Long Term Disability Insurance
Most individuals believe that catastrophes will always befall their neighbor and they will never be victims of any misfortune. But disaster needs no invitation and can strike anyone. Every individual faces the possibility of falling ill, and a normal cold may lead to fatal bouts of pneumonia or other serious illness. Research shows that there is a 20% risk of an individual becoming disabled. Also, it is noted that on average, the period of disability of a long-term nature is about two-and-half years.
Just imagine having to survive for such an extensive period without any continuous flow of income. Studies conducted also establish that the more frequent LTDs or long term disabilities are disorders of the connective tissues and musculoskeletal, which are related to back and neck, tendon, muscle and joints, and disorders of the hand, ankle, and foot. And the dreaded cancer is also among the primary causes of long-term disability.
Affecting one’s ability to earn
When you become disabled, it throws a monkey wrench in the whole works. Your life becomes a huge cauldron of turmoil and it has an acute domino effect on your family and friends. Your disability strips you of the ability to earn. Though some may be able to survive a few months of disability, by living off their savings, a long-term disability does eat your savings to the last cent. A LTD not only prevents you from earning an income, but also drastically undermines your self-confidence making you irritable and despondent. There is doubt whether anyone will be able to survive on savings alone for a lengthy period of LTD or, in other words, no one could have saved such a fortune as needed during this protracted duration.
But solace is at hand for such long-term disability patients in the form of long-term insurance protection. Such policies have the ability to supply you with a steady flow of income for a very long time. Conventionally, employers insure their employees under these LTD policies, although it is also possible for individuals to purchase long-term disability policies on their own. The payment of benefits against such policies falls in the range of 20% to 60% of your last drawn salary and this percentage is specifically described in your LTD insurance policy.
Selection of long-term disability insurance policies
There are certain caveats that you will have to take note of while selecting an insurance company for your long-term disability insurance policy. One of them relates to how the insurer defines disability. Some companies pay against such policies if you are incapable of performing your normal duties, while some will pay benefits only if you are incapable of doing any work at all. The provisions of some policies allow you to take the decision regarding the commencement of payment and you can even opt for a period of waiting before triggering payments. The insurance companies have different criteria for paying benefits. Some companies start paying benefits only if there is total disability, while some may pay you for a limited time if your disability is partial, and then also only if this partial disability will precede total disability.
Benefits on offer
Some insurers offer residual benefits that help bridge the gap in your partial income due to limitations in performing your normal duties because of your disability. There are certain policies which make payments even if you are able to work, but still suffer from presumptive disorders like loss of the use of limbs or hearing, speech or sight. Normally, such policies cover you for a period of two to five years or until you attain the age of 65. But you have to consider the longer period of payment of benefits and in doing so, you will attract a higher premium.
With the ever increasing rate of inflation eating into the buying power of money, you may opt for a COLA, meaning Cost Of Living Adjustment. By virtue of this COLA, you are able to link your benefits to the CPI or consumer price index. The terms of your long-term disability policy may read as CPI + 1%. Once you are hit by the LTD thunderbolt, and there is absolutely no chance of you earning any income, this will make it impossible for you to continue paying the premiums on your policy. Hence, it is advisable to opt for waiver benefits which will entail you not to make premium payments once your disability period adds up to ninety days or more.