Is Long Term Disability Insurance Worth It?

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The last thing you want to do is add expenses to your budget. Especially when it comes to other types of insurance, I suppose, enough already, right?

But to realize that a disability causes 16X (time) mortgage closures will change things more than death. You begin to understand why it is important to have some kind of long-term disability insurance.

In today’s post, I’ll help you understand what long-term disability insurance will pay, how it works, who needs it, and what it covers. As people often find

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What is Long Term Disability Insurance?

Generally, I consider disability insurance as payroll insurance, because, in essence, that’s what; It “insures” your salary.

When we refinance it on long-term paycheck insurance, it has a better ring and is easier to understand.

In simple terms, there is a long-term disability policy against the protection of income temporarily or permanently.

Your disability may come from either an accident or illness that can last for months or years.

You may find long-term disability is referred to as LTD insurance.

Who Should Get Long Term Disability Insurance?

If you have income, you need long-term payroll insurance. But this is even more accurate if you meet any of the following situations:

Small business owners

Most of us are trying to get cash flow on the right side of the quadrant. However, once you get there, you still need to protect your income, especially when we wear different hats on a daily basis.

Small businesses are usually a business as long as you can generate enough revenue and need to start hiring a team.

But if you have to stop working because of an inactive event that lasts a long time, you may lose your business.

Even if you make it to the point of hiring them, it will still negatively affect them if you stay away from the business for months.

As a small business owner, don’t waste time. You must protect yourself, your family, your business, and your employees.

Finding the best disability income insurance options is important, and there are a few different types that we discuss below.

Working parents

For my friends who have children, the most important concern is always about the quality of life their child is now and how they will look in the future.

When you do not have a grocer, it is easy for you to not worry about being handicapped. However, it’s important to think about how this will affect your children if you completely lose your income.

Especially if you have children who still need to be in daycare, how do you cover those costs?

If you are disabled, as a parent, the income from replacing your regular salary will allow you to maintain your family.

While you may need to cut back on certain expenses, you will still be able to cover things such as your:

Car note

Mortgage or rental

Cell phone bill

Utility

Credit card payments

A freelancer

Currently, we are in the age of the gig economy. As a matter of fact, more than 57 million people are considered freelance or some kind of freelancer works.

As a freelancer, you will be 100% responsible for finding work, completing that task and then paying your bills.

If you don’t show up, there is absolutely no way for you to complete the job or make money. And after a few missed times, you might start to lose customers sooner.

Having a Partial Income to Protect Yourself When you are dealing with any disability event will give you the ability to improve and still be alive.

Once you are feeling better, you can always find more customers. But if you have no income, it can ruin you and your family financially.

A Single Income Household

It would be chaotic if you had to move from a single income family to a zero income home.

Just think of the things you would have to contend with:

The stay-at-home wife will need to get a job

Babies will need babysitter

There is no immediate income for household expenses

We all know that staying home is a full-time job and it requires some income to run smoothly.

But if you both currently have income, what if you are in a situation where one of your income is 100% to handle household items such as:

Paying Credit Card Bills

Costs for health care

Mortgages and rental

Car notes

As a Revenue Home, you must have disability insurance. And if you don’t have one, you need to get it done quickly.

When Should I Buy Long Term Disability Insurance?

You might think that because I’m an insurance agent I’m biased. However, now is no better time to buy long-term disability insurance.

We cannot predict what will happen to our lives in the next 30 seconds, just a week or a month.

And guess what? Once you’re disabled, you can’t cover them all. So the worst thing you can do is think that you can’t do anything.

Numbers do not lie; 25-year-olds have a 58% chance of having a long-term disability before the age of 65.

And like all insurance products, the longer you wait, and the older you get, the more expensive the premiums become.

You’re constantly putting money on the table; There is no reason to go without coverage and absolutely no reason to wait.

How Does Long Term Disability Insurance Work?

Now that you understand what long-term disability coverage is, someone needs it and when you need to buy it, it’s time to work out how it works.

Therefore, when you pay your monthly premium, the insurance company agrees to pay you a set amount of benefits.

If you are suffering from a disability that affects your ability to work, you can file a claim, and the payment will begin.

In general, these benefits can change a pretty large portion of your income that you would otherwise have lost.

The Parts of a policy

There are several parts of a policy that you need to know about.

Waiting period

Each disability policy has a waiting period, which is commonly referred to as the termination period. It determines how long you have to become disabled before the benefits begin.

It assumes that if you are temporarily disabled, you will have a short-term disability policy in place or use your cash savings.

The shorter your wait period, the longer your monthly premium is, and the longer the waiting period, the lower your overall premium.

You can usually choose:

30 days

60 days

90 days

180 days

365 days

Remember, you need to know how your elimination period works. And if you are not disabled for this specific time period, your coverage will not be included.

Profit period

When dealing with long-term payday insurance, you can also choose how long you want to reap the benefits if you have an inactive event.

You can choose periods from:

one year

Five years

Six years

Up to a certain age, such as up to 65 years

Of course, the more time you want your benefits to last, the more expensive the policy will cost a month.

