USA Today Explores Alternative Types of Disability Insurance

Recently, USA Today published a lengthy article discussing Social Security disability, and delineating the options for people who do not wish to rely solely on benefits for this government program.

“The Social Security Administration provides some form of disability benefits as a safety net,” said the newspaper.  “But it’s hardly enough to live comfortably.  As of March 2013, the average disability payment was less than $1,130 per month…For many families, the prospect of losing just a few months’ income or living on half the paycheck just isn’t an option.  If this sounds like you, it may make sense to seek out some form of disability insurance to protect yourself.”

The article goes on to describe three different types of insurance programs.  First, group disability plans—the most popular type—are generally offered through an employer.  These plans, however affordable, do not nearly replace wages dollar for dollar.  Instead, rates typically hover at around 60%.  And these plans are generally limited by total dollar amount and payment period.

Next, individual disability plans—by definition not offered to and through a group—are also available.  These are likened to health insurance plans.  They vary in premium cost depending on the age, health, and employment context of the individual.  As such, what they provide also varies; and these can therefore be beneficial to an individual looking to shop around for a plan that uniquely suits his or her situation.

Finally, supplemental disability plans are affordable “bridges” when basic group insurance or Social Security disability is acceptable to a degree—but requires some additional cushion.  For example, notes the article, a supplemental policy may add 20% of your salary to the benefit on top of the 60% provided by the employer-provided group insurance.

Helpfully, the article also defines and describes a number of disability insurance terms including (1) non-cancelable and guaranteed renewable policy, (2) elimination periods and waiting periods, (3) own occupation coverage, (4) future purchase options, (5) business overhead expense coverage, (6) cost of living adjustments, (6) retirement protection, and (7) lifetime benefits.

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