Shopping for insurance can be confusing–there are many different types of plans available, some nearly indistinguishable from others. Here are some areas to look at when purchasing disability insurance.
- Non-Cancelable Feature:
If you purchase a disability policy through a trade association, the policy is usually a group policy In other words, a company insures a large number of people. Because the risk is so spread out, you can often get much lower rates as opposed to individual policies. However, group policies are cancelable at certain time intervals. The insurance company underwriting the contract may raise premiums or cancel the contract if it has a bad year. In addition, these types of policies are only maintained as long as you stay a member of the trade group, whereas individual policies are usually concealable and fully portable.
- Guaranteed Rates:
Usually, individual rates are guaranteed until 65. The rates you pay will be based on your current health. No matter what future health problems you encounter, your disability rate is guaranteed.
Individual policies tend to have more liberal definitions of total disability. If you are totally unable to perform the duties of your current occupation, but may be gainfully employed in another occupation, individual policies will still pay you disability benefits because you can’t work in your primary job.
Partial Disability Coverage:
Partial disability occurs when you suffer a disability, but can still perform at least one of your main job duties or all of your job duties but on a limited time basis. This is a much more likely scenario than being fully disabled. The partial disability coverage of individual policies is usually significantly better than the partial disability coverage of group policies.