Income Replacement Insurance For Individuals
When it comes to disability income insurance for individuals
, there are two major types you should have a good understanding of. Knowing the pros and cons of each can make a big difference if you ever need the benefits they offer.Short term disability insurance is available immediately if you break a bone or otherwise damage your body or have an illness that disables you. This kind of coverage can last from a few weeks or up to a year or more. The benefits of your disability policy will control how long the benefits last. Most employers offer this type of plan as part of their benefits package. In fact, some states require employers to make some sort of short term disability income insurance, available to their employees.
If your job short term income replacement insurance, chances are you're involved in what's called a group plan. Insurance companies pool people together to make the insurance more affordable for everyone. Most group contracts pay out 60 percent of your salary. This figure is sometimes offset by other factors, such as worker's compensation pay or even social security.
Long term income replacement insurance may start to pay you once your short term coverage stops paying you. Some employers do offer long term income replacement insurance, but usually you are on your own to buy this type of additional coverage. Currently, no states are mandating that employers offer any long term disability coverage.
If you're self-employed or if your current place of employment does not offer any sort of insurance for disabilities for individuals, you should make it a point to think seriously about obtaining coverage yourself. If you have a family that depend on you, income replacement insurance can put your mind at ease.
Insurance (of all kinds) is something we rarely spend much time thinking about until we have an event that makes us do so, but it it is prudent to understand what sort of coverage you have and make sure that when one ends and the other picks up. Also, you should know the amount of income from all sources you will be receiving should an injury or sickness keep you from earning a living, and whether or not it's enough to keep a roof over your head. Policies are available that can replace up to 70% of your income.
Even if your employer offers some sort of income replacement insurance, you are under no obligation to take it through them. In fact, many employees opt out of their employer's plan and investigate and purchase an individual income replacement insurance plan on their own. Even though the cost will be more when you go out on your own, there are many advantages to this option.
Group contracts can have payout caps, either monthly or yearly, so if you're a high wage earner you may be surprised by the small monthly benefits you actually receive. Also, if you switch jobs or are laid off by your employer, your individual disability income insurance plan will stay with you, unlike your job's contract.
Disability Insurance for individuals is something you should really think about before you actually need it. A little planning beforehand can make your life much more pleasant if you are ever disabled.
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