What Every Employee Should Know About Disability Insurance Before Having to File a Claim

You know how important it is to have health insurance coverage through your job. When and if you get sick, all you need to know is whether or not the doctor is participating in your plan. But have you ever thought about what would happen to you or your family if you, because of an illness or an injury, couldn't work and had to file a claim for disability insurance? Do you know what percentage of your salary would be covered by your employer's disability insurance plan? Hopefully you'll never become that sick during your career, but the cold truth is it could happen. Trust me, you don't want to wait until you become disabled to know how this type of insurance coverage works. You need to make sure you get the facts now, so you can plan ahead. In this article you will discover what you really should know about disability insurance coverage.

Basics of Employer Provided Disability Insurance Coverage

The majority of employers in most states provide some form of disability insurance coverage for their employees. It replaces your income when you can't work due to an illness or injury. This coverage falls into two (2) categories: short term disability and long term disability. With both types of coverage there is a waiting period that must be met before benefits can be paid. There is also a maximum period of time under which benefits can be paid. With short term disability, you will most likely have to exhaust any sick days you've accumulated before benefits can be paid. Also, the percentage of income replaced will most likely be based on your length of employment. While you're out on short term disability, your employer will require updates, usually every thirty (30) days, in order for you to continue receiving disability insurance benefits. These updates are reported to the insurance company handling your employer's plan. No confidential information regarding your condition is given to your employer; the only thing being reported to your employer is your expected return to work date.

In the event you're still unable to return to work by the time your maximum short term disability benefit period has been met, long term disability may replace up to sixty (60) percent of your income. However, not all companies offer long term disability coverage; therefore, you should check with your benefits department to make sure you employer offers this type of coverage.

What If Your Employer's Disability Insurance Replaces Less Than 100 Percent of Your Income?

What should you do if your company's disability insurance coverage replaces less than your full salary? An individual disability income policy may be needed to make up the short fall.

The most important thing to consider with any individual policy is the financial strength of the insurance company issuing the policy. You can check the claim paying ability and get other important financial details through companies like A.M. Best or Fitch Ratings. You also want to know how the insurer defines "disability". Some insurance companies pay disability income if you can't perform the customary duties of your occupation; others will pay if you can't perform any job suitable for your education and experience. It's also important for you to know if the disability insurance is non-cancelable or guaranteed renewable. Non-cancelable coverage cannot be terminated for any reason outside of non payment of premiums. With non-cancelable policies you have the right to renew your policy every year without your premiums being increased or your benefits being reduced. With guaranteed renewable you have the same rights, but the insurance company can increase your premiums if it does so for all policy holders in the same rating class as you.

There are many options for you to choose from in the disability insurance marketplace. Your objective is to get the most protection for the least amount of premiums. Do your homework and discuss your needs with a disability insurance professional.

What To Do If You Become Permanently Disabled

What happens if you don't recover from your illness or injury? In the event your disability lasts for more than a year, it may be necessary for you to apply for social security disability insurance benefits. You must meet the Social Security Administration's minimum requirements in order to qualify. You have to have a certain number of work credits and be totally, as well as permanently disabled. But you need to be aware that there's a large backlog of claims for social security benefits and the majority of people applying for them are initially denied benefits. Therefore, to give yourself the best chance of getting approved, it would be in your best interest to hire a lawyer who specializes in social security disability claims to represent you.

There are many facets to understanding disability insurance and how it works. Don't allow the details to overwhelm you or worse, cause you to dismiss it from your financial planning. Don't wait until you become disabled to discover what you need to know about disability insurance. Make an appointment with your benefits department to find out what coverages your employer offers then talk with a disability insurance professional to help you create the right plan to cover all your bases.