Disability Insurance Details
Disability insurance provides money to maintain your lifestyle when you become sick or disabled. Some plans are provided by your employer, but if you lose your job, you also lose your protection. Personal disability insurance plans, on the other hand, cannot be taken away from you.
With disability insurance, you can select the length of time money is paid during your disability (called the benefit period). This period can vary from 2 years of coverage or to age 65 depending on your occupation, budget, and requirements. Disability insurance costs are highly dependent on occupation for obvious reasons: a person with a dangerous occupation is more likely to become disabled, so if they are eligible, options may be limited and insurance costs could be high. Similarly, the amount of coverage you purchase cannot exceed a percentage of your current earnings (ie. you cannot insure what you do not have).
The waiting period is the number of days from the date you are disabled until the benefit start date, typically 30, 60, 90, or 120 days. Longer waiting periods are less expensive, therefore waiting period selection is a balance between cost and the need for a short waiting period.
Three Disability Insurance Classifications
- Own occupation - provides you with a monthly benefit while you are disabled and unable to work in your regular job, even if you are working in another occupation. Since you can earn an alternate income and still collect disability insurance, the own occupation feature is most desirable.
- Regular occupation - provides you with a monthly benefit while you are unable to perform the duties of your job as it is normally performed, and the disability must result in a loss of income of a certain percentage. The definition of disability in regular occupation is more restricted than in own occupation, making it harder to stay on disability. Thus, own occupation is more desirable.
- Any occupation - provides you with a monthly benefit while you are unable to perform the duties of any occupation, whatsoever. This definition of disability is strict. To receive benefits according to this definition, you have to be unable to work in any job, not just your own. Occasionally, however, the wording is modified to take into consideration your earning level, education, training, and experience. Since this definition of disability is the most restrictive, any occupation is a good entry level disability insurance feature, until you are eligible for regular or own occupation.
In other words, any occupation provides basic coverage, regular occupation is better, and own occupation is best.