The Types of Own-Occupation Policies<\/strong><\/span><\/h4>\n\n\n\nBelow are the three kinds of Long-term disability Own-occupation policies:<\/p>\n\n\n\n
1. True own-occupation policies<\/strong> \u2013 pay you if you become unable to work in your chosen occupation, even if you get another job.<\/p>\n\n\n\n2. Transitional own-occupation policies <\/strong>\u2013 pay you the difference between what you were earning before the disability occurred and what you\u2019re earning now if you\u2019re able to work a job that pays less than what you made before after becoming disabled.<\/p>\n\n\n\n3. Not Engaged Own occupation policies<\/strong> \u2013 only pay disability benefits until you find another job, irrespective of how much (or how little) the job pays.<\/p>\n\n\n\nThe Other Types of Disability Insurance<\/strong><\/span><\/h3>\n\n\n\nAsides the major kinds of DI plans, here are other kinds of DI policies that may interest you:<\/p>\n\n\n\n
1. Mortgage Disability Insurance<\/strong> \u2013 is a form of long-term disability coverage that covers your mortgage payment if you become unable to work for an extended period of time. You can get this type of coverage from your mortgage lender in most cases, even though some insurance agents and brokers sell this type of policy.<\/p>\n\n\n\n2. Supplemental Disability Insurance<\/strong> \u2013 pays you the difference between what you are receiving from your employer\u2019s short or long-term disability policy and your actual monthly expenses.<\/p>\n\n\n\n3. Social Security Disability Insurance (SSDI)<\/strong> \u2013 is the hardest type of disability insurance to qualify for as the Social Security Administration rejects over half of all initial applications are rejected. Meanwhile, the average monthly benefit amount you can receive is just over $1,000.<\/p>\n\n\n\n4. State Disability Insurance<\/strong> \u2013 are State-sponsored short-term DI policies which must be paid either by the employer or employee or both. The benefit of this plan is usually available for a year at most.<\/p>\n\n\n\n5. Business Overhead Expense Disability Insurance<\/strong> \u2013 covers your business expenses if you are self-employed and become unable to work. The insurance company administering this kind of Disability Insurance can cover items such as employee compensation and benefits, rent, utilities, payroll taxes, and other costs of running a business.<\/p>\n\n\n\n6. Workers\u2019 Compensation <\/strong>\u2013 is coverage that only applies to employees who are injured on the job. If you become disabled from an off-the-job event, you will not receive any benefit from this cover.<\/p>\n\n\n\nWorker’s Compensation vs Disability Insurance<\/strong><\/span><\/h2>\n\n\n\nSo as not to mix Worker\u2019s Compensation with Disability Insurance, Worker’s Compensation Insurance only pays if and when you are injured on the job or have an employment-related illness. Most states in the USA and contractors mandate employers to take it for their employees. <\/p>\n\n\n\n
On the other hand, Disability Insurance covers illness and injury that happens away from the job and that isn\u2019t job-related. <\/p>\n\n\n\n
States in the USA don\u2019t mandate employers to have this kind of insurance. But DI ensures that you can pay your bills when you are disabled for any non-work-related reason.<\/p>\n\n\n\n
When is the Best Time to Apply for Disability Insurance?<\/strong><\/span><\/h2>\n\n\n\nJust like with all types of insurance, the best time to apply for Disability Insurance is when you do not need the coverage. <\/p>\n\n\n\n
That is why we want you to know what disability insurance is as a student. When you are healthy, you can easily pass any medical screening and underwriting requirements. This translates into low rates for your policy.<\/p>\n\n\n\n
Generally, it is ideal to apply for DI before you attain the age of 65 or even 50. Once you\u2019re 65 years old, the policy will become inactive because insurance companies will consider you eligible for retirement if you become injured or ill and require coverage due to the inability to work.<\/p>\n\n\n\n
How Much Does Disability Insurance Cost?<\/strong><\/span><\/h2>\n\n\n\nThe amount you\u2019d pay for a DI policy is based on your age, annual income, and type of employment. <\/p>\n\n\n\n
Also, it is based on a risk to reward ratio. Generally, the average cost of Disability Insurance, be it short term or long term is 1 to 3 percent of your annual gross income.<\/p>\n\n\n\n
This means that if you earn around $100,000 a year in gross income will pay approximately $1,000 to $3,000 a year for Disability Insurance.<\/p>\n\n\n\n
The above estimation assumes that you are under 45 years of age and that you work in a job with minimal risks. <\/p>\n\n\n\n
Otherwise, DI premiums can cost as much as 15% of your annual gross income, especially if you are over the age of 45 and in a high-risk job like construction work. <\/p>\n\n\n\n
But if you\u2019re under 30 years of age and you work in a career that is mostly stationary, such as a secretary or office manager, you will pay less than 1 percent of your annual gross income.<\/p>\n\n\n\n
How Can I Get Disability Insurance?<\/strong><\/span><\/h2>\n\n\n\nHere are four ways in which you can get a DI coverage:<\/p>\n\n\n\n
1. Sign up for employer-sponsored coverage at work.<\/strong> Some employers offer disability insurance to their employers, sign up for one. These employers pay some or all of the cost of premiums. Five states in the USA provide or require employers to provide short-term disability benefits. These states are California, Hawaii, New Jersey, New York, and Rhode Island.<\/p>\n\n\n\n2. Buy disability insurance through the workplace<\/strong>. While some employers don\u2019t pay for disability coverage for their employees, they offer it as a voluntary benefit. This allows you to buy coverage through the employer\u2019s insurance broker at a group rate.<\/p>\n\n\n\n3. Buy disability insurance through a professional association<\/strong>. Many professional groups offer members DI coverage at group rates.<\/p>\n\n\n\n4. Buy an individual disability insurance plan<\/strong>. You can get Disability Insurance plans as an individual from an insurance broker or directly from an insurance company. However, the major kind of individual disability policies you\u2019ll get from insurance companies are for long-term coverage. Short-term policies are rare.<\/p>\n\n\n\nThings You Should Know When Buying your own Disability Policy<\/strong><\/span><\/h2>\n\n\n\nThe major reason why you would want to buy a DI policy for yourself is if your employer isn\u2019t providing you enough disability coverage or you are self-employed. Since employer-sponsored disability insurance pays only a portion of your base salary, up to a cap, it is wise to supplement the coverage. That is if your salary far exceeds the cap or you depend on bonuses or commissions.<\/p>\n\n\n\n
However, insurance companies will consider other sources of disability insurance to determine how much coverage you can buy. As a rule, you can\u2019t replace more than 75% of your income from all the coverage combined. But most people prefer to get their own policy because it will allow you:<\/p>\n\n\n\n