Most individuals depend on the steady money they make from their jobs in order to pay their bills and other expenses. But sometimes, it can be difficult—or impossible—to continue working due to a sudden disability, illness, or injury. Disability insurance is a type of policy that was designed to provide protection in these scenarios. Some people will have the option to receive this type of coverage through a group plan purchased by their employer, whereas other people might choose to purchase their own individual disability insurance policies. If you’ve considered purchasing disability coverage, here’s what you need to know:
Short-term disability insurance
Policyholders may be eligible to receive a percentage of their lost wages if a qualifying injury, illness, or condition has made it difficult or impossible to return to work. If your claim is approved, payments will usually begin to arrive after you’ve used any of your remaining sick days. You’ll need to show documentation from your doctor regarding your disability in order to qualify, and there is also a waiting period before you begin receiving payments. The payments are initially larger and come closer to matching what you’d normally get paid from your job, and then after a few weeks, are commonly reduced to about 60 percent (or less) of what you make. Short-term payments will normally last for about six months, although this can vary by your specific policy.
Long-term disability insurance
Designed to pay out for a much longer time period, long-term disability coverage protects policyholders in the event of more serious injuries and disabilities—disabilities that are usually permanent and would prevent someone from working again. Your doctor would need to provide you with documentation that details your condition, including the severity and how long it would keep you from working. Like short-term disability insurance, there is also a waiting period to prepare for. The waiting period can be a bit long and will vary depending on your specific policy and insurance carrier, but it is not unusual for it to take anywhere from 90 days to one year before payments start coming in. If you also have short-term disability insurance and are receiving payments from that policy, they might automatically transition into long-term disability insurance payments after a certain amount of time. Depending on your specific condition, you may also qualify for benefits through Social Security Disability Insurance (SSDI).
Because specific terms and conditions will always vary based on your own unique situation, the policy you choose, and your insurance carrier, it’s always important to shop around first and compare different options. If you’re overwhelmed with the different options, you could always reach out to an insurance agent, who can help guide you in the right direction and find you a policy that best suits your needs and budget.
Do you need to catch up on bills and expenses? If you’re receiving long-term annuity payments, Peachtree Financial Solutions may be able to help. Contact Peachtree today to find out how you can sell future annuity payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.