To most people, their biggest asset will reside in their ability to earn a living. These days, many things in your life will depend on your ability to make money, including coverage for mortgage, electricity and everyday food costs. In the event where you might find that you are unable to work, you might ask yourself how will you be able to pay for your basic needs? Savings will only last for so long and a disability can sometimes mean that you may never work again. To protect yourself and your family from the devastating consequences of a disability, you can resort to purchasing disability income protection. This insurance will make it possible to cover your basic needs when you find that you are unable to work for a period of time, whether it be three months or three years, six months or even for a lifetime.
Short-term disability income protection can usually last for a period of approximately three to six months. It will equal a major portion, between 40-65%, of your normal paycheck and may be used to cover your mortgage payment, household bills together with your medical needs. Most policies have a cap on how much you will be able to receive every month and most will also have a limit on how long they can be used, usually for a period of two years. Waiting periods before you may begin receiving benefits will usually range from zero to fourteen days and will usually depend on whether you might be suffering from an illness or an injury. More urgent injury claims tend to be paid faster as illnesses might sometimes require further medical information in order to determine whether they might be considered as a disability. These are the main points you will need to consider when choosing an insurance policy.
Long term income insurance, on the other hand, will make it possible to pay benefits for an average of two to five years and will provide 50-60% of your pre-disability income. Taxation of these benefits will also depend on whether premiums were paid with before or after tax dollars. Also, this policy will be able to kick in if you find that you are unable to return to work, yet make 20% or less of your previous income. If you must change careers and your income drops dramatically, this insurance protection will also sometimes be able to help you with the transition.
With any disability insurance policy, you will need to carefully read your paperwork in order to ensure that you know what will be covered and what will not. You won’t want to find yourself in a situation where you are unable to work and yet might not be covered by the insurance. This should not be considered as a solution to a job loss as it will only cover for illness or disability, yet with the odds of a person becoming disabled 1 in 4 or higher, you shouldn’t neglect any kind of insurance of this nature, as it might surely come in handy during your time of need.
Peter O. Justin is a contributing editor at DebtFinanceArticles.com. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.