An Introduction to Long Term Disability Insurance:
Long term disability insurance helps replace
income by paying living
expenses if a working person is unable to work normally due to a serious
illness or
injury. People can buy
long term disability insurance individually or can get it from
employers.
Long term disability insurance offers paychecks providing cash which can be directly used for purchasing commodities or meeting
mortgage payments. Thus one can save the hardly collected savings from getting depleted. This type of
insurance substitutes
income for elongated period of 5 years or up to age of 65 years.
Types of Long term disability insurance:
There are basically two types of
long term disability insurance:
- Non-Cancelable Long Term Disability Insurance- Under this policy if one pays required premium at time, then one has extra security that premiums can never be raised over and above of that shown in the policy document.
- Guaranteed Renewable Long Term Disability Insurance- The premiums under this policy can be raised only if the change affects an entire class of policy holders. So guaranteed renewable policies usually cost less than noncancelable policies in terms of premium.
Policies other than the above mentioned types are also available. These can be either a variation or a mix of these two types. Policies that replace a greater percentage of one's lost salary are more expensive.
Points To Remember Before taking Coverage under Long Term Disability Insurance:
- Before applying for long term disability insurance one must calculate the amount of alternative income he has. Sometimes employer pay a part (50%-60%) of the income if an employee becomes disabled and can't work for about 6 months or more. Also the total income of the family be enough to cover the expenses incurred by the family. Having diversified sources of income may obviate the need of long term disability insurance.
- It is of utmost importance to read the plan document carefully before taking cover. For instance, some policies pay benefits only against injuries that are quite serious. So one must know the definition of disability offered by the insurer.
- Long term disability insurance is sold through insurance agents as well as directly by insurance companies. So shopping around before buying is important.
- It is crucial to check whether the company and agent are licensed in the state to which the insurance seeker belongs. Also one should check the repute and financial condition of the insurance company. These can be obtained for free from the websites of Standard & Poor's Insurance Rating Services or Moody's Investor Services.
For further information one may view sites like
pueblo.gsa.gov,
metlife.com,
disabilitybenefits101.org