The Basics of Disability Insurance

Disability insurance policies have thier own unique terminology, using language you won’t find in any other insurance policy.

Total disabilty : A person is considered totally disable if he is unable to perform all the principal duties of his job or any other job for which he is reasonably suited, considering his income, education and experience.

Elimination period : Disability for deductible. The elimination period represents the number of months you are willing to wait, while disable, before coverage begins. Your choice will depend on how much money you have in the bank as a safety net combined with how long your employer will continue your salary or provide sick leave following a disability.

Benefit period : This refers to the duration for which you want a disability insurance paycheck.

Cost of living adjustment rider : if you are disable for several years, the monthly disability check you receive has diminishing spending power. The cost of living adjustment option annually increases your benefit while you are disable by some predetermined percentage.

Future purchase option : This option guarantees, when you apply and qualify for your first policy that regardless of your future health, you can increase your coverage every one to three years, up to the option limit you’ve purchased.

Residual disability : It means proportionate coverage hwen you are unable to work full-time and usually resulting in an income loss of at least 20 percent.