Do you know what you have, and do you have what you need?


Long Term Disability
Long term disability insurance typically starts at 90 days, and may start as early as 30 days although the premiums increase significantly.  Long term disability while typically covers you until the age of retirement, shorter long term disability plans that last for 2 years in duration have significant value.  Long term disability insurance typically pays around 40-60% of your income.

Short Term Disability
Generally, short term disability has a 30 day elimination period and does not extend beyond 2 years.  Typically, short term disability is purchased by the employer and cannot be purchased individually.  During the disability, short term coverage pays approximately 70-80% of your income.

Renewable Options
Non-cancelable option: Renews your original policy without any increase in premiums until the age specified.  Guaranteed renewable option: The insurance company will revive your policy regularly, but it can raise premium rates at any time.  Conditional renewability option: The insurer can add extra conditions or restrictions at any time or even increase your premiums.

Defining Disability
Every company has its own definition of partial disability and total disability. Make sure you study and understand these descriptions. Own occupation is the most flexible definition of total disability. This implies that if you lose your job due to disability, you can work at other jobs on a part-time basis and still qualify for the full disability benefits associated with the “own occupation” disability.

Policy Exclusions
Exclusions are a list of ailments for which your policy will not cover you. These are often pre-existing conditions and chronic disorders such as backache, heart disease and arthritis. Other common exclusions are disabilities due to war wounds, injuries incurred during commission of a crime or suspension of professional license.

Residual Disability Provision
This may be a rider or may be included in the policy design.  In case of partial disability, you are entitled to receive a specified percentage of the income lost during the disability. This is one of the most important of the policy riders as many people who become disabled are able to return to some aspect of their job or another job but may experience a reduction in hours or income.  Partial disability may be defined by percentage of loss of work time, income or both.  It is critical you understand how this rider is defined.

Inflation Protection
rider is essentially a
 cost-of-living adjustment. This benefit does not go into effect until the claim is first made. From that point forward the inflation protection would increase the value of the benefit, typically adjusted by the consumer price index (CPI) or a defined percentage. 

Future Increase Option
your income increases, this rider option permits you to buy extra coverage up to a certain age without the need of further medical exams.

Automatic Increase Rider
This rider offers an automatic increase in the monthly benefits for a specified period of time (usually five years). The increase in the benefits, on average, is compounded at 4% interest rate. This rider is custom-made for those who have regular raises in their salaries, as the coverage also increases irrespective of any changes in your health, occupation or income.

Waiver of Premium
During the disability, the 
waiver of premium rider provides relief from paying premiums for a certain amount of time, usually 90 days or the duration of the elimination period. 

Elimination Period
This is the waiting period before benefit are paid.  The most common elimination period is 90
days. Reducing the elimination period increases the premium, and extending the elimination period decreases the premium.