In the insurance industry, Disability plans provide for periodic payments of benefits when a disabled insured is unable to work.
This product is designed to replace anywhere from 45 to 65% of your gross income on a tax-free basis should illness keep you from earning an income in your occupation. If you’re working with a disability, your earned income can be insured against the risk that your disability will make it difficult for your to complete daily tasks and duties. For example the inability to maintain composure as with psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits, and long-term disability benefits. In fact, Nearly 18.5% of Americans are currently living with a Disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.
Disability insurance comes in both Short-term (STD) and Long-term (LTD) plans. The STD plans cover a percentage of your lost salary if you can’t work for more than a few days due to an injury or illness. Usually your disability payments will commence once you’ve used up your paid sick days or something comparable. You could see the majority of your salary when your STD plan first starts, but keep in mind that payments can be reduced to 60% of your salary. The duration of these benefits varies by plan and policy, but for STD plans six months is about the standard.
The LTD plans are more of a standardized insurance product, protecting you from catastrophic illness or injury. This would include events that permanently end your ability to earn a paycheck. These plans will usually start up when a STD policy is set to expire. A handful of LTD plans cover you for 5-10 years, but you may want to consider one that covers you until age 65.
Call us for more information about Disability Insurance. 1-800-877-8749