Disability Insurance Myths and Facts

Logic Insurance (Disability Insurance Myths and Facts) - When people think of insurance, they think of life insurance, or auto insurance, or homeowners insurance. Rarely do they think about disability insurance (DI), yet this is a vital part of a person's insurance portfolio. 

The odds of a person experiencing an extended disability due to illness or injury during their working life is remarkably high: about 25% of the population will suffer a disability that will put their income at risk. 

Yet, when people are told about disability insurance, they see it as an expense rather than a way to mitigate their risk of losing their income. 

Disability Insurance Myths and Facts

So let's take a look at some of the myths surrounding disability insurance that relegate this very important insurance to the bottom of their priority list of risk mitigation.

Disability Insurance Myths 1

About 33% of employees do have some disability insurance through their employer. For those fortunate 33%, the first myth is believing this is all the DI coverage they need; however, that is often not the case. Many group DI policies are very restrictive and only pay if a person cannot work at all in any occupation. That means, for example, if a surgeon develops debilitating arthritis in her hands and can no longer perform surgery, but can still work at another occupation, say teaching, then the group policy will not pay a benefit to her. Further, if the employer is paying the premium for the policy with pre-tax dollars, any benefits paid become taxable income. Given that DI policies only pay between 60% and 66% of their gross salary, taxing this benefit can drop the net proceeds by over a third. Both of these issues make group DI policies a less than ideal alternative to individual DI policies. And the remaining 67% of uncovered employees have no income replacement in the event they cannot work due to illness or injury.

Disability Insurance Myths 2

The second myth is the idea that dying prematurely is more likely than becoming disabled and losing income during one's working years. In fact, the risk of serious disability due to injury or illness is surprisingly high. In fact, that the risk of a serious disability that puts somebody out of work from the age of 20 through retirement at age 67 is about 25%. And according to a report by Unum Insurance, 60% of their disability claims are for women! Compare this to the risk of dying prematurely: approximately 17% for males between the ages of 25 and 64 and about 11% for females in the same age bracket.

Disability Insurance Myths 3

The next myth confuses workman's compensation insurance with disability insurance. These are completely different products: the former is designed to provide wage replacement and medical benefits resulting from an injury or illness that is directly caused by activities in the course of employment. DI provides wage replacement, typically up to 66% of income for any injury or illness that precludes a person from working for an extended period.

Fewer than 5% of disability claims are directly work related and are covered by workman's compensation; 90% of disability claims are the result of illnesses that are not connected to employment, and therefore are not eligible for workman's compensation. The point here is that you're chance of suffering a non-work related disability that puts you out of work for an extended period is at least 18 to 19 times greater than suffering a work-related injury or illness. Therefore, workman's comprehensive insurance is not a substitute for disability insurance.

Disability Insurance Myths 4

The last myth I want to discuss is the myth of being too young to buy disability insurance. It turns out that over 40% of disability people under the age of 50 make claims, and people under 40 make almost 14% of claims. Further, just like life insurance, the younger you are when you buy disability insurance the less expensive the premium, and the more likely you will be underwritten. In other words, as you get older, there is a good chance that an insurer will not underwrite a policy due to pre-existing conditions, or rate a policy, adding to the premiums, which will already be more expensive because of age.

Now keep in mind that insurers are very conservative when writing disability insurance. That means that different occupations are rated differently and will have different premiums to account for risk; some occupations cannot be underwritten at all, especially those that have a high risk of on-the-job injury and/or illness. Often, people in high-risk occupations have to get disability insurance through specialty carriers that have experience underwriting and pricing policies for these individuals.

Another important point is that a person must have an income to get a disability policy. That income can come from salary or self-employment income (which has to be documented). People without an income or a steady income cannot purchase a DI policy, since the amount of coverage is directly tied to steady, current income. This can be problematic in situations where a spouse provides support for a self-employed breadwinner by doing activities such as marketing, administrative support, or bookkeeping, but is not compensated.

Because there is no separate compensation, this supporting spouse cannot get a DI policy. In the event the non-working spouse cannot provide these essential services due to a disability, the primary breadwinner will need to hire or contract with a person to provide this support. That means higher expenses for the primary breadwinner. In order to mitigate some of the financial risk, it may be worthwhile to put the supporting spouse on the payroll at a market salary or wage so a policy can be considered for underwriting.

There are numerous other considerations besides what I've discussed in this article. These issues include elimination periods, partial disability vs. total disability, various riders, Own Occupation policies, and balancing coverage and premiums with the rest of an insurance portfolio. That requires an agent or financial advisor experienced in disability insurance products. The point of this article was simply to dispel some myths pertaining to disability insurance, and to motivate people to consider these policies as a part of an overall insurance portfolio. (Article Source) 

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Should You Have Disability Insurance?

Logic Insurance (Should You Have Disability Insurance) - Before determining how much disability insurance a person should have, it is important to first understand how much coverage a person CAN have. While consumers may believe that benefit levels should be unlimited, the insurance industry is regulated and insurance carriers are cautious of how much coverage they offer. 

