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I was working in my garage when I suffered an accidental injury. Will I qualify for disability?
Yes. Since it was accidental, you qualify -- even though it was your fault. If it was intentionally self-inflicted, and not an accident, you'd usually be unable to collect.
Maybe, but it depends on the type of claimed disability, the employer, and the insurance company involved. Usually the determination would be made by doctors based on medical data and (possibly) a medical examination and tests. However, employers and insurance companies know that many people who can in fact work would like to get paid for doing nothing, or while working at another job.
Yes. Being off work to have cosmetic surgery would usually not qualify for disability insurance.
Should I buy a level premium policy or a rising premium policy?
It depends on why you are buying the insurance. If you only expect to need the coverage for a few years -- until your mortgage is paid off or your child finishes college, for example -- a rising premium policy (one where the premiums increase as you get older) would be appropriate and would minimize your immediate outlay of money. You could then consider dropping the coverage when you no longer need it. Increasing premiums might also be appropriate if you expect to have much higher income in a few years and you want to minimize the cost in the first few years.
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What is an income replacement policy?
Income replacement is not usually an insurance policy (though some disability income policies could be called income replacement policies). Rather, it is a promise given by your employer to continue to pay your salary for some period of time if you become disabled (often for six months, or until you can be eligible for Social Security coverage). This saves the employer from the expense of purchasing a policy, but the employee takes the risk that the employer will not honor the promise.
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How does private disability coverage differ from worker's compensation and state disability?
You buy the policy, select the benefit levels, and pay the premiums yourself. The plan is not based on you continuing to work with your current employer or in the state where you now live. Unlike workers compensation, it is not limited to work-related disabilities. Since private disability coverage is only for the person stipulated in the policy, it can be tailored to fit specific needs.
No. Social Security is reduced if you have too much earned income, but unearned income does not cause a reduction.
When do social security disability benefits kick in?
Social Security disability coverage usually begins after you have been disabled for six months, provided you meet Social Security's rather tough requirements. About 70 percent of applicants fail to meet the requirements. If you qualify for benefits, the monthly payments are quite low. Social Security benefits are usually integrated with other disability payments so that the maximum benefit from all sources does not exceed the maximum allowable benefit - which may be close to 100 percent for the short term, but usually does not exceed 70 or 75 percent for the long term.
Won't the government take care of me if I become disabled?
No. Although Social Security and certain other government plans (such as your state's worker's compensation, Veteran's disability, etc.) do provide some disability protection, they were not intended to give you adequate replacement income - only to provide a subsistence level of income. Any other coverage will add to this.
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What is short-term coverage? What is long-term disability coverage?
The exact definition of short-term coverage varies from policy to policy. Typically, short term can mean up to six months or even up to a couple of years. Social Security disability coverage usually begins after six months, so some people consider it the definition of short term.
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Are partial disabilities typically covered?
You are totally disabled if you cannot perform any of the normal functions required by your occupation. If you can perform some, but not all of the functions of your job, you are partially disabled. For example, assume you work for a circus and are expected to tame lions and do magic tricks. If you hurt your back and are unable to cope with lions, you might still able to perform sleight of hand. You are now partially disabled.
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Some policies cover only accidents or only illness, Or both. Should I buy a policy that covers both?
You are better off having a policy that covers both accidents and illness, since you do not know in advance what may cause you to become disabled.
Does my occupation or the type of work I do have a bearing on my eligibility?
Yes. If your occupation places you at great risk of injury (parachute tester, for example) or illness (say, an asbestos remover) you can expect to pay more -- or even be ineligible -- for disability insurance.
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I like to go first class. What is the top of the line plan?
You should look for a plan that provides coverage until retirement age or even for life. It should be non-cancelable (the insurance company cannot end your coverage) and guaranteed renewable (the rates are guaranteed not to increase). You might also want some extra features, such as:
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Is disability insurance difficult to obtain?
It depends on how you define difficult. Generally, if you are in reasonably good health and have a steady income, you should be able to purchase a disability income policy.
What does disability insurance cover?
After an initial period called the "elimination" or "waiting" period, disability income insurance pays a specified percentage of your income while you are disabled. The payments continue for the duration of the disability or until the maximum time limit stipulated in the policy. As a rule, insurance companies will not allow you to have disability coverage for more than about 60 percent or 70 percent of your normal taxable income.
What are the odds of becoming disabled? What is the average duration of a disability?
The odds of becoming disabled depend on a number of factors, including age, health condition, and type of occupation. For many people, disability presents a much greater likelihood at their current age than does death. For example, at age 42 you are three times more likely to become disabled than die.
Who should purchase disability insurance?
Anyone who works for an income should consider disability income insurance. First, check to see what disability insurance you already have. You may be covered under group disability, income continuation, Social Security Disability, workers compensation, or other plans. State-sponsored disability insurance plans are also available in several states (including California, Rhode Island, New Jersey, New York, Hawaii and Puerto Rico).
What is the relationship between risk and disability?
Since it is possible to be disabled more than one time and disabilities can last for an extended time, disability insurance claims can be very large. Because disability insurance provides replacement income checks, disability insurance premiums are paid to insure against the risk of lost income. Medical expenses, liability, or other types of losses are not not covered under disability insurance.
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The purpose of disability insurance is to replace the lost income from work should you become disabled, and unable to work. The disability insurance policy will stipulate when you are eligible to begin receiving benefits. Usually, you must be unable to work for a specified amount of time before disability benefits begin to be paid to you. The amount of the payments, the duration of coverage, and a description of exactly what constitutes a disability are contained in the policy. The premium for the policy is determined by a number of factors, including: the amount of the income payments, the length of payments, exactly what constitutes a disability, and such personal risk factors as the state of health and type of employment of the insured.
I was working in my garage when I suffered an accidental injury. Will I qualify for disability?
Yes. Since it was accidental, you qualify -- even though it was your fault. If it was intentionally self-inflicted, and not an accident, you'd usually be unable to collect.
Maybe, but it depends on the type of claimed disability, the employer, and the insurance company involved. Usually the determination would be made by doctors based on medical data and (possibly) a medical examination and tests. However, employers and insurance companies know that many people who can in fact work would like to get paid for doing nothing, or while working at another job.