Individual Paycheck Insurance
Of all the various types of insurance products we sell, disability income insurance is one of the two or three most complicated. That's because there are so many variables involved in indentifying the appropriate product, determining how much one can and should buy, and how one's avocation affects one's rate.
What Are The Basics?
There are three main components to disability insurance: how much, how long, and when. How much of one's income, and therefore how much disability insurance one can buy, is a function primarily of one's job and one's wages.
What's A Rate Class?
So-called "white collar" professions, such as doctors and accountants, wil generally be eligible for higher benefit levels because they make more and their work environment is generally not very dangerous.People in, for example, retail sales and management, won't generally qualify for as much of a benefit due to the nature of their work and their income level.Those who toil in the blue collar arena, such as a taxi driver or mechanic, may have trouble finding coverage at all, and when they do, can expect somewhat lower benefit levels due to their job requirements.
What Are Waiting Periods?
This is how long one must wait from the time of claim until the time one actually receives a check. Think of it as a deductible, such as when you wreck your car or hail damages your roof. Typically, this can be anywhere from a month to a year or more; the longer the time that one is willing to wait, or self-insure, the lower one's rate will be.
What is A Benefit Period?
Once one has satisfied the waiting period, the insurer will begin sending checks, and will continue to do so as long as one remains disabled, up to a previously agreed to cut-off date. This can be as short as a year, or as long as until one reaches retirement age.
What About Social Security?
Most working people have access to at least some paycheck insurance through the Social Security Disability benefit (SSDI). This is administered by the Social Security Administration, and is based on one's income, how long one's been in the workforce, and the nature of the disability:"Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability ... Your disability has lasted or is expected to last for at least one year or to result in death."As a result, many people who think they'll be eligible for disability benefits from Social Security are disappointed to find out that they aren't, or that it will take a lot of time and effort to receive any financial assistance.
Even though a portion of your paycheck goes to pay into the Social Security Disability system, it may not be wise to rely on SSDI in case of a major illness or injury. Individual disability insurance can help provide peace of mind, and money for food and shelter, and can be configured to meet your own specific needs.