When Buying Disabilty Insurance
Getting Started—
Determining Your Resources
Before purchasing an individual long-term
disability income insurance policy, evaluate
the benefits you may already be eligible
to receive from your employer, the government,
or other programs.
Employee Benefits
Disability benefits from your employer may
include workers’ compensation insurance
for work-related injuries. For short-term illness,
your employer may provide sick leave, shortterm
disability insurance, or both. For a longer
illness, lasting six months or more, your
employer may provide group long-term
disability income insurance.
Sick leave and short-term disability coverage
from your employer can range from a few days
to as much as a year, depending on your
company’s benefits and your length of
employment.
Group long-term disability coverage through
employers replaces part of your salary if you
are disabled and unable to work. A typical
policy replaces at least half of your salary up to
a specific maximum benefit, such as $5,000 per month. Long-term benefits begin when
short-term disability benefits stop. Benefits
from group long-term disability policies
generally continue until either age 65 or your
retirement age under Social Security, or until
you are able to return to work. In some policies,
benefits may also be available for a period
of time after you return to work.
Social Security Benefits
Social Security provides long-term disability
benefits based on your salary and the number
of years you have worked and contributed
to the Social Security system. However, Social
Security replaces only a limited portion of your
salary, and the qualifications to receive benefits
are very strict. To be eligible for Social Security
disability benefits, all of these conditions must
be met:
- You have been disabled for five full calendar
months.
- Your disability is expected to last at least
12 months or end in death.
- You are unable to be gainfully employed at
any occupation, not just your occupation
at the time your disability began.
Other Resources
Other programs besides Social Security aid
those who have become disabled. You may
qualify for:
- Workers’ compensation for work-related
injuries or illnesses, required in all states.
- Special disability programs for veterans
injured in war, federal and state government
workers, railroad employees, or miners
who develop black lung disease.
- State vocational rehabilitation programs.
- Automobile insurance benefits for
a disability resulting from an auto accident.
- Temporary disability programs available
in California, New York, New Jersey,
Rhode Island, Hawaii, and Puerto Rico.
Long-term disability income insurance provides
financial protection if you become disabled.
It helps pay current bills so that savings
accumulated for your children’s education or
your retirement can remain intact.
Knowing your eligibility for disability benefits
from your employer, the government, or other
programs is an important first step before
deciding whether to purchase disability income
coverage. Also take into account other sources
of income that may be available to you:
a spouse’s income, short-term emergency
savings, investment income, or help from
your family.
If the total of these benefits is insufficient to
pay your living expenses if you become
disabled, or a disability would affect your
long-term savings plan, consider buying an
individual disability income insurance policy.
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