A Guide to Purchasing Private Disability Insurance Coverage

November 07, 2012 (Press-News.org) Though some workplaces offer disability insurance to their employees, these benefits have gotten a lot less common -- and a lot less robust -- in the economic downturn. In 2002, 59 percent of American companies paid all or part of their employees' long-term disability insurance premiums. By 2009, that number had fallen to 48 percent. As such, many Americans have turned to private disability insurance to supplement or replace employer-sponsored policies.

Private disability insurance can be a tremendous asset if an unexpected illness or disability strikes. However, coverage can be fairly expensive. In addition, many policies have terms and conditions that are hard to understand and that can make it difficult to qualify for benefits.

If you are considering purchasing private disability insurance, it is important to make sure you fully weigh the costs and benefits before making a decision.

Is the Cost Worth the Risk?

Private disability insurance is not inexpensive. According to the Employee Benefit Research Institute, on average, coverage in a group disability insurance policy with a waiting period of 30 days and a maximum benefit of $15,000 per month costs about $16.30 for each $1,000 of coverage. A similar individual policy with a 90-day waiting period runs about $18.60 per $1,000 of coverage. By comparison, the average life insurance policy costs about 22 cents per $1,000 of coverage.

Still, the cost may be worth it, depending on what your family's economic situation is.

Most private disability insurance policies provide benefits equal to between 50 and 60 percent of a policyholder's salary. If your family could replace or get by without this income with little trouble, then a disability policy may not be necessary. However, if your income is vital to your family's economic survival, purchasing disability insurance may be worth the cost. When making this decision, consider both short-term disabilities that last a few months and longer-term issues that could last years. In the latter situation, Social Security Disability benefits may not be sufficient to sustain the lifestyle you are used to.

It is also important to consider your risk of becoming disabled. While musculoskeletal injuries -- the most common type of disability -- might not be a huge problem for office workers, cancer -- the second most common disability -- can strike anywhere. In addition, people with less sedentary jobs are more likely to have their work interrupted by physical disabilities.

Understand the Restrictions

If you decide that purchasing private disability insurance is the right move for you, the next step is to choose a policy. When doing so, make sure you understand the restrictions that will apply should you end up needing benefits.

For example, can you receive benefits if you can no longer perform your chosen profession, or does the policy require you to seek alternate work? What are the requirements and benefits surrounding vocational rehabilitation and retraining? Will the policy make up the gap if you have to go back to work at a lower salary? What if your job is eliminated while you are on leave?

Challenging Insurance Delays and Denials

Unfortunately, even if you have paid your premiums and complied with the terms of the policy, your insurer may ultimately end up denying or significantly delaying your disability claim. When this happens, consulting with a disability benefits lawyer can be your best bet. An experienced attorney will be able to spot the errors in the insurance company's reasoning and can help expedite delayed claims and appeal claim denials.

Article provided by Edelstein Martin & Nelson
Visit us at www.insurancedisabilitylawyer.com