Understanding the Short-Term Disability Elimination Period
Short-term disability insurance is a valuable resource designed to provide financial protection when you are unable to work due to a disability, illness, or injury.
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Employer Disability Insurance vs. Individual Disability Insurance
What Is Individual Disability Insurance
Individual disability insurance is a type of insurance that provides an income for individuals who are unable to work due to an accident, injury, sickness, and/or disability. It protects policyholders should they become unable to work due to illness or an accident.
What Kind of Insurance Do Employers Give?
To help provide a stream of income if you become disabled, many employers offer group coverage for short-term and long-term disability for full-time employees. These group disability plans typically cover a percentage of your monthly earnings, but it is often not enough to guarantee financial stability.
Individual disability insurance plans fill this gap. Most policies offer a fixed amount of benefits, depending on how much you earn. While individual disability policies typically have higher premiums, they provide better benefits since applicants are underwritten individually.
While the same policies, provisions, and benefits as an individual disability insurance plan apply, keep in mind that there is a maximum supplemental benefit amount that you are entitled to, depending on the amount of income you earn and the active group benefits.
When You Should Buy Individual Disability Insurance
There are several situations when an individual disability insurance policy is something you should consider. Here are some of those cases:
- If your employer does not offer a group plan, individual disability insurance may be your sole disability insurance policy.
- You may also buy individual disability income policies as an alternative to group plans or when a group plan is unavailable.
- Individual disability insurance may also serve as additional disability insurance that fills in the gaps between your employer’s plan and the amount you will need financially to survive should you become disabled.
Do You Need an Individual Disability Insurance Policy?
If you cannot work because of a medical condition, individual disability insurance may provide a stream of income. The right policy will guard against the risk of losing the ability to make a paycheck throughout a working year. It can protect your mortgage and car payments, utilities, rent, and similar expenses by providing income if you become ill or injured and cannot work. If you are a higher income earner (or earn income from commissions or bonuses), you should consider supplementing your group coverage with a personal long-term disability insurance policy.
However, if you have enough savings to replace the lost income for the period of time you would experience a disability, perhaps the policy is unnecessary for you.
Benefits of Individual Disability Insurance
Individual disability insurance protects you and your sources of income if you are injured or sick and unable to work. It provides financial safety and the assurance that you and your close ones will be protected even if the leading income provider in the home is unable to work due to a medical condition or disability.
Another benefit of individual disability insurance is that it may help cover income derived from commissions, bonuses, and other incentive payments, which may be unrecovered by a traditional long-term disability insurance plan.
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