DISABILITY INCOME

One's ability to earn an income is an important asset to protect.

FREQUENTLY ASKED QUESTIONS

WHAT IS THE DIFFERENCE BETWEEN SHORT AND LONG TERM DISABILITY?

The main difference STD and LTD is how long the coverage is.

 

Short-term disability insurance lasts for a shorter period of time, usually starting at a few months and no longer than a year.

 

Long-term disability insurance will not begin until any short-term disability benefits have been exhausted, and can last until your retirement. LTD usually has 90, 180, or 365 day elimination periods before payments begin. 

WHO NEEDS DISABILITY INCOME INSURANCE?

Those who rely on their EARNED INCOME to maintain their lifestyle. 

W2 employees usually have a small group benefit, and should look into supplementing with a private disability policy. 

1099 contractors don't have benefits. If they rely on their earned income, they need to look into disability income for their financial plan. 

DO I NEED ANY RIDERS?

Few riders worth looking into: 

  • Own Occupation

  • Non-cancellable, guaranteed renewable

  • Basic/Enhanced Residual Riders

  • Cost of Living Adjustment (COLA)

  • Future Increase Option (FIO)

WHAT GOES INTO PRICING A POLICY?

  • Age

  • Health

  • Occupation type and duties

  • Benefit period and monthly benefit amount

  • Elimination period

  • Benefit age and length

  • Riders

WHAT IS AN ELIMINATION PERIOD?

An elimination period is the amount of days you need to be disabled before a benefit is to start. For most STD plans, this is 14 days, for most LTD plans, this is 90 days. 

The elimination period is often referred to as "a time deductible." The longer the elimination period, the less likely you are to qualify a claim, and thus, lower premiums. 

ARE DISABILITY BENEFITS TAX FREE?

Yes. This is because you are using post tax dollars to fund your policy. 

Policies offered through employers usually cover 60% of your gross income, so after taxes this nets to around 45% on average.