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A Beginner's Guide to Disability Insurance

Disability insurance exists to help replace lost income in the event you should suffer an illness or injury. Most disability insurance companies define "disabled" as the inability to perform the duties of one's occupation.

Typically, you have to wait a specified length of time until you are eligible to collect benefits from a disability insurance policy. This is why this is one kind of insurance that you should make an effort to acquire as soon as possible. In fact, the one factor that usually drastically distinguishes one disability insurance policy from another is the length of the waiting periods that must expire before you are considered for insurance. These waiting periods are referred to as "elimination periods" in a policy.

The typical lengths of elimination periods are thirty days, three months, six months and one year. Depending on which policy you decide to invest in, the coverage can have a length of two years, five years, to the age of 65 years or until death. The longer the length of coverage, the higher the premium, although there is a discount often built into the deal for those who opt to buy lengthier coverage.

Before you consider any disability insurance plan it is important for you to assess the reputation of the insurance company that you are dealing with. There are many government-run and independent consumer organizations that offer brochures and sites online that rate these insurance companies in terms of their financial security and ability to pay claims. Insurance experts recommend choosing a company that is within the top three companies rated by these lists. You are advised not to sign a policy with a company that appears to be receiving a substantial amount of financial aid from the government.

Since disability insurance policies are designed to replace income lost as a result of injury it is important to understand how consistently benefits are paid out in case you have to make a claim. Keep in mind, that a long waiting period can be devastating if you are completely disabled due to an injury. Before you sign on the dotted line make sure you fully understand the insurance company's protocols in terms of short and long-term disability.

It is also a good idea to inquire as to what happens if you happen to miss a payment. Know what your grace period is and make certain that the insurance company receives your premium on time. Coverage can be canceled without notice if premiums are not paid by the due date. It is possible to convince the company to reinstate your coverage if this occurs, but usually when you miss a payment your request is denied. In such a scenario you could be without disability insurance for quite a long time as you apply to a new company and wait for the elimination period to be completed for an additional policy.

Your application for disability insurance can also be delayed if you send in incomplete information. Never assume that you are covered by a disability insurance possibility until you have received official notice from the company.

Once you have received notice that you have disability insurance coverage, your next step is to wait for the elimination period to expire and make sure that you pay your premiums on time. This will ensure that you have disability insurance for a long time to come in the future.


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