Too often disability insurance is overlooked or underutilized. It is natural to assume good health enjoyed today will continue uninterrupted until retirement. Because this is not always the case, paying for disability insurance today when it is not needed is like dotting the “i’s” and crossing the “t’s” in a comprehensive financial plan for the future. In the event a health crisis occurs, disability insurance is designed to replace a portion of your income lost during the period of disability.
Employers that include disability insurance on the menu of choices generally offer two types:
✔ Short term disability – provides benefits for a limited period of time – usually six months or less.
✔ Long term disability – provides extended benefits after an employee has been disabled for a period of time.
Short Term Disability Insurance:
✔ Bridges the gap between sick pay and long term disability coverage.
✔ Coverage typically lasts between 10 to 26 weeks.
Long Term Disability:
✔ Benefits employees who are disabled as a result of sickness or accident and unable to work for a lengthy period of time (usually more than six months).
✔ Long term disability insurance does not provide insurance for work-related accidents or injuries that are covered by workers compensation insurance.
What else do you need to know?
✔ The cost of group coverage is often less expensive than the cost of individual coverage
✔ Group policies often have fewer underwriting restrictions than individual policies. A physical exam is not typically required.
✔ “You can’t take it with you” is a phrase that normally applies to group disability insurance. When you leave your job most often the coverage does not convert to an individual policy.
✔ If you know you are leaving your job, consider applying for individual coverage before you quit. Assuming you are insurable this strategy eliminates lapses in coverage.
✔ Consult a Certified Financial Planner™ to determine how disability insurance fits into your long-term financial picture.
We want to make sure you don’t miss your opportunity to take advantage of employer provided benefits during open enrollment period. That’s why we are focusing an 8-blog series on your options when it comes to open enrollment. Typically, open enrollment is offered toward the end of each calendar year and provides a window of time to make new elections or change current benefit coverage. It’s easy to confirm this period of time by checking with your human resource department or benefits coordinator.
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