Disability Insurance

Disability Insurance is a type of health insurance that pays you periodically for a specific period of time in case you are not able to work because of disability (illness or accident). It may be weekly or monthly and the coverage time may be from a few months to years according to the policy.

There are two types of Disability Insurance Policy:

Short-Term Disability (STD)

It has a waiting period of 0 to 14 days. And the maximum benefit period is no longer than two years.

Long-Term Disability policies (LTD)

It has a waiting period of several weeks to several months. And the maximum benefit period ranges from a few years to the rest of your life.

Disability Policies have two protection features. One is called ‘Non-cancelable’. In this case, the insurance company cannot cancel the policy except nonpayment of premiums. It allows you to renew the policy every year without an increase in the premium or a reduction in benefits.

Another one is ‘Guaranteed Renewable’. In this case, the company has the right to increase the premiums as long as it does so for all other policyholders in the same rating class of yours. However here too, the insurance company cannot cancel the policy except nonpayment of premiums. So, companies may put the initial premiums for Non-Cancelable policies higher than the Guaranteed Renewable.

Additional Purchase Options

Coordination of benefits

The total amount depends on the type of other benefits that you receive from the company. Your policy can give a target total amount that you will receive from all the policies that you have. So, there are make-up benefits between the policies.

Cost of living adjustment (COLA)

In this case, the company may increase benefits based on the increased cost of living measured by the Consumer Price Index. It is needed as lifestyles become costlier day by day. However, the company may ask to pay higher premiums for this benefit.

Residual or partial disability rider

It is designed for partially disabled people. They might work part-time receiving part of their actual salary. So, this benefit makes up the remaining need of the policyholder.

Return of Premium

In case you don’t claim the benefit for a specified period of time, the company would refund a part of your premium as bonus in this policy.

Waiver of premium provision

In this policy, the policyholder won’t need to pay the premium in case he/she is disabled for 90 days.

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