How to Choose a Disability Insurance Policy

1.

Find out how soon your benefits would start. Some policies have waiting periods of 90 to 120 days. If you are sure to have enough savings to cover these months, that may not be a problem, but if 3 months of bills would bankrupt you, you must find the shortest waiting period. Also ask whether the policy will cover partial as well as total disability. Some policies allow for partial disability payments once you have gone through a period of total disability.

2.

Ask about which pre-existing conditions would render you ineligible for the policy. Find out if any issues arising from those are covered. For example, if you are a diabetic without complications, would you be eligible for help if the condition changed and you were unable to work? This is a crucial point because the issues most likely to cause your disability may be ineligible for coverage.

3.

Get information about the company's cancellation policy. Some insurance companies can't cancel you or increase your premiums once you sign up. Other policies, however, are renewable each year, and although you will always have the same policy, it may cost more every year. Find out if you will have to pay the premiums even when you're disabled. Some of these policies waive these fees, but some do not, and you would have to pay back part of your benefit each month in premiums.

4.

Find out how long disability benefits last since some policies have different terms in this area. Some provide coverage until your Social Security benefits start up at age 65, which is usually a good thing for the insured. Find out if there is coverage for rehabilitation care. Many disabilities require this, but many policies don't pay for it.

5.

Use caution when signing up for any added-on benefits that will increase the cost of your premiums. Usually these extra benefits are not worth the money, so look these over very carefully. Realize that many agents make a lot more money to make sure that you buy these extras, so don't let them push you into any of them.

6.

Don't let the insurance agent fill out your health questionnaire. They may leave out something important to try and squeeze you through, and then later you'll be found ineligible. Realize that you must submit blood and urine tests that will show up many problems.

7.

Read up on all the information you can find. Go to the Disability Insurance Forums website for lots of tips and information. They have great consumer advice and questions sections. Their URL is listed in Resources below.

Tips and Warnings

  • Make sure that your policy covers the cost of the premiums when you're collecting. You shouldn't have to give back a chunk of your benefits to the insurance company each month.
  • Insurance salespeople can be very aggressive. Let them know that you are going to talk to several companies and that you will not be deciding on insurance until you do.
  • Disability insurance is a good safety net to have if you are ever unable to work due to a long-term injury or illness. Choosing the policy that's right for you can be confusing. There are a lot of policies with a wide range of different benefits. Making a choice becomes easier when you understand which benefits are important to you.