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How to Choose the Right Disability Insurance

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What is the best disability insurance for your needs? When it comes to disability insurance, you need to consider that each person has different needs, so it is important to take some time to evaluate the policy that best suits your needs. The two common types of disability insurance include long-term disability (LTD) and short-term disability insurance. You can look at the conditions that qualify for LTD in the United States. Choosing the right cover is essential if you want to enjoy the benefits. 

How to Decide the Amount of Capital to Be Insured?

First of all, it is essential to establish the sum to be insured or the maximum amount the company would pay in case of disability. To determine the right amount, you must consider your primary income and expenses and check if you already have some form of protection against possible cases of disability. Here are the steps to follow in order not to make mistakes:

Calculate Your Monthly Expenses

Consider the most important regular expenses that affect your family budget, especially expenses like this:

  • House (rent, mortgage payment, condominium fees)
  • Utilities (electricity, water, gas, landline telephone, internet, pay TV, RAI fee)
  • Food (grocery shopping, meals eaten away from home)
  • Transportation (fuel, road tax, insurance, public transport season tickets)
  • Education (tuition, university fees, kindergarten fees, school canteen fees, books);
  • Health care (health services, drugs, insurance premiums)
  • Leisure (sports, courses, travel, entertainment)
  • Other (credit cards, clothing, etc.)

Carefully Evaluate Your Income

List all your sources of income:

  • annual salary – extra income (any bonuses or commissions)
  • gross annual income (amount before tax)
  • estimated after-tax income

Check the Forms of Disability Protection Already Available 

If you already have a personal policy that provides for the case of permanent or total permanent disability, check the characteristics of the guarantee and what indemnity this policy offers. Many employers offer a collective disability insurance policy to their employees, who can benefit from it free of charge or by contributing part of the premium payment. Check with the human resources office the characteristics of the policy and the amount of compensation provided in the event of disability.

Take Stock

Once you have calculated the amounts for the previous items, you will need the numbers to determine the amount of the principal. Please note that disability insurance should cover at least 60-70% of your after-tax income. Knowing, therefore, the weight of ordinary expenses on your family budget and the possible presence of pre-existing insurance coverage, you can evaluate the right amount to insure.

Make sure you have considered all the elements by consulting this list of tips designed specifically for those interested in a disability policy. Here you will find all the answers to the most frequently asked questions about insurance to help you make the best decision based on your specific needs. 

Choose the Right Features

There are many variations of disability coverage. Their characteristics and, therefore, the usefulness that you can derive from them can be very different. It is, therefore, worthwhile to examine the main types to make the choice fall on the most suitable one.

First of all, the cause of the disability must be considered. The policies may have a guarantee for invalidity due to injury or invalidity from any cause, i.e., accident and illness, as is the case for the invalidity guarantees of temporary life policies in the event of death. It is useful to distinguish two other concepts that you have surely heard about: short-term disability and long-term disability.

A policy that provides for LTD has the objective of providing an important sum of money, which allows the insured person and family members to provide for their care. In these cases, the person affected by the disability, having suffered severe physical damage, can no longer work or carry out other important activities in the same way. The short-term disability guarantee, on the other hand, offers the insured an amount that is equal to the severity of the physical damage.

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