(content by Prince)
Thinking about purchasing a disability insurance policy?
Congratulations, you’re about to make one of the smartest financial decisions of your life.
Why?
Because disability insurance is a way to protect your future unearned income. In the event of an illness or injury that prevents you from working, disability insurance ensures that you can still collect a portion of your income, even if you can never work again.
But, like all types of insurance, it can be difficult to decide which policy and which insurance company is the right choice for you.
To help you get started on your search, here’s what to look for in order to find the disability insurance company that works for you.
Shop for Competitive Premiums
Nobody enjoys paying monthly insurance premiums, which is why many people choose an insurance policy based strictly on its cost. For most people, the cheaper the policy, the better it is.
But with disability insurance, the cost is not the most important decision-making factor.
Premiums vary based on a variety of factors, including:
– Your age
– Your gender
– Your current health status
– Your location
– Your occupation
– Coverage amount
– Benefit period
– Elimination period
– Additional riders
Some of these elements, such as your age, gender, and health status, aren’t things that you can change. But other factors, such as the benefit period and elimination period you choose, allow you to have more control over how much your premiums will be.
By choosing a longer elimination period or a shorter benefit period, you can bring the cost of your monthly premium down.
Pay Attention to the Definition of Disability
The single most important thing to consider when shopping for disability insurance is the definition of disability. It’s a crucial element of every policy because you have to meet the definition of disability in order to become eligible to start receiving benefits.
There are two main definitions of disability that insurance companies offer:
– Any occupation
– Own occupation
With any occupation, your disability must prevent you from working ANY job at all. This is an incredibly hard standard to meet, and it makes it far less likely that you’ll ever be able to reap the benefits of your policy.
Own occupation is the preferred definition. With this definition you will be eligible to collect benefits for any illness or injury that prevents you from doing your current job.
Most insurance companies do not offer the own occupation definition. The ones that do offer it are referred to as the Big 6.
Here’s an in-depth breakdown of the Big 6 insurance companies and the different types of disability insurance policy options they provide.
Look for Relevant Riders
All of the Big 6 insurance companies offer a variety of riders that you can add to your policy. These are additional clauses and terms that provide you with extra benefits and put more money in your pocket.
If you’re still paying off student loans, you’ll want to add the Student Loan Repayment Rider. If you want the option to add more benefits at a later date, add the Future Increase Option Rider. To account for rising inflation, you can add the Cost of Living Adjustment Rider (COLA) so that your benefit amount increases along with inflation.
Adding riders to your policy will increase your monthly premiums, but the added benefits offer far more protection and financial security for your future.
When choosing a disability insurance company, select one that offers the riders you want and need.
Factor in Built-in Benefits
In addition to riders that you can tack on, many policies offer built-in benefits that you can enjoy that won’t add to the cost of your premiums.
MassMutual and Principal offer a built-in benefit known as the recurring disability benefit. This benefit waives your elimination period if you file a claim related to a disability that you were approved for in the past.
Ameritas offers a built-in benefit called the “good health benefit.” This benefit reduces your elimination period by two days for every year that you’re covered and don’t file a claim.
The Standard offers a built-in family care benefit. If you need to care for an ill family member, this benefit can help to supplement your living expenses.
When comparing the costs of different insurance policies, be sure to take into account the built-in benefits that some policies offer.
In Conclusion
Before settling on an insurance company, compare quotes and policy terms from multiple providers. That is the only way to make sure that you’ll pay a reasonable amount in premiums for the quality and coverage you’ll receive.
