Check List For Buying Disability Insurance

It is always important to get the homework right before applying for anything at all. Apart from knowing where to apply and how to fill the form, it is also important to know what is really desired from it. Same is the case with disability insurance policy. Unless the applicant knows what he is looking for, there isn't much that can be gained. He may visit and consult several agents or experts but the solution would still remain a mystery.

The concept of disability insurance runs around the fact that when an individual gets disabled (which can be due to various reasons such as accidents or illness etc.) and is not able to continue work, he would get paid for the wage loss by the agency till the time he get back on his feet or the payout time expires, whichever is earlier. Because this insurance is directly proportional to the monthly income generated by the policy holder, there are several key aspects that have to be kept in mind.

1) The policy should be such that the compensation amount can be changed in case the salary increases or decreases. That is, it should have enough flexibility.

2) Duration of the payout has to be good enough. Compensation for a few months is not enough as there is a good chance that full recovery might not take place in it.

3) Most agencies start the payout after a period of 90 days from the date of being declared disabled. Provisions to reduce this date should be present (and should be opted for if possible).

4) Disability insurance policy should be able to compensate for at least 80% - 90% of the wage loss if not complete. This is very important as without it, the purpose for the same gets defeated.

5) Always get new disability insurance quotes before you have to renew your policy. Quotes are free, and might save you hundreds a year!

Also included are certain complications that arise due to taxes. If the policy is maintained by the employer, the payout received would be liable to be taxed. On the other hand, if you pay for the policy yourself, it can be used on a tax free basis. If you belong to the first category, try and make sure that you get the larger benefit of the total amount for taxation.

There are some people who prefer to keep the insurance policy payout valid for a couple of years, those who prefer to keep it till they are 65 years and retire, and there are also those who wish to keep it going till their death. The requirement can be mentioned in the application letter while applying and the relevant policy bought. Although, remember that larger the number of years, larger would be the premiums.

Not only this, but before you select a policy to buy, do some checks on the insurance agency too. The insurance agency should be old enough and also have a decent number of clients enrolled with them. These are traits of a good company which is srious about working in unison with their clients for mutual benefit.