some providers giving 70 percent of the original salary, you will have to watch out for those who will only furnish you with a very low 40 percent which could cause financial hardship. More than any other factor, it is this one that you need to be sure of as once you have taken out the plan and found it necessary to make a claim, it will be too late for you to change it.