Consumer Guide to Disability Insurance

If you are ill or suffer an injury, the disability insurance will play an important role in your life. Not only will you receive money steadily in place of your regular paycheck, you also will be able to heal and rehabilitate - so your focus can be on your health and not your finances. Whether you're simply looking to learn more about your employer-provided disability coverage or are searching for a long term disability rate for your own coverage, it's important to understand the way that disability insurance works. Here are some helpful tips for you and your family.

Short-term disability info

• Short-term disability coverage will replace a portion of your lost paycheck in the event that you are unable to work because of an illness or injury. Pregnant women often go on short-term disability before they give birth and stay on it while on maternity leave.
• Short-term coverage usually starts after you have exhausted your employer's sick leave allowance - and possibly also your vacation days. This also means that once you are able to return to work, you likely won't have any available sick or vacation days until the annual renewal period. Check with your human resources department to find out more.
• Most short-term policies cover no more than six months of time after the illness or injury - your policy may vary. In general, if you are still unable to work after the short-term coverage concludes, you will then move into long-term coverage (if available).
• The amount of your benefit will vary by the policy. Some policies provide 60 percent of your previous salary; yours could be higher or lower. Be sure to be prepared for this in the event that you need the coverage.

Long-term disability info

• If you have long-term disability coverage, it will likely replace from 50 to 70 percent of your salary. Check your policy to find out the coverage guidelines.
• Long-term disability coverage is considered some of the most important insurance you can purchase. Many individuals who need disability coverage require it for more than a year - think about the financial toll it would take to be unable to work for more than a year.
• The duration of coverage for long-term disability can vary greatly. Some policies will cover the insured for five years; others for 10. Some will continue to pay until you reach retirement age. Make sure you understand the policy's guidelines.
• Your long-term disability coverage may conclude if you are able to do any kind of work. Some policies are written at an "any occupation" standard, which means benefits will cease whenever the insured individual is able to work in any capacity. If you have an "own occupation" policy, your coverage will continue until you are able to do the work functions of your actual job.
• Most disability insurance companies will require you to file for Social Security benefits once you begin receiving long-term disability payments. It is your obligation to follow your disability insurance company's instructions - otherwise you run the risk of defaulting on the policy's agreements.