1. What does Disability Insurance cover?

 

Ideally, your policy should be designed to cover most injuries or illnesses that can prevent or limit you from working. This may include a range of conditions, such as accidents resulting in broken bones, back injuries, and even chronic illnesses like cancer or heart disease. Take a final look to see if it covers both physical and mental health-related causes for becoming disabled. Knowing what situations are covered can curb surprises later on.

Your policy might also provide coverage, typically a reduced monthly payment, in the event of a “partial disability.” While a “total disability” means you are entirely unable to work and may need substantial assistance with daily living activities, a “partial disability” means you can still perform some of the duties of your regular occupation. The specific definition can vary depending on the terms of your insurance policy or the legal context, so be sure to review your policy details carefully.

 

RELATED: The 5 W’s (and H) of Disability Insurance

 

2. Should I get both Short-Term and Long-Term Disability Insurance?

 

Short-term disability policies typically cover periods of up to a few months but not longer than 12 months; this coverage can be useful if you have a temporary injury. In contrast, long-term disability policies provide coverage for extended periods, at times until retirement age, and protect you if a chronic illness prevents you from returning to work over a longer term.

Some policies also offer a survivor benefit, providing financial support to your beneficiary if you pass away before age 65. Typically, this benefit equals a few months (often three months) of your maximum monthly benefit at the time. By carefully evaluating your needs and considering all the options, you can create a secure safety net for you and your loved ones.

 

3. How much will a disability policy pay in benefits?

 

Disability Insurance policies typically replace a percentage of your pre-disability income, often between 60% and 85%. Pre-disability income is calculated by adding up your salary, commissions, bonuses, and/or revenues from your current business or practice. If you pay your Disability Insurance premiums with after-tax dollars, the benefits you receive won’t be taxed. That means the benefit amount will be similar to your after-tax income before you became disabled.

Plus, you can always look into adding endorsements or riders to your policy to increase your benefit amount. For example, your insurer might offer a cost-of-living adjustment (COLA) rider, which increases your benefits annually to match inflation. Assessing your benefit amount and considering these options are crucial before signing up for the policy.

 

RELATED: Protect Your Income with Disability Insurance

 

4. What counts as a disability?

 

Carefully review the definition of “disability” in your policy and how it’s structured. Some policies may classify you as having a disability if you can’t perform the main duties of your current job or occupation. For instance, a surgeon with hand tremors might qualify for benefits. However, if your policy lacks this provision and you can still work in another lower-paying position or specialty, you may not receive full benefits or any benefits at all. Comparing this between policies allows you to have realistic expectations for your coverage in different scenarios.

 

5. Are there any exclusions?

 

Exclusions differ between policies but commonly include:

• Pre-existing conditions;
• Disabilities resulting from certain activities or injuries (e.g. risky hobbies like skydiving);
• Self-inflicted injuries; and
• Injuries sustained in illegal activities or criminal acts.

Knowing these exclusions is essential to avoid situations where your claim is denied because your condition wasn’t covered.

 

6. Does my doctor need to be involved when filing a claim?

 

Your doctor’s role is crucial in providing medical evidence to support your disability claim. If your insurance carrier requests, your doctor may need to present specific medical information, which can directly affect your claim and benefits. It’s important to review your policy to understand what medical evidence is required and how your doctor’s involvement impacts your claim.

Moreover, your doctor might have to confirm your disability periodically so you can continue receiving benefits so you may need to remain under their care for a period of time.

 

7. What do I do if my benefits are disputed or denied?

 

If your claim is denied, you should be able to appeal the decision to a higher-level decision-maker. This process typically involves providing additional medical evidence and possibly undergoing additional medical examinations. Thoroughly review your policy to understand the appeals process.

 

8. How do my employer benefits affect my individual policy?

 

Employer-provided disability benefits can be coordinated with your individual policy; your employer’s benefits may serve as primary coverage, with your individual policy filling in any gaps or providing additional benefits. A tailored policy can make sure that you are maximizing your coverage without an overlap. If you find this process tedious, speak to a licensed consultant to double-check that you’re fully covered.

 

9. Can I work part-time and still collect benefits?

 

Your insurance policy will indicate whether you’re eligible to receive benefits while working part-time. Some policies do allow for part-time work, but typically adjust your benefits based on your part-time earnings.

Plus, consider the long-term implications of working part-time on your benefits. Part-time work may extend the duration of your benefits, especially if your policy has a lifetime benefit cap. Review your policy carefully to understand whether it permits part-time work and how benefits are calculated in such scenarios.

 

10. Are there any other things I might be missing?

 

Consider these additional aspects of your policy:

• Benefit Period: Determine how long benefits will be paid out if you develop a disability. Some policies only cover 2 years, some 5 years, and some will cover for your working lifetime up to age 65.
• Elimination Period: Clarify how long you’ll need to wait after developing a disability before benefits kick in. Typically, elimination periods are 60 days, 90 days or longer. The shorter durations will result in a higher premium cost.
• Cost: The rates depend on many different factors. Keep in mind: the least expensive policies often pay out insufficient benefits and cover fewer situations, potentially costing you more in the long run. The cliché “You get what you pay for” definitely applies with Disability Insurance.

If you find yourself unsure about any details or if there are other aspects you need clarification on, don’t hesitate to reach out to a licensed Life & Health Insurance consultant. Navigating insurance policies can be complex, but you don’t have to do it alone.

 

Key Takeaways

 

We hear these questions about Disability Insurance all the time. You don’t need to answer all of them right away, but you should treat this as your final checklist. This way, you can sign off on your policy with confidence and get back to doing what you love.

And if you can’t find solutions to these questions, connect with an insurance brokerage like PROLINK. Our licensed consultants will not only assist you in shopping around for the best policy, but also take the time to understand your unique lifestyle, profession, and needs. We’ll help you understand how much coverage you need and navigate your policy’s fine print to ensure you make an informed decision.