Disability insurance has been designed to safeguard potential income on the occasion of becoming physically disabled and incapable to employment. Even though experts suggest it is essential to signup for a disability insurance program, yet it is the least sought after.
While people have adequate insurance cover in place to cover the costs of medical expenses during sickness or injury, yet they fail to realize the unfortunate situation that may lead to loss of salary. Thus, people who count o their jobs to pay for shelter and food must mull over disability cover plans.
Several organizations provide disability insurance to their employee; however, the payout from the employer’s pocket is taxable, while the monthly instalments are not taxed if the employee pays it. Consequently, the policy may miss out certain advantages; nevertheless, review and contemplate purchasing supplementary covers if the policy is inadequate.
Disability insurance policy is segregated into two types: Long-term and Short-term.
Short-term disability policy restores a fraction of lost wages on the occasion of missing out six months of work. The cover begins after exhaustion of all sick leaves, and reinstates100% of salary for the initial payout. The wage payments will ultimately reduce to 60% if the policyholder is unable to return to work.
Long-term disability program offers coverage on advance medical care, in addition to reinstating 50-70% of wages. Some organizations may require their employees to buy supplementary insurance, thus increasing the full amount to 80%. Usually this type of insurance policy covers the policyholder for 5-10 years or until 65 years. Further, the policy may vary in offering the disability benefits like exclusionary criteria that includes any pre-existing medical condition, and contentious category that involves back injuries and mental illness.
The policy can be either non-cancelable or guaranteed renewable. Guaranteed renewable indicates the insurer can only cancel the policy if the premium payments are missed out. Non-cancelable means the insurer can never hike the premiums. Both are enviable, yet non-cancelable is a better option.
Cost of Living and Residual benefits are the essential riders that must be considered to enhance the viability of your policy. The residual benefits rider substantiates the discrepancy between new and old salary, if the policy holder switches jobs. The cost of living rider enables the value of the policy to increase with inflation.
Long-Term Care:
Living the dawn of the life under the supervision of home care nurse or in a nursing home is the most detestable option for most of us. However, improved medical science has enhanced the life expectancy, and subsequently senior citizens are unable to live autonomously. Simultaneously, the nursing expenses are getting highly expensive because of elevating medical expenditure. The long-term care insurance policy swathes the costs, and is essential for people to consider it when they reach their prime at 50-60.
The insurance payout on this policy type is usually between 2-3 years as the expected nursing care is usually 2 years. You can obtain “guaranteed renewable” on the policy.
