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Long Term Disability Insurance - An Inexpensive Hedge Against the Unknown

Article Submitted by: James John

Wednesday, 05 August 2009

The thought of not being able to work for a year or longer is completely foreign to most of us. Yet, statistics bear out that 20 percent of U.S. workers will experience that exact situation.

How would you pay the mortgage and other bills for a year or more?

How would you maintain your current standard of living?

A long term disability insurance policy generally pays benefits up to 2 years, 5 years, until age 65, or for life. This means you can receive up to 70 percent of your regular earnings while you can't work to pay your mortgage and other daily living expenses.

Why Pay For Insurance When The Government Will Cover Me?

Disabled U.S.workers can qualify for federal disability benefits from the Social Security Administration, but keep in mind:

The first payment from the government will not be received until at least 6 months after the disability has occurred.
Almost 70 percent of first-time Social Security disability claims are denied.
Most claims that are ultimately approved only happen after the claimant has retained a disability lawyer to assist.

Can you really afford to go up against this bureaucracy when you're unable to work and the bills are stacking up? Do you really want to have to hire an attorney, go to court, etc., further reducing your take home cash flow?

With an individual long term care insurance policy, you can avoid the federal run around and start receiving benefits after your elimination period.

What Could Cause Me to Be Out Of Work For A Year Or More?

The leading causes of long term disability (2007, Unum) are as follows:
•Cancer - 12.2%
•Pregnancy complications - 12.1 %
•Back injuries - 11%

The U.S. Census Bureau estimates that American workers have a one in five chance of becoming disabled and the average long-term disability (LTD) absence from work lasts 2.5 years, according to the Council for Disability Awareness. That's a lot of bills to pay without a source of income.

Policy Options

Long term disability insurance policies can be setup to meet your specific needs. Options include:

Elimination Period:This is the period of time after your disability before benefits are paid. Typical periods include 60, 90, and 180 days. The shorter the period, the higher the premium.
Benefit Period:This defines how long benefits will be paid. The longer the payout, the higher the premium.
Residual Coverage:This identifies how you will be covered if partially disabled (i.e., when the doctor has deemed you can work part-time). Without this option, all benefits are stopped at the point your doctor says you can work in any capacity.
Renewability:This covers how and when the insurance company can change your policy. Options include:

Non-Cancellable/Guaranteed Renewable: The insurance company cannot legally change your premium or benefit without your consent, regardless of whether your income falls.

Guaranteed Renewable:The insurance company has the right to change your premium at any time with state approval.

Exclusions:These are stated circumstances under which benefits will be limited or not paid at all. Pre-existing conditions are often excluded for the first two years of a policy.

Playing the Odds With Your Income?

Given that 20% of all U.S workers will suffer a disability lasting a year or more and that half of all bankruptcies are disability-related, the cost of a long term disability insurance policy quickly pales in comparison to the cost of not having one.

Article Source: http://www.ArticleBlast.com

About The Author:

John Mossa writes articles on Long term disability insurance since couple of years. He has good expertise on writing informative and useful articles related to disability insurance and supplemental disability insurance.

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