Disability Insurance
Disability insurance is designed to provide an income stream if you are unable to work due to injury or illness. While many employees have access to group disability insurance through their employers, these benefits may be taxable. Some individual policies paid for as an out-of-pocket expense can provide income tax-free benefits, and may replace a larger percentage of your monthly income.
When choosing a policy, you may wish to evaluate the following features:
- Benefit amount: the percentage of monthly income that the policy will replace
- Elimination period: Typically you may choose a 30, 60, 90 or 180 day elimination period (the amount of time that will elapse before benefits are paid out).
- Income term: benefits are generally paid out for a set number of years or until you reach retirement age. Benefits usually do not extend beyond retirement age because it is assumed your income would cease to be based on employment earnings in retirement.
- Disability definition: Different policies categorize injuries and illnesses differently. Some injuries and illnesses may be covered while others may not.
You may also wish to purchase a policy that is non-cancelable (one the insurer can never cancel) and guaranteed renewable at the same price as long as your premiums are paid on time.
A Legend Advisor with insurance knowledge can help you evaluate your disability insurance options and select the policy that may best suit your needs.