Business Solutions & Financial Services Inc
Disability Income Insurance
As a Financial Specialist with more than 15 years of experience, I know many local families. My knowledge and understanding of the people in this community help me provide customers with an outstanding level of service. I look forward to helping families like yours protect the things that are important –I can also help you prepare a strategy to achieve your financial goals.
E-Mail: tercero@allstate.com
Miami Florida
Tel: 786-246-4411
Financial Representative
Individual life insurance
Business life insurance
Employee Benefits
Retirement plans
Daniel B. Tercero
What Is Disability Income Insurance?
The term disability income insurance refers to an insurance policy that provides income to individuals who can no longer work because of a disability. Disability income insurance helps protect people from financial losses if an accident or illness renders them incapable of working and receiving regular income.
Disability income insurance is available through employers, Social Security, or insurance companies and comes in short-term and long-term disability coverage. Premiums are based on several factors, including age and occupation. Policies pay benefits monthly.
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Disability income insurance provides insured individuals with income when they can no longer work because of an accident, injury, illness, and/or disability.
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Disability income insurance is available through employers, the Social Security Administration, or private insurance companies.
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Policies pay out benefits for short- or long-term disability coverage.
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Premiums are based on several factors, including age and occupation.
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Policies pay benefits every month, generally after the waiting period.
How Disability Income Insurance Works
Disabilities can disrupt incomes and prevent people from maintaining their living standards, paying their bills, or providing for their families.
As many as 43% of individuals aged 40 will have a long-term disability by turning 65.
Enrolling in a disability income insurance policy can help individuals mitigate any losses that stem from an illness or accident that leads to a short- or long-term disability.
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Premiums are based on a series of factors, including age and occupation.
If you work in a field with a higher risk of injury, your premiums will be higher.
The amount of income you receive is also factored into how much you pay for coverage;
the more you earn, the higher your premiums.
Policies pay benefits if illness, accident, or injury prevents you from performing the material and substantial duties of your occupation. Benefits are tax-free because the policyholder uses after-tax dollars to pay premiums. -
You may have to pay taxes on your benefits if your
employer pays for your disability income insurance coverage.
Disability income insurance isn't designed to guarantee 100% of your regular income.
Instead, it intends to replace between 45% and 65% of your gross income.
As noted above, most employers provide their employees with disability income insurance benefits.
This type of program is referred to as group insurance coverage. Benefits are also available to insured individuals and their families through the Social Security Administration.
Individuals may choose to purchase disability income insurance to supplement existing coverage or if they don't have any insurance at all.
Employer and Employee
Each pays a portion of the premium.
Employer and Employee
Each pays a portion of the premium.
The Impact of Disability
While most Americans insure their lives and physical possessions, such as their homes, cars, etc.,
many overlook the need to protect their most valuable asset
THE ABILITY TO EARN AN INCOME.
PAYCHECK INSURANCE
How long could you afford to pay your basic monthly living expenses if you were unable to work due to a sickness or injury?
MORTGAGE INSURANCE
How long could you continue to pay your mortgage if you were unable to earn money?
RETIREMENT PROTECTION
Would you have to borrow money from your retirement savings if you were disabled for longer than 6 months?
PROTECTION OF THE FAMILY UNIT
How would your family’s lifestyle be impacted if you were unable to earn an income?
Disability Income Special Considerations
Disability Income Monthly Benefit Payment
Maximum Benefit Period
Waiting Periods
Long-Term Disability Insurance Riders
Disability income insurance policies contain a specific monthly benefit amount based on your monthly or annual income. For instance, your employer-provided benefit may pay $3,000 a month. Unless stated in the policy language, DI policies do not coordinate with Social Security benefits but pay in addition to it. Look for an indexed policy that keeps up to date with inflation, as your benefits likely will only kick in for some time.
Most insurance companies provide plans with a maximum benefit period of two, three, five, or ten years. However, some companies have plans that pay up to the age of 65, 67, 70, or for the rest of your life. Once again, the price increases to purchase an extended benefit period.
Policies have waiting periods before you're able to receive any benefit payments. This refers to the amount of time or number of days that you are disabled before benefits kick in. These periods, also called elimination periods, vary by employer and insurer. The most common period is 90 days. The shorter the elimination period, the more expensive the premium.
Policies do not pay 100% of an employee's salary and may not guarantee job protection. But certain protections come with most policies. Noncancelable policies mean insurers can't cancel the policy for any reason unless you stop paying your premiums. Guaranteed renewable policies allow individuals to renew their policies without any changes. But the insurer may increase premiums at any time.
Not all disability income insurance policies are the same. You should review any coverage offered by your employer or private insurer before you sign up.
Types of Disability Income Insurance
Disability income insurance comes in
two types:
Short- and
long-term disability coverage.
We've noted some of the essential components of each below.
Short-Term Disability Income Insurance
Long-Term Disability Income Insurance
Short-term disability provides employees with coverage for time spent away from work for a short period.
Wage insurance covers events, such as an illness, accident, or injury, where the employee intends to return to work after a few weeks, months, or a year.
Most STD policies have a waiting period of zero to 14 days before benefits kick in. Benefits may only be paid for a maximum of two years.
As the name implies, long-term disability insurance covers individuals who may experience more lengthy or lifelong events. Employer plans typically work in conjunction with STD plans. This means that individuals begin receiving STD benefits before any long-term benefits kick in. long-term benefits begin after any short-term benefits are wholly paid out.
The waiting period for LTD benefits can range anywhere between a few weeks to several months. The maximum benefit goes beyond STD coverage, from a few years to the rest of the insured individual's life.
The Cost of Disability Income Insurance
The final premium for disability income insurance varies based on several factors.
Policy premiums generally range between 1% and 3% of your gross income.
Insurance underwriters also consider age during the underwriting process. The minimum age for applicants is 18, while the maximum tends to be 60.
Unlike life insurance, DI insurance rates for women are higher per unit of coverage than for male applicants.
Insurers have historically paid more and higher dollar amounts for claims filed by women.
This includes those filed during an earlier period of their lives.
This may be attributed to pregnancy, childbirth, and higher rates of depression and autoimmune disorders.
Smokers can also expect to pay as much as 25% more for the same protection as non-smokers because of the higher incidence of smoking-related illnesses.
When determining premiums, providers often place applicants into career and income classifications.
The basis of these classifications is the carrier’s claim experience for these job categories and incomes.
The classification with the lowest risk pays less.
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