Benefit Amount

The benefit amount will be what you pay for each month. This will usually be one percent of your revenue and can increase up to 60% of your total monthly income.

Depending on the company, and your income, you can choose the benefit amount you want before buying your policy.

Again, the more benefits you request, the higher your monthly premium.

Monthly Premium

The premium is how much you pay per month for your policy.

Definition of Disability

Understanding disability characteristics is important when it comes to disability policies that will determine how the policy will work.

Some policies will provide an advantage if the injury prevents you from working at your regular job, but allows you to do other types of work.

However, other policies will not pay off the benefits if you can work in another type of industry, even making less money.

There are four ways a long-term disability insurance policy generally defines disability, and these are:

Any occupation

The way to work with this attribute is that if you are able to work for another job, then you are inevitable to benefit.

Even though the job pays much less than what you earned before you become disabled, you still won’t be eligible for benefits.

One of the hardest points of any professional disability is a policy that can be done.

Any professional policy generally has a minimum premium. But it will also have the least coverage.

Own occupation

Defining your profession is all about protecting your ability to work in the “your” career field.

If a disability prevents or limits you from doing the right thing that you did when you were disabled, you are covered.

As long as you can work in another capacity, you will still be eligible for benefits.

Other ways a personal business policy may cover you if:

Due to disability you have to work less hours

There are some job tasks you can’t do

If available, I would recommend getting your own professional rider on your policy as this is the maximum amount of protection you can receive for a disability definition.

Modified Own Occupation

Changes in the way your profession describes disability is the failure of any job to perform.

Basically, with a modified definition of your profession, you have to choose whether you want to work or not, even if it is considered that you are capable of working.

You still have the benefits of paying no matter what you choose.

Transitional Own Occupation

This definition of disability is almost the same as the coverage of your own profession.

It determines how your benefits will be treated if you work at another business after an injury or illness.

The interim personal professional policy limits your benefits based on the difference between your total disability benefit amount and your subsequent disability income.

What is covered by disability insurance?

So can you really use the money from a disability insurance policy? Well, here are some things:

Mortgage or rental

Car loan

Cell phone bill

The cost of living

Medical bill

Credit card bill

In the words of Shirley Caesar, you name it!

There really is no limit to the benefits you can use; This is basically a replacement for your salary.

What is not covered by disability insurance?

It is very easy to obtain long-term disability insurance and long-term care insurance worry.

The way to work long term care insurance is that if you are not able to do one of the ten activities of daily living (ADL), it will cover you some of the costs associated with getting care.

However, disability insurance is designed to cover only a portion of your income. So it does not cover additional expenses such as your long-term care costs.

It is up to you to determine how you spend the money you receive.

How Much Is Long Term Disability Insurance Cost?

To understand the value of a long-term payroll policy, you must first understand the metrics that will be used to determine the final value:

Your age

As with almost any type of insurance, the older you are, the more likely you are to file a claim, so there will be higher costs.

See some sample costs based on a monthly benefit of just $ 4,300 that lasted five years:

Age                Monthly Premium

40                  $ 82.00 / month

45                  $ 104.00 / month

50                  $ 129.00 / month

55                  $ 167.00 / month

As you can easily see, the sooner you buy your disability insurance, the cheaper it becomes.

Your gender

Unlike life insurance, when it comes to gender, with all other factors being equal, women generally pay 40% higher premiums for disability insurance than men.

The reason for the price difference is that women are more disabled than men, and their claims generally last longer than men.

For example:

A 40-year-old man applies for $ 3,300 monthly benefits, compared to $ 61 a month, and a 40-year-old woman receives the same coverage and pays $ 80 a month.

Again, as I mentioned above, the gender cost difference for disability insurance is the opposite of life insurance.

Women are living longer than men, so their life insurance rates will be cheaper than ever.

Health

Of course, your health is considered when you buy a disability insurance policy.

If your health is below average or you use tobacco, you have a higher potential for disability.

When evaluating your health, disability insurance companies may request the following:

A medical examination

Measurements of height, weight, body size, pulse and blood pressure

Collection of blood and urine

Family medical history

Already existing conditions

The medicines you are taking

Do you drink or use tobacco

However, if you are in high health, there is a way to get a disability insurance policy without a test by a company called Breeze.

Your career

As disability insurance is primarily for your income, the value of your policy will have a significant impact on your current career.

The more injured you are with a job or illness, the higher the premium.

If it is more difficult to perform a job with particular injuries or illnesses, more insurance companies will have to pay benefits.

These businesses are classified into specific risk categories. Which are calculated on a scale of one to five or six.

If your career is in a high group number, low risk, and low premium, low group number, high premium.

For example:

An accountant is considered in Class 4-A Tier, jobs that do not require much manual labor.

However, one wall is considered in Class 1-A tires, which are jobs that require higher manual labor than others.

Income

The companies base your disability insurance benefits on a percentage of your income. So part of your premium calculation is how much you earn.

For the purposes of the following, an income is considered earned if a disability stops or reduces it.

So if you have an investment or business income that doesn’t require work on your part, they won’t factor it into your underwriting.

