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Definition
of disability
When determining whether the insured is qualified to resume work, be sure to
take note of their education, experience, and past earnings. Many policies
provide for an initial own occupation definition of disability, for a specified
period of time, after which a different definition of disability applies.
Partial or residual benefits
When the impairment to the insured only allows them to
perform a portion of his or her duties partial or residual
disability will benefit. Also it may
pay benefits if the insured’s income is reduced because of disability
by a certain amount from what they made before their impairment.
Cost of living adjustment
If there is a cost of living adjustment (COLA) there will be a change in benefit
payments after disability has occurred.
Cancelability and renewability
of policy
Know whether your policy is noncancelable or guaranteed renewable. Noncancelable
means the policy cannot be canceled, cannot change the policy provisions, or
increase policy premiums after they have issued the policy as long as the premiums
are paid on a timely basis.
Waiting and elimination period
Is the waiting or elimination period appropriate for the insured’s circumstances?
Commonly available periods may include 30, 60, 90,180, and 360 days. Naturally,
the longer the elimination period one selects, the lower his or her premium
payments will be. However, a person’s needs, cash reserves and income
sources should be the deciding factors in selecting proper elimination/waiting
period.
Benefit period
Whenever possible, you should elect a long-term benefit. This is because a
long-term medical disability can be financially devastating. Some companies
offer lifetime benefit periods, but periods as short as 24 months to 60 months
are also available.
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What
Should I look for in a Disability Insurance Policy?
