Employee Life and Disability Insurance

Individual Disability Insurance

Individual long-term disability insurance can be expensive, but the peace of mind it provides can make it worth the cost. According to the Social Security Administration, for an average employee with a spouse and two children, the value of disability insurance benefits equals $200,000 in life insurance. Unfortunately, it has become increasingly difficult to qualify for individual disability insurance.

Individual disability insurance policies vary. Mental and physical health, and profession affect the benefit period, monthly benefit amount, and policy price.

For individual coverage, these are some criteria to consider:

• High monthly benefits. It is best to secure the highest possible monthly benefits.
• Own occupation coverage for life. Insurance companies often only offer "any occupation" coverage. However, "any occupation" coverage can mean that despite career goals, the insurance company could require the insured to take a job in a completely different field.
• Long waiting period. A 2-year waiting period will make the policy far more affordable than a 2-week waiting period, but the buyer must be able to survive financially while waiting for the benefits to kick in.
• Long benefit period. Get the longest possible benefit period. It’s usually best to choose a long benefit period over a high monthly income.

It's usually wise to apply for long-term disability insurance. Unfortunately, it's not always possible to purchase as much disability insurance as is desired: usually the maximum figure is 50-60% of working income. That's because insurance companies don't want to provide an incentive to stay on disability.

Think of disability insurance as a financial life vest. If you're left without a working income because of an illness or injury, disability insurance will provide monthly benefits until you can begin working again.