Underwriters will review your salary, wages, regular overtime, bonuses, and even commissions.

Benefit Period

Again, the benefit period is how much time you want to pay for your benefits.

You can choose your term of benefit, and while the most valuable option is five years, you can take at least one year or up to 65 years.

Remember, the longer your benefit period is, the more you can expect to pay at a premium.

Elimination or Waiting Period

Each long-term disability insurance policy will also include termination or a waiting period.

This is the time when disability becomes available and when your benefits start to pay off.

These periods can last from 30 days to one year. But keep in mind, the shorter the elimination period, the higher your premiums.

Alternatives to Individual Long Term Disability Insurance?

Depending on your specific situation, buying a long-term disability policy may not be the best financial decision.

The following are some alternatives to consider, but depending on your situation, they may not work as you need them:

Group coverage

If you can get through the long-term disability work, then you have to jump on it like a fresh batch of hot cakes.

As with health insurance, buying a disabled product through an employer will be a much cheaper month.

When making an entry or selection, you still need to make sure you understand how this product will work.

You need to know the term of the benefit, the amount of interest and the expiration date.

Social Security Disability Insurance (SSDI)

When you think you can forget about disability insurance because you can apply for SSDI, you might want to think again.

Only 35% of people who apply for SSDI benefits are approved because of their strict requirements.

This means that 65% of people who think they are getting coverage are out of whack, and it may be too late for them to buy a traditional policy.

While SSDI may come in handy if you qualify, there is a 65% chance that you will not.

Workers Comp

Now, the voice of workers sounds like a great plan unless you read the fact that 90% of all disability and accidents are not work related.

So your chances of actually using your worker’s comp are only 10%.

I think the chance is low that the answer to the “working comp” is to put all your blinds in one basket.

But, if you are getting injured at your job and are able to get workers to work, this is great.

However, think how much better it would be if you were also able to submit for your disability.

Long-Term vs. Short-Term Disability Insurance

When it comes to disability insurance, there are two different types that you will often read about: short term and long term.

Short Term Disability Insurance

Short-term disability insurance that focuses more on the less severe injuries and illnesses.

This type of plan is best for an inactive event that may restrict your ability to work, but it is something that you will recover from.

Short-term disability coverage also has the shortest termination period (approximately 14 days) and the shortest benefit period (usually no more than six months).

For example:

Electric leg or foot

A bus driver is required to recover from hip surgery

A cashier needs time to recover from cancer treatment

Long Term Disability Insurance

As you read in this post, long-term disability is more about the serious injuries and the illnesses.

You will also have coverage that lasts longer, as well as an additional extended term.

Their main differences

The main differences between short-term and long-term disability insurance are:

The main types of inactive events that cover

The longer the time you can get to your benefits

How long do you have to wait before your benefits begin?

                                        Short-term disability                     Long-term disability

Profit period                 Up to 6 months                            1 year or more

Elimination Period       Up to 30 days                              30 days to 1 year

Who is the Best Long Term Disability Insurance Company?

It would be very irresponsible of me to say that there is a company that is best for everyone. But I have a company in mind that you may want to check out.

If you would like to purchase long-term disability coverage, I recommend Breeze. This is a first-of-its-kind long-term disability product.

Their policy will provide you with a disability policy online completely in less than 15 minutes with no exams and no revenue documents.

Breeze offers a ton of added features in its products, such as partial disabilities for coverage, hypothetical disabilities, home changes, and residual benefits, to name a few.

You can also include rides such as our profession as we described above.

Along with all these great features, they are backed by Assurity Group, which has an (excellent) rating on A.M. Best for financial stability.

So if you are a healthy person, want to avoid an exam, and want a quick bite, then air may be the best option for you.

Is Long Term Disability Insurance Worth It?

I can’t decide if long-term disability insurance is “worth it” for you.

However, I can give you some strong data points as to why you need it:

More than 25% of today’s 20-year-olds will be out of work for at least one year because of disability before they retire.

There are at least 51 million working adults in the United States without disability insurance in 2019.

Only 40% of US households have at least $ 6,275 savings. That’s only three months’ income on a family of four. جي

Four in ten U.S. adults indicate that they cannot pay the unexpected $ 400 bill without borrowing money.

And get this, the most common causes of long-term disability are:

Musculoskeletal disorders (29.7%).

Cancer (14.8%).

Injuries such as tenderness, sprains, and muscle and ligaments (12.3%)

Mental health problems (8.6%)

Rotation (heart attack, stroke) (8.1%)

You may find that injuries account for only 12.3% of all long-term disability; This means that your career choices will not protect you from disability.

The Bottom line

The numbers are real, and they are terrible, to be honest.

If you are working and earning income, regardless of your situation, you need to get disability insurance.

Although you can only afford to get a small coverage in the beginning, you need to take steps because some coverage is better without the coverage.

There is no better time than “currently” to get disability insurance because it is so easy to apply online, and the prices are affordable.

You’re already ahead of the curve just by reading this post and learning more about disability insurance. But now that you know about it, what do you do?

Do You Ever Need to Use Short Term or Long Term Disability Insurance? If so, share your experience with us on our Facebook page.