Individual Disability Insurance

A person’s income is a very valuable asset – it is very necessary to run a household and also invest for the future.  There may come a time when an individual could fall sick or get injured and is unable to work for a period of time.  This insurance covers such eventualities and keeps a family in its home.

The one thing to remember is that it will not completely replace a person’s income – only a part of it.  It supplements income even if the injury or illness is not job related.

How does it work?

To be able or eligible to receive the benefits of such a policy, a person must meet the definition set forth in the policy.

  • Total disability would preclude a person from doing his job for a particular period.  One can be considered permanently disabled if they are unable to perform any job at all – given the person’s education and work experience.

  • Partial disability is when a person can work – but not the number of hours as per the job requirements.  This will lead to a drop in their paycheck as well.

Policies vary – so check out what the criteria are before buying into a policy.  It also pays to check if the policy will pay out if disabilities occur due to an illness or accident.

Things to be aware of while buying:

Careful shopping is necessary – disability insurance can be complicated.  Make sure to read all the available information on different policies and make sure to get the right one.  Read all the terminology used and make sure to understand the distinctions before buying.

What about eligibility?

Most policies have a waiting period before a person can start claiming benefits. This period can be anywhere from 3 months to a year before benefits become available.  Benefit periods also differ – 1, 2 or 5 years and only up to age 65.  Go through the policy very carefully to understand what benefits are available as well.  In the event that one becomes disabled, the insurance company will look at a person’s income to determine the type of benefits to offer.  This may be a percentage of income or a lump sum amount.

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