After all, if one could receive a greater income at home while on disability claim, he/she would have no incentive to return to work when possible.

Should you Have Disability Insurance?

The amount of disability insurance an individual can purchase is dependent on income, profession and any existing group & individual coverage. Most individuals are able to protect up to 60% of their gross income. 

The greater an individual's income however, the lower the percentage that can be insured. For example, an individual earning $50,000 annually will have no problem securing 60% income protection while an individual earning $500,000 may only be able to secure 40-45% income protection.

Now knowing that the amount of disability insurance an individual can purchase is limited, we can determine how much coverage an individual should have. While the exact benefit amount that one should have is subjective, there are certain values that should be considered greatly and can create a floor for the minimum amount a person should have. Every consumer should have enough disability insurance to cover all living expenses (rent, mortgage, utilities, etc.), liabilities (car payments, student loans, commercial debt, etc.), insurance premiums (life, home, auto, liability, etc.) and savings (primarily retirement savings).

It is easy to discount the importance of having enough coverage during the purchasing process - truth be told, disability insurance is not cheap. However, you'll never hear a person who has needed to claim disability benefits say, "Wow, I probably didn't need this extra $1,000 of monthly benefit". Most people go to work every day because their standard of living depends on the income they earn. For that reason, it is important to be certain that when purchasing this coverage it will provide an adequate amount of protection.

Whether you are a physician, a teacher, a police officer or any other professional, a debilitating injury or illness that prevents you from working and earning an income can be catastrophic. Unless an individual is independently wealthy, it is important to consider having enough disability insurance. (Article Source)

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How to Apply for Disability Insurance

Logic Insurance (How to Apply Disability Insurance) - Protecting one's ability to work and earn an income should be a priority for any individual who is currently dependent on his/her income. Some employers will provide disability insurance as a part of their employee benefits package, however those individuals who are not provided with coverage at work may be able to secure disability insurance on an individual basis. 

How to Apply For Disability Insurance

Below is a summary of the process of applying for individual disability insurance.

Selecting A Disability Insurance Policy 

Disability insurance, perhaps more than other types of insurance, can vary greatly from one policy to another. Since each policy is designed to pay benefits under different circumstances, it is important that consumers review and compare the features and definitions closely in order to make an educated decision. Considering that this coverage may one day become a primary source of income, consumers should apply for a comprehensive policy that will pay the largest amount of benefit in the greatest number of circumstances. 

Enough independent research can potentially be done to make a well informed decision. However, it is necessary to eventually work with a licensed agent when applying for disability insurance, thus it makes sense to work with one throughout the research process as well. Since agent compensation is paid by the insurance companies, there is no additional cost to working with a highly experienced agent vs. less experienced agent. It would therefore be advantageous to find an agent or advisor who specializes in disability insurance and represents multiple insurance companies.

What You'll Need To Prepare 

The application process is fairly thorough but can be streamlined when working with an advisor who understands both your situation and the disability insurance underwriting process. When applying for disability insurance, applicants are generally required to provide the following: 

The Application - Completing the application is fairly simple since it primarily asks for personal information that applicants should know from memory. To further streamline the process however, it will be helpful to have one's driver's license and medical history information easily available. Applicants will need to provide dates of any medical procedures or treatments as well as the name and contact information for any physicians consulted in the past. Providing honest and detailed responses will help to reduce processing time. 

Financial documentation - This can be as simple as providing a copy of a recent paystub, or may require specific pages from an applicant's tax returns. The insurance company's goal is to understand how much income needs to be protected. Therefore, the necessary forms will depend on how the applicant's income is earned and whether he/she is a salaried employee, sole proprietor, corporation owner, etc.

Your Health Matters 

Medical underwriting is a big part of the application process for individual disability insurance and applicants must be fairly healthy to qualify. This is one of the primary reasons that individuals are recommended to apply young, to take advantage of potentially better health. 

Medical underwriting will include a few different steps: 

• Insurance medical exam - The insurance medical exam is composed of a medical history questionnaire and normal lab work which is completed by a paramedical services provider. The insurance medical exam can be completed at an applicant's home/work or in some cases may also be done at the provider's office location. 
• Personal Phone Interview - The personal phone interview is essentially a repeat of the original application that is completed. This serves as a cross verification process and is conducted by a third party service contracted by the insurance company. 
• Pharmacy Scan & Medical Records - In addition to the insurance medical exam and phone interview, insurance companies may also order pharmacy scans and medical records from physicians with which an applicant has consulted in the past. 

This process provides the insurance company with the medical information needed to decide whether or not a policy can be offered, and if so, whether a medical exclusion rider or increased premium is necessary.

