Most people assume that they can wake up every day and earn an income to support themselves and their families. One of its most valuable assets is the ability to be independent in this regard. Also, most people do not understand that the chances of becoming disabled at some point in their professional careers. Therefore, disability insurance is available to protect your assets.
Disability Insurance Definition
Disability insurance is insurance to replace your income if you get sick, disabled or injured, and an illness or accident prevents you from earning income in your profession. Disability insurance will pay between 45% and 60% of your gross income during your absence from work.
However, it is important to keep in mind that not all policies are the same. A careful examination of the details and comparison of purchases is necessary when buying disability insurance. The cheapest policy is not necessarily a good option. The chances of receiving a monthly benefit that will cover your cost of living while you are disabled are not unlikely if you have purchased a low-cost insurance policy.
The purpose of this article is to provide useful information about the characteristics of disability insurance so that you can make an informed decision when purchasing your insurance policy.
Types of disability insurance
Short Term Disability Insurance: The short term disability is, as the name implies. This policy can pay benefits for two weeks to two years. Usually, your employer offers short-term disability policies.
Long Term Disability Insurance: Long term disability, as the name implies, will provide benefits for a prolonged period. Long-term disability insurance generally lasts approximately 5 years. This type of insurance will also expire when the person is 65 years old. Some employers will offer this type of insurance as part of employee benefits or will make it available at a specific cost.
The two main types of long-term disability insurance policies are non-cancelable and are guaranteed renewable. A non-cancelable and guaranteed renewable policy means that the insurer cannot cancel or refuse to renew your policy as long as the required premiums are paid on time.
However, the important differences between the two policies are that with a guaranteed renewable policy, premiums can be increased, but only if they affect the entire class of insured. As part of a non-cancelable contract, the payment of the premium remains in effect as indicated in the policy. As a result, initial premiums for guaranteed renewable policies may be less expensive than non-cancelable policies.