Health

The health of a person seeking disability coverage, including the existence of certain pre-existing conditions, will affect not only the cost, but also the extent and type, of coverage available. Insurance companies do not want to insure individuals they assume will need to collect benefits due to significant health concerns, and certain ones will automatically exclude a person from receiving any type of disability insurance. Others, such as spinal disorders, heart conditions, asthma, etc., will result in higher premiums, and could also include a narrower definition of disability, which would complicate qualifying for benefits.

Elimination Period

The elimination period is the amount of time that must pass before an insured is eligible to apply for benefits. The length of time this lasts correlates with the cost of the coverage, and the shorter the period, the higher the premium. The standard waiting period is 90 days, but can extend up to 720, depending on the option selected by the insured.

Definition of Disability

A person’s occupation and the definition of disability applicable to the policy both play into how much coverage will cost, and how easily approval for benefits, in the event of disability, may be obtained. Someone who works in a highly physical occupation, or one which requires specialized and/or delicate use of hands, for example, will face higher premiums. Most importantly, though, is the definition of disability employed by the insurance company, which falls into one of two types: own occupation and any occupation. Own occupation, the better option of the two, grants disability benefits if an insured is unable perform his/her job due to a debilitating condition. Any occupation requires the insured be unable to perform any type of work for which he/she has the skills and qualifications to meet, a standard that is more difficult to satisfy, and is more likely to be disputed if benefits are sought. Further, many policies start with an own occupation disability definition that later converts to any occupation after the first few years of coverage.

Benefit Period

Another important factor is how long benefits will be paid, known as the benefit period, which for long-term disability can extend to retirement age. The younger the insured is, the more important this term must meet his/her financial needs in the event of an early onset of disability.

Other Available Benefits

Finally, many policies will require insureds claiming disability to exhaust other sources of benefits, which offset how much the disability policy will be obligated to pay. Social Security Disability Insurance and workers’ compensation are two examples of similar benefits that could reduce how much a person receives each month.

Consult a Disability Insurance Attorney

Disability benefits are an essential financial lifeline when disability makes working impossible. Getting companies to pay these benefits, however, is not always easy, but the experience and dedicated approach of Farrell Disability Law will give you a real chance at obtaining the result you deserve. Contact the Jacksonville law firm for a free consultation.

Resources:

nerdwallet.com/blog/insurance/disability-insurance-explained/

dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/filing-a-claim-for-your-health-or-disability-benefits.pdf

Disability insurance generally comes from three sources: employer-provided group policies, private individual disability policies and the benefits offered by the Social Security Administration. This coverage is intended to cover necessities, but not to replace the need for a person to work. Thus, while everyone should recognize the need to plan for this possibility and protect themselves accordingly, it is equally important to assess how these disability insurance options interact with one another in order to maximize benefit payouts and to determine how much additional income is necessary for financial stability.

Policy Review

The most important thing anyone with disability insurance coverage can do is review the terms of the policy. Clauses related to the percentage of income the insurance company will pay are a crucial provision that impact the level of benefits offered. For example, employer-provided disability insurance will typically pay up to only 60 percent of an employee’s salary, which leaves a significant amount that must be found elsewhere. A private disability policy could supplement this gap. In addition, how the policy defines “income” is also key information to know. Depending on an individual’s pay structure, the exclusion of bonuses or commission could greatly impact how much money an individual receives if he/she becomes disabled and consequently, whether the policy truly provides sufficient coverage. Further, many policies, both employer-provided and individual, place caps on the maximum amount the insurance company will pay each month, which could fall short of the percentage of income the policy is designed to replace. One final consideration for group or individual policies is how long the benefits are paid. Is it measured in months, to age 65, or beyond? Knowing this information is key to long-term financial planning.

Social Security Disability Insurance

The other alternative, Social Security Disability Insurance (SSDI), may seem like the easiest way to replace lost income in the event of a disability because it does not require an individual to pay a separate premium to obtain coverage, but merely to work a certain number of years. However, qualifying for SSDI is extremely difficult and time consuming, and almost always pays much less than any policy offered through an employer or purchased privately. Also, assuming a person does qualify, another important consideration in the overall picture of person’s disability coverage is the fact that receiving SSDI benefits can reduce the amount a person receives from group or individual policies. This adjustment offsets the total amount of money received, and could leave someone receiving less money than expected.

Contact a Disability Insurance Attorney

If you suffer from a disability that affects how much you can work, talk to a disability insurance attorney about your options for receiving benefits through SSDI or a disability insurance policy. Securing regular income during this difficult time is a top priority that deserves the careful and knowledgeable services of a disability insurance attorney. Farrell Disability Law helps clients throughout Florida and South Georgia get the money they need, and can assist you with your disability claims. Contact us for a free consultation.

Resource:

ssa.gov/pubs/EN-05-10029.pdf