How to Compare Disability Insurance

Disability insurance covers you for financial losses incurred if you have an accident that results in temporary or permanent damage. It is very important for people who are in businesses or professions that require physical skills. For example, if you are a wine taster with a brewery or distillery, imagine if you lost your sense of taste, either temporarily or permanently. For this reason, comparing disability policy types and coverage is very important.

Instructions

1. Understand the basic types of disability insurance before you start comparing them. Short-term disability insurance provides coverage for a period of two years. Long-term disability insurance usually covers you for a minimum duration of five years, up to age 65.

2. Compare the policy type with group coverage. Group coverage insures for Social Security and other benefits along with disability benefits. Such coverages cover only up to 60% of total earnings lost under a disability claim.

3. Check for flexibility of coverage when comparing individual disability insurance policies. Individual policies usually pay a fixed dollar amount depending on the coverage. This amount can be more if you do not qualify for Social Security benefits under any other policy. You can opt for an individual policy to fit your needs.

4. Look for a non-cancelable policy. Also known as a guaranteed renewable policy, insurance companies cannot terminate your policy or even raise the premium without your permission.

5. Buy disability insurance only if the company provides residual coverage. Under this coverage, the company provides you with benefits (mostly monetary) for some time even after you resume work.

6. Shop around for quotes from many insurance companies while comparing this type of coverage. Look for a policy that gives you maximum benefits during the period of disability.

Tips & Warnings

• Choose a short-term policy if you are not sure about the duration of your employment or business.

• Compare disability insurance coverage with similar plans and policies from more companies. Make sure you are comparing policies that cover similar risks.