Posted: Mar 01 '23

Questions to Ask Your Disability Insurance Broker

If your job or business is all you depend on for your financial needs, then having protection for that income source is critical. One way you can protect yourself is to purchase disability insurance that will ensure you are still meeting your financial obligations despite not working due to a disability. In the sections below, we’ve covered more about disability insurance, including the main questions you should ask your disability insurance broker. Call us to speak to a Vistaplan advisor today.

What is a Disability Insurance?

Disability insurance or income protection insurance is a policy that replaces part or whole of the regular income if the person insured loses the ability to work due to a disability. It's a crucial type of insurance for most working class because it ensures they have a safety nest to help them pay their bills if forced to miss work for several weeks or months.

The income from disability insurance helps protects individuals from financial hardships since they can no longer have their regular income. A disability could be physical or mental, so long as it limits you from performing your normal duties. This can be caused by accidents, pregnancy, childbirth, or other medical conditions.

How Does Disability Insurance Work?

Disability income insurance has a simple goal, to replace part of your regular monthly income, which you cannot earn due to your current condition. This means that disability insurance offers monetary benefits and not job security. But keep in mind you will have to meet specific requirements set by your insurance policyholder. If you are eligible, you will receive 60 to 70% of the money you earned five to eighteen months before claiming your insurance benefits. The duration of this benefit will now depend on the type of disability insurance you have.

Questions to Ask When Buying Disability Insurance

It can be challenging to decide which disability insurance policy is best for you or to assess whether your current coverage is adequate. The following are crucial questions (and their answers) to ask your disability insurance broker before purchasing a policy.

When Should I Buy Disability Insurance?

Disability insurance safeguards you against losing your income. If you become disabled, replacing your current paycheck will likely be complicated. Having disability insurance guarantees, you receive about 60 to 80% of your income, whether you lost your earning capacity due to a degenerative illness or an unexpected accident. Ideally, you want to speak to a disability insurance broker about buying a policy while you are strong, healthy, and working in full capacity. Remember, the earlier, the better.

What are The Most Common Types of Disability Insurance?

Disabilities insurance comes in two general categories:

1. Short-term disability insurance policies – This coverage replaces up to 60% of your income in case of a temporary disability or the short time you cannot work. Its waiting time is usually 0 to 14 days from the day of disability and may cover you for up to one year.
2. Long-term disability (LTD) insurance policies – they have a waiting period of 90 to 180 days and its benefit period depending on your policy, i.e., 5, 10, 15, or even till your retirement age. LTD typically pays 50 to 80% of your pre-disability income.

When do Disability Benefits Begin?

The elimination or waiting period is the amount of time that must pass after the date of disability before you start receiving the benefits. Most long-term disability policies permit 30, 60, 90, 120, 180, and 365 days of waiting periods; however, 90 days is the most frequently chosen duration. 

Your premium will be less expensive the more extended your waiting period is. Why? Because the majority of disabling conditions, like broken bones, back problems, or temporary illnesses, disappear within the first few months.

How Long do Disability Benefits Last?

The benefit period is the time you will be eligible for insurance benefits. Common term lengths range from 5 to 10 years to 65 years, depending on your insurance provider. Remember that the longer the benefit period you select, the more expensive the premium. 

Can the Insurance Company Change or Cancel my Policy?

As long as you don't lie in your application and pay your premiums in full, an insurance company cannot modify or revoke a guaranteed renewable and non-cancelable policy. Furthermore, your insurance giver cannot raise the premiums.

What Factors Determine the Cost of Disability Insurance?

A few factors influence disability insurance's actual pricing: These include:

• Age. Your risk of developing a disability increase with age. Therefore, the younger you are, the lower the cost of premiums.
• Gender. Disability insurance brokers have found that women file more disability claims than men and are more likely to have expensive suits. Therefore, when all other factors are kept constant, women tend to pay 40% more than men for their disability insurance premiums.
• Health status. Insurance providers consider your health history when determining whether you are eligible for disability insurance and the pricing of your premiums.
• Occupation. Your line of duty generally perceives the level of risk you are exposed to is typically considered when determining your premiums. The premium for a high-earning professional who spends most of their time in an office is lower than that a manual worker pays.

What are the Benefits of Buying Disability Insurance?

Disability income insurance has a straightforward objective; to replace a percentage of your gross monthly income when you cannot work due to an illness or injury. To support yourself and your family, it aids in the purchase of food, paying bills, and covering your other expenses. 

What are the Different Disability Definitions?

Some disability insurance policies will still provide a monthly benefit if your injury/disability allows you to work in a different capacity but hinders you from carrying out the responsibilities of your usual occupation. Other policies restrict monthly benefits payments if you can perform any other job. Your disability insurance broker will make sure that you understand all the terms of your policy and know exactly what you are getting.

How can I use Disability Insurance Payments?

Whatever you decide to do with your monthly benefits is up to you. Monthly benefits from your disability insurance policy can assist you in meeting your short and long-term debt obligations and monthly living expenses. 

Does Disability Insurance Cover Pre-existing Conditions?

Pre-existing medical conditions may not always hinder your ability to purchase disability insurance. You may be able to get disability insurance coverage for conditions that are not related to your current disability. Usually, insurance providers will make an exception for specific pre-existing medical conditions. These exemptions may be permanent or, in some cases, removed when there is no recurrence of the condition within a predetermined period. 

Will I Pay More if I Purchase a Policy through a Disability Insurance Broker?

Working with a disability insurance broker is the best decision you can ever make. If you work with a broker, you might be able to save a lot of money on a disability insurance policy. A broker will recommend the best available disability insurance coverage at the most affordable price after comparing a wide range of market policies and evaluating them according to features and costs.

Secure Your Future Today!

It is emotionally and physically challenging to adjust to an unexpected disability. The last thing you want is to start worrying about how you will pay your bills or provide for your loved ones. Having disability insurance can help in situations like this. Speak to a disability insurance broker at Vistaplan today to secure your future now!

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About the Author - David Motkoski

David is a well-respected insurance advisor with over 30 years of experience helping healthcare professionals, business owners, and their families secure their financial futures. He takes the time to make certain his clients understand the life, disability, and health insurance products they are purchasing, so they can make the right choices for their budgets, plans, and futures. CONNECT WITH ME ON LINKEDIN