The possibility that an accident or illness, suddenly occurring, affects our day-to-day life and prevents us from working is a relatively frequent problem. Statistics show that the unemployment rate for persons with disabilities is 26%, over five times higher than the 5% rate for persons without disabilities.
There is a risk that an accident or illness could deprive us of the ability to carry out our work permanently and it is disability insurance, which is often included in the life insurance offer, that can provide solutions to these dramatic situations.
In disability coverage, it is considered as sinister when, due to a physical or mental deficiency, a person’s inability to perform certain activities occurs. Any injury that the insured suffers unintentionally by a sudden action of an external force, as a consequence of an accident, and that causes him invalidity would be covered by this insurance. It can also occur as a consequence of an illness that results in the loss of power to do any job.
However, in the eyes of insurance companies, we can distinguish different types of disability, and for each of them, we can find one answer or another in life and disability insurance policies. It is important to know because when insurance compares life to include this coverage will be very useful to assess the different insurance offers. Professionals at Valent Legal can further help you in understanding all this and more.
Types of Disability Insurance Policies
- Short Term Disability Insurance Policies
These policies pay monthly benefits up to two years term. They are appropriate for people who do not have significant savings and have an immediate need for income.
- Long Term Disability Insurance
These policies pay monthly benefits for more than two years and can pay benefits up to the age of 65. They are appropriate for people who have enough savings to meet immediate income needs but would be affected by the catastrophic consequences associated with long-term disability.
Qualities of a Disability Insurance Policy
You establish the conditions under which the person will start receiving disability benefits. Some insurances only cover disability caused by accidents. It is preferable to look for insurance that covers disabilities caused by accidents or illness.
One should also look at the insurance company’s definition of disability in order to establish how they measure the level of disability. The best policies pay benefits if the person is unable to do their regular job. Policies that only pay benefits if the person cannot do any kind of work are more restrictive.
Renewal clause
Preferably the policies should guarantee the automatic renewal of the policy regardless of the health of the person. Other policies guarantee that premiums cannot increase. Policies that guarantee renewal and the cost of disability insurance offer the best alternative.
Guaranteed Insurability
If the insured person’s income increases in the future, this clause allows him to increase the disability benefit regardless of the state of health.
Partial Disability Benefits
Some policies only pay benefits if the person cannot work fully. The best policies pay benefits, even if the person can work partially. In that case, the benefit will be adjusted proportionally.
Adjustment for Cost of Living
This clause establishes that the disability benefit will be gradually increased to offset the effect of inflation.