You might be wondering why you even need to think about disability insurance in the first place. After all, your employer offers you this type of insurance so you should be covered if you have to be out of work due to illness or injury. Unless you are well-versed in the intricacies of your particular insurance policy, though, you could be unpleasantly surprised if you are out of work for an extended period of time.
Your First Steps
The first thing you should do is go over your current insurance policy. If your employer provides disability insurance, then you have some coverage. It is likely not to be enough, though. Most employer-provided insurance policies offer only short term disability. This coverage is often only for the short term and phases out after about six months. Long term disability — the type that kicks in after you reach the time constraints of your short term insurance — often lasts only five or ten years.
Think Long Term
It is easy to become complacent and think that you will never need long term disability insurance. Many catastrophic accidents, injuries and illnesses, though, can make you unable to work at your previous potential for a number of years. For the best protection, you need to make sure that your long term disability insurance covers you until at least the age of 65. After that, social security officially kicks in to provide you with the coverage you need.
In order to meet your responsibilities, you need to think in the long term. Talk to your insurance agent today to build a plan for both short and long term disability insurance that will protect your family and everything you have worked so hard for.
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You know you should probably get disability insurance at some point. After all, you never know when an accident or illness will make it difficult for you to work. With both short and long term policies available, however, the choices can be confusing. Knowing the differences between these polices will help you sort out which one is better for you.
The Long and Short of It
Short term disability is insurance that kicks in once you have exhausted the sick days available from your employer. Though policies vary, short term disability typically last about six months. While you might see payments that are nearly the same as your usual salary early on, they are often reduced to a percentage of that amount within a few weeks.
Long term disability is designed for those catastrophic events that have the potential to mark the end of your paycheck-earning days. In many cases, long term disability begins when short term policies end. While some plans last only five to ten years, a more viable long term disability insurance policy lasts at least until you are 65 years of age.
You Need Both for Complete Coverage
Given the overview outlined above, it is easy to see the place for both types of insurance in your life. Short term disability insurance is the ideal way to ensure coverage if you come down with pneumonia that sends you out of work for two weeks when you have already used up nearly all your sick days. Long term disability insurance is vital if that bout of pneumonia turns out to be a more serious illness that requires extensive care that could result in you being out of work on a permanent basis.
Protect your assets and your family by ensuring that you have the necessary insurance coverage should you find yourself unable to work.
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According to the Social Security Administration, one in four 20-year-old employees will become disabled by their sixty-seventh birthday. What would you do if an injury or illness prevented you from working? Unless you have accumulated adequate savings, you may have trouble paying your daily living costs. Protect your right to earn a living and receive peace of mind with disability insurance.
What is Short-Term Disability Insurance?
While this type of policy won’t cover the full amount of your regular wages, it will pay 60 to 70 percent, which is better than nothing. Your policy will outline the wait period, which could be as long as two weeks or as short as one day. Under short-term disability, you’ll receive replacement wages for up to six months.
What is Long-Term Disability Insurance?
Designed for extended or permanent times of illness or disability, long-term disability insurance begins after short-term disability ends. You might be able to extend your policy benefits annually, depending on the policy.
You Can’t Rely on Social Security
You may put off purchasing disability insurance because you think you will automatically qualify for social security benefits when an injury or illness prevents you from working . That’s not true. Your claim could be one of the 50 percent that are denied. If you are approved, benefits won’t start for at least six months and may be a faction of the income you need.
Your Pension may not be Enough
A pension from the government or a private company may provide disability benefits. They typically are reduced, though, based on the permanence of your disability and other benefits you may receive.
You can’t predict when a devastating illness or injury will happen. However, it could jeopardize your ability to work. Talk to your insurance agent to determine which disability insurance fits with your overall financial plan as you obtain financial peace of mind.
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