What Is Long Term Disability Insurance?
What Is Long Term Disability Insurance?
As it is called, long term disability insurance should pay you an income in case of disability for an extended period of time. For most people, it seems that that period of time is at least 5, 10 years or to age 65. What we have found though, is that, in most cases, policies benefit periods are just 2 years! This two year benefit period seems to be most prevalent with disability insurance policies that cover mortgage payments (or sometimes called mortgage disability insurance). Not sure why people would think that a 2 year benefit period would be good enough for a 15 or 30 year mortgage!
Two years of benefits, unless that is all you can afford, is hardly long term disability coverage. We recommend that, again, if you can afford the premiums, you select a policy with a benefit period of at least 5 to 10 years or, even better, to age 65 or 67. The reason is really simple. If you were to loose your job and were told that you could not work for one year, somehow, you would find ways to survive. On the other hand, if you were to loose your job and were told that you could not get another job for 10 years, you would most likely loose all of your assets. Well, when you are disabled for an extended period of time the results could be same and worse. Why worse? Because when you are disabled, not only do you have to cover your basic expenses but now you also have to cover your disability expenses (which can be very high). So, when selecting a policy, try to go for the longest affordable and available benefit term. By the way, if you cannot qualify for the 10 year benefit period, because of your occupation or other factors, we recommend that you get at least the 5 year benefit period.
How to make your long term disability insurance policy more affordable?
Well, when you select a long term disability insurance plan, as we have explained above, one part of your selection will be the waiting period. Simply put, the waiting period is the amount of time you need to wait (from the time of a covered disability) before any benefits are paid. For example, if you select a plan with a 30 day waiting period, then, you will need to wait 30 days from the time you have a covered disability before any benefits are paid to you. So, how can you make a long term disability policy (that is a policy with a benefit period of at least 10 years) more affordable? Select a longer waiting period. We recommend the shortest waiting period you should consider Is 90 days. If you are very uncomfortable with a 90 day waiting period, then 60 days is OK. We do not recommend the 30 day waiting period for a long term disability insurance plan as the rates for these policies can be double that of a 90 day waiting period policy.
Another reason to select the 90 day waiting period
Again, what is more likely to wipe you out, is not the first 90 days of a disability but an extended disability of 5, 10 years or more. Of course, if you cannot afford a long term disability plan, even if the waiting period is 90 days, then go down to a shorter benefit period which usually is the 2 year benefit period. One thing you don't want to do is start a great plan with a long benefit period and then cancel it later because you could not afford it. Some may consider the 180 day waiting period but the cost saving between the 90 day and the 180 is usually so small that selecting a 180 day waiting period is not worth it.
How about riders on the policy
Riders for long term disability insurance policies are beyond the purpose of this article but important nonetheless. One thing we can say though, is, request explanation on all available riders for the policy you are considering. Riders can make a big difference in the value of the policy you select. Please look at our other articles on long term disability insurance and riders.
As we say in all of our articles, please make sure to ask, ask and ask more questions before you apply and once you have received and fully reviewed your new policy. Be well. I Was Recently Diagnosed With Depression. What Happens Under My Term Life Insurance, Income Protection and Trauma Insurance Policies? Life Insurance for Seniors Is Unnecessary, Plus 5 More Insidious Retirement Myths What Should You Consider When Setting Up Life Insurance? What Are The Benefits Of Critical Illness Life Insurance When To Get A Critical Illness Life Insurance Policy How To Get Critical Life Illness Insurance The Inner Workings Of A Critical Life Insurance Policy Quick Tips On How To Go About Purchasing The Right Life Insurance Policy Who Needs Critical Illness Life Insurance Aviva Life Insurance Life Saver Plus – A ULIP Plan Aarp Life Insurance Policy Tips Angioplasty- the ballooning procedure to open blocked cardiac arteries and save life Life Insurance Quotes Online Just a Click Away