10 Disability Insurance Shopping Tips
Your biggest asset is your ability to earn income. Disability insurance is a crucial factor in protecting this asset, which makes the process of buying long term disability insurance of utmost importance. To buy disability insurance from the right insurance company and acquiring the right benefits at the best disability insurance rates should be your central points of focus.
Here are 10 disability insurance shopping tips:
1. Make sure you understand the definition of disability before you buy disability insurance
A policy that pays a benefit if you're unable to work in your occupation is preferable to one that pays only if you're unable to work in any occupation.
2. It's all about the quality of benefits!
Disability insurance rates are 1 to 3 percent of your income for a good individual disability insurance policy. With some things, cheaper is not necessarily better. Disability insurance is not a commodity; it is a contract that clearly spells out when a claim will and will not be paid. Before you buy disability insurance, make sure you clearly understand the contract.
3. Check out the company ratings
Your disability insurance company could potentially pay your salary for the next 10 to 30 years. It is important that they be financially sound. All disability companies are rated by third party rating companies such as S& P, The Street and Moody's. It is best to look for an "A+" or better rating.
4. Watch out for group plans
Group plans can be changed or canceled at any time. This could leave you without coverage when you need it most. Most group plans cannot be taken with you if you switch employers. Most group plan benefits are taxable and do not cover bonuses, which leaves you with a lower net after-tax benefit. Group plans have a benefit cap (some as low as $5,000 per month). Many group disability plans have a restrictive definition of disability. These plans require you to be COMPLETELY disabled before they pay a benefit. Benefits are typically reduced by income received from workers comp, social security, and other income sources. Most group policy benefits do not keep pace with inflation. Many group plans do not cover a partial disability (which ironically, is the most common type of disability).
5. Buy disability insurance from a brokerage firm
A broker represents more than just one company's point of view and offers you objective advice rather than a captive agent who represents only one company.
6. Consider the inflation protection benefit
A person disabled for 25 years with a $6,000 per month benefit would be paid a cumulative benefit of $1,800,000 without adjusting for inflation; if increased by 3 percent per year to adjust for inflation, the cumulative benefit would be $2,667,532.
7. Buy disability insurance from a disability specialist
There is a lot to understand about disability income insurance. Most insurance agents do not know how the contracts work. That is why it's important to work with a disability specialist who understands the contracts of multiple companies.
8. If three or more people from the same employer buy a disability insurance policy, they can save substantially
In some cases, three or more female physicians can save nearly 40 percent per year when they buy their policies together while male physicians can save up to 25 percent.
9.Just because your association sponsors a plan does not mean it is good
In almost all cases, association plans are group plans. Be sure to read the master association contract so you can understand all of the contractual provisions and disability insurance rates.
10. Always buy disability insurance policies that are guaranteed renewable and non-cancelable
For these policies, the insurance company can never raise your rate or cancel your policy even if your health or job status changes. They are portable, even if you move to a new state.
Please call (877) 972-3262 to speak with an experience disability insurance specialist or complete disability insurance quote request form now.