Once an insurance company has been selected, the application process should take between 3-8 weeks. Applicants who are extremely healthy, young and applying for relatively low benefit levels can expect the process to take between 3-5 weeks on average, and those who are applying for larger benefit levels or have more complex medical histories can expect to take between 6-8 weeks due to potential delays in retrieving medical records.

Once the application is approved, consumers should review their policy carefully to ensure that no errors have been made throughout the issuing and printing process. Although infrequent, mistakes may occur and the issued policy may vary from that for which was applied. Any alterations made to the application or policy will require the policy owner's signature of acceptance, so consumers need not fear medical exclusions or amendments being amended without their knowledge. (Article Source) 

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3 Types of Disability Insurance Claims

Logic Insurance (Disability Insurance) - Disability Insurance claims are the type of cases which personal injury lawyers usually handle. It is usually necessary to hire the services of a legal professional once your initial claim has been denied.

There are a number of capable law firms which can help remedy your legal situation. They will help you throughout the whole process of appealing your case.

3 Types of Disability Claims

For the sake of those who are not familiar with the differences between the disability insurance claims, perhaps it is necessary to explain what sets them apart from each other.

Social Security Disability

First, there is the Social Security Disability (SSDI). It provides income to people who are unable to work due to their disabilities. How much you receive per month, will depend on the amount of money you were able to put into the system by means of paycheck reduction. In extreme cases, when the disability is severe, the SSDI is also made available for the children of the recipient.

Supplemental Security Income (SSI)

The second type of disability claim is called the Supplemental Security Income (SSI). Basically, it is remarkably similar to the SSDI. However, it is reserved for people belonging to the low-income bracket who were never able to find any type of work due to their disabilities. This process demands applicants to pass the necessary eligibility requirements.

Veterans Disability

The last type is the Veterans Disability. As the name suggests, this is reserved for the military veterans. It is for those who sustained service-related injuries or those who have developed illnesses as a result of their actions in the line of active duty. The amount one gets is dependent on the severity of the injuries themselves, and the number of dependents the claimant has.

Hiring Personal Injury Lawyers

Hiring legal counsel will be the smart move for you. The first thing they will do is to get an independent medical examination. This will serve as additional proof of your disability. The lawyers that you hire will be the ones to fight against the administrative red tape. You won't need to burden yourself with unnecessary stress. Let your lawyers do their work. There is a reason why they are lawyers after all. If done right, you will be able to get your benefits in no time at all.

Claims can be denied for any number of reasons. For instance, it can be as straightforward as needing additional documentation. It can also be due to your paperwork containing wrong information or other errors. 

However, as it sometimes happens, the reason as to why your application was denied can be caused by the Social Security Administration or the Veterans administration disagreeing with your claim. They can say that you do not fit the criteria for the disability claim. They can state that you do not fit their definition of someone with physical or psychological disabilities.(Article Source)

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The Importance of Having Disability Insurance

Logic Insurance (Disability Insurance) - The importance of having disability insurance because we can never be fully certain about our life and what will happen next as the days go by. One minute we may be okay, but we cannot accept the same circumstance the next. This is why it is important to have an insurance plan that allows for us to anticipate the future with certainty in our hands. 

The Importance of Having Disability Insurance

More specifically, there are a lot of benefits of having a disability insurance at our disposal.

What is a disability insurance? 

Disability insurance or often called as DI is a kind of insurance product that protects workers from the physical threats found in their workplace. If he or she incurs injuries during the performance of his or her duties, he or she is guaranteed or insured of income.

This kind of worker's insurance ensures that policy holders (or the beneficiaries) get their paid sick leaves and short-term plus long-term benefits associated with the disability inflicted on them during the performance of their work. More than the physical injuries and physical disabilities, this kind of insurance product (more often than not) covers mental and psychological injuries too that is brought about by the physical disability.

What are the benefits of having one? 

Having a disability insurance ensures employees that they will get the right protection and compensation when the time comes that they need it. When one gets injured due to the performance of his or her job, it would be a hard time to find the strength to work again like he or she used to. It is important to note that it is not as if the employee wanted to be injured. It's all part of the job.

With a disability insurance, there is a way to protect the employee's welfare with a product that whatever happens in the future, there won't be much to worry about. With the glaring statistic that at least one disabling accident occurs every second, there ought to be a way to address this inevitability without a solution that has assuring results. It's just a matter of time that not only employees are aware of this, but also employers who are responsible of staying on top of their employee's welfare during work hours.

Moreover, caution and precaution can only do so little when it comes to acquiring injuries from the workplace. Especially when it comes to workplaces that have highly erratic conditions, no amount of protection can fully shield employees from the perils of a hazardous and dangerous environment. And with the fact that physical injuries can transcend to psychological impairments and even permanent damage, the risks employees are exposed to during work hours should not be taken lightly.

Not only is a disability insurance a way to ensure that you have a safety net when the unfortunate happens that you meet an accident in the workplace; it is also a way to ensure that there is a way to protect yourself from the possibility of suffering a disability injury before your age of retirement comes. (Article Source)

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