On behalf of DeBofsky Sherman Casciari Reynolds P.C. on Wednesday, October 2, 2019.

Obtaining disability insurance is tricky. If you are purchasing coverage to supplement employer-supplied insurance or seeking insurance because you have no other coverage, there are a lot of variables to consider.

It’s a sad fact, but many Americans give little thought to disability insurance coverage until it is needed. Understanding the following information will strengthen your knowledge of disability insurance and chances of being approved.

U.S. disability stats

  • 37 million: The number of people in the U.S. with a disability; nearly 12% of the population
  • 90% of disabilities are caused by an illness, not an accident.
  • The average length of a long-term disability claim is 34.6 months
  • Disability and other medical issues are the major factor in 62% or personal bankruptcy claims
  • One in eight workers will be disabled for five years or more during their career

How much disability coverage should you carry?

Because every situation is different, you should base the amount of coverage you need on your current monthly expenses and on your current income.  No insurance company will write a policy that would replace 100% of your income or there would be less incentive to return to work.  Most coverage averages about 60% of your current income.

Do disability policies differ?

Yes, they certainly do. Policy variables include benefit amount, coverage length, waiting periods, limitations such as the amount of time you can receive benefits for a behavioral health condition, and whether benefits are taxable.

All disability policies contain pre-existing condition exclusions, though, and also have underwriting requirements.  If you have been diagnosed or treated for an illness or injury prior to purchasing the coverage, you may be ineligible for the insurance coverage.

What is the elimination period?

The elimination period is the amount of time from when you become disabled to when you begin receiving benefits and can last from as little as 30 days to up to one years.

How long should I be paying for disability coverage?

It varies, but you should continue paying premiums until at least 62.

How long will benefits last?

That depends. Many policies stop paying benefits at age 65 or Social Security Normal Retirement Age. Other policies, however, have limited payment periods such as two years or five years.

What is a future increase option?

This is a rider that may be available to you that would allow you to increase your benefits without having to provide proof of good health or increased income.

What is a cost of living adjustment?

This is another rider worth strongly considering if it is available to you. Instead of only receiving a disability benefit that is fixed when you become disabled, this rider increases your benefit each year based on inflation. This helps you to keep up with your monthly expenses as the price of goods and services rise each fiscal year.

After all that explanation, you may have had enough, but there are more factors to learn to gain a full and balanced understanding of disability policies. If it becomes overwhelming, or if you are denied benefits or feel you were mistreated, it would be wise to allow an attorney who is experienced in disability insurance to fight on your behalf.

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