| All of us should have a financial to-do list. | | | | policy is the conditionally renewable policy. |
| Purchasing disability insurance probably | | | | The insurance company can raise rates at any |
| ranks pretty low on this list. Most of us | | | | time or put any condition on the policy.Pay |
| figure that we won't need it. But according | | | | attention to how the insurance company |
| to current statistics, approximately 30% of | | | | defines "total disability". The most |
| people age 35 to 65 will have a disability | | | | lenient, consumer-friendly approach is |
| lasting at least 90 days. These disabilities | | | | "own-occupation disability". This means that |
| can seem as minor as a broken bone, an | | | | if you are disabled and cannot perform your |
| atypical pregnancy, or an emotional | | | | principal job duties, you will be paid your |
| conditional, but all of these can cause you | | | | disability benefit, even if you can perform |
| to stay away from your job. If you should | | | | other tasks.The most stringent definition of |
| ever need disability insurance, you will be | | | | "total disability" is "any occupation |
| glad that you took this precaution. A great | | | | disability". This means that you will not be |
| number of people without coverage could be | | | | paid any benefits unless you are unable to do |
| driven deeply into debt.Most people think | | | | any kind of work and are completely |
| they do not have to purchase additional | | | | unemployed. You will find that many |
| disability coverage because they are already | | | | insurance companies define "disability" |
| covered through work. But most disability | | | | somewhere in between the two extremes defined |
| insurance covered through employers only | | | | above.It is prudent to purchase partial |
| provides 60% of your salary. Further, these | | | | disability or residual coverage. This means |
| policies usually set a monthly maximum of | | | | that the insurance company will pay partial |
| $10,000, which is less than 60% of highly | | | | disability benefits if you can work at your |
| compensated employee's salary. Another | | | | job only part time. Their employer would pay |
| problem is that these benefits are fully | | | | for the time actually worked and the partial |
| taxable. This means your net payment is a | | | | disability coverage would pay the other |
| lot less than the 60% of your salary. These | | | | portion.The price of disability insurance |
| employees find themselves trying to survive | | | | premiums typically cost 3% of your annual |
| on 40% of their salary.When shopping for a | | | | income. This varies based on factors such as |
| policy, look for the strength of the company. | | | | age, gender, occupation and health history. |
| You need to determine whether the insurance | | | | When pricing your policy, the insurance |
| company is financially sound. Also make sure | | | | company will categorize you according to your |
| they will be able to pay their claims in the | | | | occupation class. Your policy will be more |
| future.On your contract, check the | | | | expensive if your occupation is more likely |
| renewability. There are three options. The | | | | to results in a disability.As you can see, it |
| non-cancelable contract is the best. This | | | | is financially prudent to purchase disability |
| type of contract locks in your rates and | | | | insurance if you would lose your income |
| benefits. The only person that can make | | | | because of a disability. Only the wealthiest |
| changes is you, not the insurance company. | | | | people are not in this category. There are |
| Next in line is the guaranteed renewable | | | | many factors involved when purchasing this |
| policy. Once you have purchased your policy, | | | | type of insurance. Take your time and |
| the insurance company cannot drop you but | | | | educate yourself. Chances are, you will be |
| they can raise the prices. The worst type of | | | | glad that you did. |