Income Loss

Life has a way of throwing a nasty surprise your way at times. Unexpected things happen at the most inconvenient times. One of the worst is to lose your ability to work. To be prepared for income loss, disability coverage should be in place to see you through.

Some insurance policies have been tailored around that possibility. It usually pays a benefit of 50 to 70 percent of the income earned before the loss of work. It may be a very good idea to look at them closely.

All working people should look at this kind of insurance. This is also true as far as couples are concerned. Sometimes the joint income is necessary to make ends meet. If one spouse can not bring in any money, there may be a big problem.

There are two types of disability insurance. The one makes provision for instances where somebody is not able to work for a relatively short period. This may happen when illness strikes of maybe in case of an operation or accident. It will be necessary in cases where the person has used up his or her available sick leave. These policies will continue for six months. Initially payments will keep up with your income, but will decrease later to about 60 percent of income.

The long term option is normally used to cover permanent disability. This would mean cover until retirement, although there are also options available to have this cover for other periods, for example five to ten years.

Long term policies of this kind come in three types, depending on who pays the premiums. In case of the first kind, premiums are paid by the employer. In the case of the second, payments are made by Social Security Administration and the last option involves payment by a private entity. The cover offered by most employers can be limited. The SSA will need full and complete medical documentation. If there is a possibility that someone may take up another job, he or she may not qualify for the insurance.

If someone feels that neither employee nor SSA coverage is ideal, they may go for private policy options. Many types fall under this umbrella. There are individual, group, group association and other policies. They offer more comprehensive benefits than social security policies although they cost more.

When you opt for private cover, make sure you know what is in the policy. Understand definitions. Most of these documents will not pay if you are unable to do the work you were trained for, but can still work. Choose the policy carefully. If you suffer income loss, disability coverage is absolutely vital if you want to keep your independence.