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Disability Insurance - What it is and why you need it today

Who needs disability insurance? The answer is anyone who currently is able to work. Disability insurance covers earnings if you are unable to work because of an illness or injury. It may not provide your full current income, but can offer enough financial stability so that you can continue to pay your bills and support yourself and your family.

Many employers offer disability insurance, but if yours doesn’t, purchasing a disability insurance policy is something to consider. It’s especially important for those who have jobs that put them at risk of injury or a history of family medical conditions that have occurred in other family members while they were still at an age when they could work. But anyone can suffer an unexpected injury or illness that would make them unable to work.

Types of disability insurance

There are two types of disability insurance: short-term disability insurance and long-term disability insurance. Short-term disability insurance generally covers periods of up to two years. Long-term disability insurance benefits vary from a few years to lifelong coverage.

Both short-term and long-term disability insurance usually has a waiting period. It can range from a day to two weeks for short-term, and up to several months for long term. There are some provisions and clauses that you should consider when shopping for disability insurance of either type, including:

Disability Insurance Clauses to consider

  • The option to add on to the policy later. As your income goes up, you should adjust insurance to cover it. Insurance should also be higher when you accrue more debt, such as a home, or additional family members.
  • Non-cancelable clause: This is an important feature. IT ensures that the insurance company cannot cancel your policy unless you default on payments. With this feature you can renew your disability insurance policy annually without losing benefits or paying more in premiums.
  • Cost of living adjustment: Known as COLA, this is an option to have benefits increase as cost of living measurements increase. Cost of living refers to the Consumer Price Index for general costs, not your personal costs of living. You will pay an additional premium for this option.
  • Return of premium: This means that if you don’t make any claims over a certain amount of time, your part of your premiums will be refunded.
  • Partial disability: Allows you to return to work part time if you are partially disabled.
  • Waiver of premiums: Once you are disabled for a certain period of time – usually 90 days – you do not have to pay premiums. You can purchase your own policy that will supplement insurance offered by your employer or by the government.

A knowledgeable Texas insurance agency can provide all you need to know about disability insurance - something that any working adult should consider.


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