What are the tradeoffs to consider in selecting disability insurance?
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When looking for a disability insurance policy, there are many things to consider. [ Since many disability policies offset or deduct social security disability benefits, there may be even more factors to consider when choosing a disability insurance policy. With so many different policy options, it can be hard to tell what is necessary and what isn’t. To aid in the process, we’ve narrowed it down to the top 10 things to consider when choosing a disability insurance policy:
Whether to purchase an individual policy or purchase a policy at work. If you are thinking of purchasing disability insurance, you may have the option of obtaining disability coverage through your employer’s group benefits plan.
However, most of these plans limit your enforcement of coverage, should you ever become disabled, under federal ERISA law. ERISA affords great protection to the insurance company and almost none to you, the insured. The only advantage to these policies is that they are cheap or possibly even free, since your employer pays for most if not all of the premium.
A better option, if you can afford it, is to purchase your own individual policy. Under this option, you have the advantage of enforcing your policy, should you ever need to use it, under more advantageous state bad faith law and deceptive trade practices acts. Also, make sure you have both short term and long term disability benefits. If you purchase disability coverage on your own, your premiums will be based on a number of factors including age, health and occupation.
Individually purchased polices are more expensive but you get what you pay for. The specifics of your coverage can vary greatly depending on whether you purchase through your employer or not, so it is best to check both options to ensure you are getting the best coverage for your circumstances.
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