Important Tips For Buying Disability Insurance

Are you insured in the event you become disabled?  Many Americans don’t have disability coverage because they don’t feel that they need the insurance.  Ask yourself if you could afford to support yourself and loved ones if you were out of work for a long period due to illness or injury.  Strangely enough, many of us carry life insurance policies to protect our families in case of death, but decline disability coverage.  For younger workers, it’s more likely you will be injured than it is that you will die.  It also is more likely that you will be hurt away from your job than on the job and that you will become disabled due to disease than to an injury. 



When considering long-term disability insurance there are several things you should keep in mind.  The first item is that most automatic disability coverage given by the majority of employers is not enough to sustain you during an injury.  You will probably need to purchase additional coverage.  If you carry only your company’s insurance, you may lose your right to appeal a denied claim.  This is because the insurance company works for your employer, not for you.  So your individual rights may be limited.  You also need to find out if the benefits you receive will be taxable income.  Most company policy benefits are taxable, but some individual policies are exempt. 

 

When purchasing individual coverage, look for a policy that will provide you with the best coverage and the least number of restrictions.  Most policies are fairly specific about what is covered and what is not.  The rates for coverage often are calculated based on your age and sex.  For example, a middle age female can expect to pay slightly more than her male counterpart does.



When shopping for a policy, use a licensed agent who is approved to work with several insurance agencies.  This will provide you with a broader range of options.  Individual policies that are not regulated by the Employee Retirement Income Security Act (ERISA) give you greater flexibility and safeguards to protect yourself. 


If you can afford it, be sure that your policy is based on your overall ability to do your specific job.  Avoid policies that provide benefits only if you become totally disabled.  And, be sure that your policy is not written such that if you can perform even a portion of your job, your benefits will be reduced.  Your best bet is to purchase a total disability policy. 

Look for a policy that covers both physical and psychological disabilities.  Also, make sure your policy waives your premium during any period of disability.  Most policies have only a short waiting period to get started and the benefits should be applicable for your entire lifetime.  If they do not last for your entire lifetime, aim for an age when you know that you will be getting another income such as Social Security or a pension. Be sure that your coverage is guaranteed as long as you pay your premiums.  If possible ask for a cost of living increase to be written into the policy.  It will be worth it if you find yourself disabled.


Purchasing a long-term disability policy is a good idea for most working adults.  Disability insurance not only offers you peace of mind, it’ll go a long way to support you and your family if the unforeseen strikes.

Before You Buy Homeowner's Insurance

In order to guard yourself from risk and liability, it is essential to invest in a homeowner’s insurance policy that will give you the protection you need.  Although such policies are not a requirement by law, any mortgage company will require this as a stipulation to receiving your next home loan.

Types of Policies

Several types of plans are available that include various optional riders dependent on your particular needs.  There are specific policies for older homes, mobile homes, condos, and anything from basic protection to high liability coverage.  However, a majority of owners will invest in something known as an HO-3 policy, because it offers protection for both the dwelling as well as your contents that are available in your home.  

For example, the HO-3 policy will guard the outside of your property from any of the open perils (i.e. threats or dangers) to your home and also named perils for your contents.  However, there will be a list of specific issues that the policy will not protect you from (such as earthquakes or water damage).  Uncovered perils may be added at an additional cost. 

On the other hand, others may be interested in reviewing the options available with the newer HO-5 policy.  This coverage takes the HO-3 a step further by providing open peril policies for both the home and also contents.  So essentially you would be protected for more items within your house, without having to prove that damage occurred under one of the named perils.

Other Important Factors

Next, there are liability limits.  In the event that damage would occur, this amount would provide the coverage necessary to help restore your home.  However, please keep in mind that this is not the same thing as the home’s actual value.  There are other things that you need to consider such as the land, possessions, living expenses (if you need to rebuild), or other structures that are located on your property.

Therefore, take the time to assess what type of limit you would need to help cover the total loss in the event of a major catastrophe.  Also, be sure to revisit your policy from time to time as the property appreciates, and/or you consider making changes and additions to the property.

Finally, it’s important to review the differences between actual cash value and replacement costs.  For those who have a lot of contents that hold a high value, it may be better to consider replacement cost coverage, which could be worth the added price.  This will provide a brand new replacement for all covered contents.  

On the other hand, for people who are less concerned with replacing everything at market value with comparable items, you may want to consider actual cash value protection for household items which will take into account depreciation.

Of course, this is only the tip of the iceberg when considering a homeowner’s policy.  Other things that can be considered include:

Jewelry Coverage

Personal Articles Coverage

Umbrella Coverage

Liability Claims Protection

So...take the time to schedule an appointment with a qualified insurance agent to discuss your needs and review what else may be available.  If you need names and numbers of reputable insurance agents, please feel free to contact me as well.