Worried about the revved up medical bills on your recent sickness- temporary disability? It has made a big whole in your monthly budget. And now you are having sleepless nights on any possibility of recurrence of the situation in future.
Well, with the changing lifestyles, diseases among the generations have increased. Sometimes these diseases take the from of disabilities, costing you more on your pockets. But buying an insurance policy can give you some amount of respite. When you are unable to work, disability insurance coverage replaces some portion of your earned income. You get two major types of disability coverage:
Short-Term Disability Coverage: This type of insurance coverage gives you cover for the early days of your disability. This policy can pay you benefits for two weeks to two years. Usually short-term disability is included in the employee’s benefit package.
Long-Term Disability Coverage: As the name suggests, long term disability helps you replace your income for an extended period of time. This time period generally ends after five years or when the age of the disabled person is 65. This long term disability is either provided by your employer or you can also have it individually. Under this, there are two types of individual insurance. One is non cancelable and the other is the guaranteed renewable.
In this type of insurance scheme, the renewal of the policy cannot be refused by the insurer. The insurer is also required to pay the premiums on time. The major difference between the two is that, you have an extra security in a non-cancelable contract, that the premiums will never be raised above that shown in the policy.
But a guaranteed renewable insurance policy can raise the premiums, if the change made affects all the policyholders. Due to this, the initial premiums are less expensive for the guaranteed renewable policy as compared to the non-cancelable one.
Insurance on individual disability is a basic concept. It considerably replaces your total income and that too on a tax free basis. The disability policy provided by every company is different from the other. But it is not a product that you can shop for on the basis of competitive rates. Buying a cheap disability insurance policy is just like throwing away money.
So before going in for a particular insurance policy, it is advisable for you to do a little market survey and put your hands on the one that is the most suitable to you.
