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Disability Coverage Disability insurance Being disabled is commonly referred to as "living death." An individual who is severely disabled due to accident or illness continues to need financial resources to live, often is consuming additional funds to deal with the disability, and yet is no longer earning income to help pay for these expenses. Insurance to replace some of that income stream is available and is known as disability insurance. This category of insurance is often characterized as the "forgotten risk." Families that have been very prudent to take out auto, homeowners, and life insurance think that they are adequately covered for disability or that there is only a low likelihood of ever needing this type of coverage. The reality is quite different. While some employers provide disability coverage as part of their insurance package, and while it is true that workers' compensation insurance at the state level and Social Security at the federal level will potentially help a family when the breadwinner becomes disabled, each of these solutions may end up far from adequate as you will see. The potential that an accident or illness will result in disability is also much higher than you might think. The odds of becoming disabled are much higher than the odds of dying. In any given year, 12% of the population will suffer a long-term disability. Your chances are one in seven that you will suffer a period of disability lasting a five years or longer before you reach age 65. Almost half (44%) of all workers now 45 or older will be disabled for 3 months or longer before reaching retirement. Families dip into savings to take care of short term disabilities or borrow on credit cards. But these decisions destroy nest eggs for college or retirement and create long term strains on family finances. Many families don't have the reserves or the credit available. In a 2007 NAIC survey, more than half (56%) of adults said they could not meet their expenses if they were out of work for a year. Workers' Compensation If you are employed in the State of California, your employer is required by law to carry Workers' Compensation Insurance. This insurance covers you for job related injuries. There are four issues you need to consider regarding this coverage. 1. Some employers do not follow the law, or fail to keep payments up during hard times. You may not be covered even if you think you are. 2. This insurance requires proof that the injury is job related. The insurance company and your own employer will be allied against you in an attempt to show that the injury or illness was not job related. 3. The payments may be delayed for months or years while the legal issues of fault are worked out. 4. The payments are often limited in amount and time of coverage. Therefore, having your own policy instead of or in addition to your company policy may be a good decision for you and your family. A Jaffe Insurance Agency representative can help you design a program that wraps around your current coverage. Social Security If you pay into the Social Security program, you are covered by Social Security in the case of some kinds of disabilities. Unfortunately, collecting on this insurance is one of the most difficult of all types of insurance. 80% of all claims are turned down on the first presentation, and it is commonly necessary to hire an attorney to help you through the legal morass to get SSI. State Disability Insurance You also pay a percent of your income into SDI in California. Like Social Security, this program is designed to step into the gap, especially in long term or severe disability situations. Like Social Security, compensation generally takes time and effort. Employer Supplied Disability Insurance Many employers offer disability insurance as part of your compensation package. As with all insurance, this policy will have limits and conditions. Most small employers do not offer this kind of insurance. Self Employed If you are self employed, or if you are a principle owner in your company, you may be exempted from paying into Workers' Compensation. Therefore one of the most critical elements of your coverage may not be there for you if you were to become disabled. Obviously the disability of a member of the leadership of a company can have even more debilitating effects for all concerned. Four Primary Variables in coverage for An Individual Policy Monthly Benefit - Most disability policies have a fixed monthly benefit. The amount can include an inflation adjustment for an additional premium. You can also purchase extra coverage that offers higher payment schedules. The definition of disability - Two major options are known as "own occupation" (the inability to perform the duties of your specific occupation) or "any occupation" (the inability to perform the duties of any job for which your education and training make you qualified). Waiting Periods - The waiting periods (the time after you become sick or injured before the payments begin) can range from one week to two years. The longer you are willing to wait and cover your own expenses, the less your premiums will cost. Benefit period - The benefit period can range from six months to life, depending on what you choose and what your insurance company is willing to offer you. Options to Consider
The monthly amount for which you can qualify, the benefit period, and the amount of the premium all depend upon how hazardous your occupation is. If you are an loan broker, your disability insurance is going to be cheaper than if you are an roofer. Your current physical and mental health are factors as well. Consider the following when you are looking for an individual policy:
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