Why Healthy People Should Consider Individual Disability Insurance
Individual Disability Insurance
When you are healthy, purchasing disability insurance can seem counter-intuitive. Purchasing disability insurance protects your most precious financial asset: your ability to earn a living, says Frank N. Darras, the nation's leading disability and long-term care insurance lawyer.
"Since disability insurance can be expensive, you want to make sure you buy the right type of policy, and keep an eye out for tricky language that could spell disaster, should the worst happen," says Darras.
-- Decide how much individual coverage you need. Do you buy the maximum benefit or can you live on less?
-- How long can you go without benefits? To save money on premiums, choose a longer waiting period. Expect to pay a substantial premium for benefits that kick in within 30 days.
-- Obtain the longest benefit period possible -- at least until you reach age 65. Considering a five-year benefit cap to cut premiums is risky, since your disability might last much longer.
-- Look for "own-occupation" coverage. This pays benefits if a disability leaves you unable to perform your job, even if you can still work in another occupation.
-- Look closely at the fine print on exclusions and restrictions, particularly if the premium seems too good to be true. Many policies contain a fraud provision that allows the carrier to rescind your policy at the time of claim if they find a false statement on your application, so be truthful.
-- Look for non-cancellable, guaranteed renewable coverage. This means your insurance company can't cancel your policy, increase your premiums, or change the contract language, as long as you pay premiums on time.
-- If you are young and expect to earn a lot, paying extra for COLA (cost-of-living adjustment) is money well spent. It should keep you ahead of inflation for the next 25 years if you become disabled. Consider future increase options, which allow you to increase coverage as you earn more money, regardless of your health.
Finally, 1 in 5 Americans become disabled for a year or more; 1/2 the bankruptcies files in 2006 were due to overwhelming medical bills from unforeseen accident or sickness. Protect yourself now, with an individual disability insurance that pays a tax-free benefit; should sickness or accident prevent you from working.