Imagine that you and your partner were to suffer an injury or fell ill and could not work for a long time. It could be the span of a few months or even years. Will you be able to pay your charges? Nobody wants the thought of this; it’s a bit scary. What’s more frightening is the lack of the right plan should it happen.
What Is Disability Income Insurance?
Disability income insurance can help you prepare to deal with this situation. You select a policy and pay the premium. In the event of a disability, the disability income insurance policy will pay a set amount of income per month for a certain period to help pay your expenses.
Comparison of Short-Term and Long-Term Disability Insurance
Alongside having various policies and different types of policies, there are two significant kinds of disability insurance: Short-term disability insurance and Longer-term disability insurance. The primary difference between the two types is the period of benefit and elimination.
You may be able to imagine the short-term disability insurance policy has a shorter timeframe for benefit duration and the time to end. These policies will protect you for three to six months, though specific policies can extend at least two years. The period of elimination can be between two and four weeks, meaning you’ll be required to wait until 14 days before the insurance benefits begin to accrue.
Suppose you don’t have a savings account to provide you with three to six months of your income in case of a disability. In that case, short-term insurance is a fantastic solution to ensure financial security. The amount of coverage varies. People generally depend on short-term disability coverage to provide between 50 and 70 percent of their earnings until they can return to work or until the coverage period expires.
A long-term disability insurance plan gets intended to cover you for a prolonged period of many years. Many benefits are set “up until age 65,” so if you are disabled, you will be able to receive the benefits of long-term disability till you reach 65. The average Social Security Retirement age is when you’ll start receiving the actual Social Security benefits and be protected financially from that.
The time for elimination is longer, with an insurance policy for long-term disability, generally between a three and six-month interval. You will need to wait at least six months to could begin receiving the insurance benefits. The amounts of insurance coverage vary, as does the short-term disability coverage. You can decide how much of your earnings you would like the help to be covered.
Short-term disability insurance is an excellent option for those looking to ensure they’re covered until they have a savings account for emergencies and those looking for an opportunity for maternity leave. But, many prefer to purchase long-term disability insurance as the ability to replace income for an extended period due to disability offers the potential for significant benefits.
Factors Affecting Disability Insurance Cost
It’s an excellent way to protect your future, but at what price? The cost of premiums is likely to range between one and a half and three percent of your income. However, your short-term disability policy and long-term disability insurance policies depend highly on various variables. Age, sex, use of tobacco, job, and other policy information are all factors that determine the price of your policy.
Here are some ways that these factors could affect your disability insurance policy:
- Older age means more expensive premiums.
- Females are more costly to cover than men.
- Smokers could get charged as much as 25 percent higher than the same coverage for non-smokers.
- Blue-collar jobs can get expected to be paid higher than white-collar jobs. A system of occupational classification is employed that contains previous data on claims for the various job categories.
- If you opt for a more lengthy time to get rid of or wait, you are willing to pay lower costs.
- The extended benefit period and the longer you are covered is a higher cost.
- The higher benefit amount translates to more premiums.
- Additional benefits are available through your insurance company at an additional fee. These features may also be included in your insurance initially, but with the possibility of taking them out to make your price more affordable.
We at Ottawa Life Insurance are here to assist you with our personal and business insurance requirements. We are gets dedicated to ensuring our clients are safe in need. Call us at (613) 454-1424 and email us at info@ottawa-lifeinsurance.ca for further information.
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