Unfortunately your health is changeable. Today you may be strong and then you may feel terrible, broke your finger or have a heart attack.
You are a lucky one, if this period of disability is short and very soon you become as healthy as you were before. Much worse if you feel bad during a long time and you don’t attend your office. No doubt, it influences your income, because you don’t earn anything and pay medical bills. So American employees get disability insurance.
What is Disability Insurance?
It is a deal between a worker and an insurance company. A worker can claim for a sum of money (once or regularly) if some kind of a disaster happens to his health. This contract is regulated by Social Security Administration. To claim for this money compensation can only those workers, who have paid Federal Insurance Contributions Act Tax.
Every company, where you work at, will pay you if you get disable. But you are able to get only 60% of your monthly income as compensation. It influences your lifestyle. This shortening of income and paying medical bills can be killing to the budget. So, many workers prefer to get individual disability insurance policy in addition.
In fact individual policy doesn’t offer the coverage of the whole amount of your wages too. You can apply for 70% of your monthly income in case of disability. But the trick is that if you get policy individually, you get 70% of your tax-free income, while your employer’s insurance plan will offer you 60% of your income after the deduction of the tax rate. Often 70% of tax-free income is equal to 100% of the income after the deduction of taxes. So getting disability insurance policy is a good idea. There are two primary kinds of this insurance – long term and short term.
Short Term Disability Insurance
Short term disability insurance is the bargain between, that presumes a money compensation for the worker in case of his illness or injury, when he is unable to attend his office and do his job during some period of time (starting from the eighth day of disability and up to six months of disability). Often this kind of insurance is not offered by the employer and if the worker gets ill, he pays the expanses from his own pocket or he must get an individual insurance policy in advance.
But the coverage of long term disability insurance will be the duty of your service buyer (at least a part of it).
Long Term Disability Insurance
It is the same deal as in case of a short term insurance, but the period of disability is much longer. This insurance deal presumes the coverage to the disabled employee starting from the sixth month of his disability and up to 65 years old.
A part of payments will be made by your employer. He must pay you starting from the sixth month of disability (after half a year of disability it is considered as long) and during the next two years, if you are not able to start performing duties of your own occupation. It is an important point, pay attention to it. You may be completely disabled (when you can’t do any job at all) or partially (when you can’t perform your previous duties anymore but still can do some other – simpler- kind of job). You get your monthly coverage from employer during two years if you can’t perform your previous duties anymore. And he continues his payments up to your 65, if you are completely disabled.
You should know that in case of disability (partial or complete) you can apply for some amount of social help in any case, even if you haven’t got the individual insurance policy. But the size of compensation is much lower in this case and it for sure will change your lifestyle. Getting an individual insurance policy means receiving more money in case of a disaster. So it is recommended to buy it. Let’s speak about best disability insurance.
How to find it? Looking for Best Disability Insurance
Insurance companies propose a lot in this sphere and it is hard to find the best rate. To make the best deal, first of all analyze your situation. Are you healthy enough? Do you have any chronic disease? Is your work dangerous?
Answer the following questions:
- Does your employer offer the insurance plan in case of your disability? How much of your income is he ready to cover?
- Is this coverage enough for the most necessary needs you have?
- What additional amount of coverage do you want to receive?
- What disables are covered by your employer? What other disables are the most probable, considering your own way of life?
- What period of coverage do you need to get? (Remember, that the longer period of coverage you choose – the more you will pay for it)
After answering to these questions, you should calculate your needs and then look for the insurance plans that offer this level of coverage. Find the best ratio between your monthly payments and the coverage you can apply for in case of a mishap.
Cost of Disability Insurance – What Amount to Prepare?
If you have found the best disability insurance and are eager to get it, you should know what amount must be present at your account when you call to an insurance agent and asks him to prepare the contract for you.
An average cost of disability insurance is about $1,800 per year. This sum depends on the coverage you want to receive. Thus the insurance company may offer you partial coverage – for the lower rate – or the whole one. It will be much more expensive.
It is better to get partial coverage, if your employer offers some insurance plan at work and you want just to get some coverage in addition. For self employed workers disability is really harmful as they can’t get the compensation from a service buyer.
Disability Insurance for Self Employed is a Must Have
This policy is necessary, if you are the boss and the only worker in your office. You can’t avoid getting this insurance. In case of disability of self employed worker, he can’t count on compensation, made from the pocket of his employer. So he must care about himself in advance.
Every self-employed worker applies for an individual disability insurance policy. He has to find the company, with which he wants to sign a deal. Then he fills in the application about his occupation, his health and the coverage he wants to get. Later someone must do the verification of this form for him – as if he is self-employed, no one can guarantee, if he was honest, giving an information about himself. Later his claim will be approved and he can sign the contract.
So, getting disability insurance policy is inevitable for everyone. Getting this policy helps to keep the level of income as high as it was before the mishap during some period of time.