Confusion No More: Answers to 10 Disability Insurance Questions

Posted By: The Income Protection Team on 7/27/2016


Confusion No More: Answers to 10 Disability Insurance Questions

Of all the things you buy in your lifetime, insurance is probably one of the more complex items on the list. And because disability insurance is a little less mainstream than car insurance, for example, it can seem especially confusing. Never fear! We’re here to make it easier than ever before.

With that goal in mind, here are answers to 10 frequently-asked disability insurance questions. 

Q: What’s the difference between individual disability insurance and paycheck protection? What about income protection?

A: Actually, there is no difference! Individual disability, paycheck protection, and income protection all refer to the same type of coverage.

Q: How is individual disability insurance different from long-term disability insurance at work?

A: One major difference is that you have to pay taxes on the long-term disability benefits you receive through your work-sponsored policy. Also, benefits are usually capped and may not be sufficient for your income protection needs. Another big difference is portability. With work benefits, you lose your coverage if you change jobs. If you want to know whether you’ll be covered if you sustain a disabling illness or injury, the best this type of policy can offer is a firm “probably.” Probably isn’t enough. It takes an individual policy to ensure your protection. Conversely, individual disability benefits are not taxed. Benefit levels and policy provisions are tailored for you and the coverage follows you to any job and even into self-employment.

Q: When do people buy disability insurance?

A: You have to purchase a policy before you get sick or injured. You wouldn’t wait to buy auto insurance until you’d crashed your car; the same goes for disability. Also, the younger you are when you buy your policy, the lower your rates.

Q: Does paycheck protection help when you’re fired, or lose your job for some other reason?

A: No, it doesn’t protect your paycheck in those scenarios. Disability insurance kicks in only when you have a disabling injury or illness, one that makes you incapable of doing your job according to your doctor.

Q: How does the cost of disability insurance compare to homeowners’ or car insurance?

A: It’s much more affordable when you compare apples to apples, and look at how your total earning power stacks up against your annual premium. To calculate your earning power, start by subtracting your current age from 67. Then multiply that number by your annual income. You can insure the resulting amount – which can easily add up to more than $1 million – for as little as 1 percent of your annual salary. So, a 35-year-old person who earns $40,000 a year could pay an annual premium of $400 to get $1,280,000 of protection. Amazingly affordable, right? Compare that to car insurance, where a $30,000 car could cost you $1,000 a year.

Q: What is a policy elimination period?

A: Similar to a waiting period, it’s the amount of time it takes for your coverage to kick in after your injury or illness takes place.

Q: Can’t I just get Social Security if I’m disabled?

A: Social security is hard to qualify for, it provides minimal benefits, and it takes a long time to kick in. For example, you may have to wait over a year to get approved for Social Security benefits after you apply. This is not a failsafe by any means. I’m sure you agree that it’s best to pave your own way and take control of your own financial stability rather than hoping the government will help.

Q: Can I get an individual disability insurance policy if I already have a policy at work?

A: Yes! In fact, it’s smart to supplement your workplace disability coverage, especially when you’re between jobs or planning to leave your job. It’s also smart to investigate the benefit levels available from your work policy, so you can purchase an individual policy to round out your coverage.

Q: Who needs disability insurance?

A: You can answer this question by asking how it would affect you if you lost your paycheck for three months or longer. Generally, you don’t need disability insurance if you’re independently wealthy, if you don’t rely on your paycheck to pay your bills, and if no one else (parents, children, a spouse) is relying on you for material support. If, however, you work for your living, you provide for others, your obligations include commitments like student loans or mortgages, you’re saving for retirement, or you like to travel, go on adventures or play sports, disability insurance is a good idea. Take the quiz to find out if you need coverage here.

Q: What makes DIonDemand different from other disability insurers?

A: One of the biggest differences is how quickly we deliver quotes, approvals and policies – all in just 20 minutes in most cases. We are the only provider who can say that. Other disability insurance providers require four to six weeks for the underwriting process. You can get a quote, but you have to wait for weeks to get your approval and coverage. Read more about our speed here. And, for specific details about the DIonDEMAND coverage read this FAQ.

Curious to give it a try? Get your instant disability insurance quote here.

Topic: Disability

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