There is much more of a grey area with disability insurance than with a life insurance policy. Of course, it’s hard to dispute a person’s death. Whereas with a disability policy, there is often much miscommunication as to what qualifies as an eligible disability claim.
There are many variables to look for when analyzing a disability policy and its likelihood of paying out:
Does the applicant have other policies in effect? Most disability carriers will pay out a maximum of 50% to 66.66% of the insured’s net income. With higher income earners, this number can be as low as 35%.
Does the plan provide “Injury Only” protection, or “Injury and Illness” protection? The World Health Organization estimates that of the 600 million people on this planet with disabilities, 25% have disabilities due to injury, while the remaining 75% are due to illness. Since “Injury Only” disability covers a generally smaller population of potential disabilities, the premiums are often cheaper than those policies that cover “Injury and Illness.”
What is the definition of disability in the contract? The definition of disability used in a disability contract can have a direct impact on the insured’s ability to collect when he or she needs the money most. The three definitions of disabilities that are used in most injury and illness disability contracts are “Any Occupation,” “Regular Occupation” and “Own Occupation.” You can get more details on each definition here.
Was all application information clearly communicated to the insurance company? The application wording can vary from company to company and omitting details can result in a denial of claim.
Are there any policy exclusions? Most disability policies will have exclusions for pre-existing conditions or certain recreational activities. It is crucial that the applicant be aware what is not covered by his or her policy.
Disability insurance policy features and premiums can vary sharply from one company to another. You can get a customized disability insurance quote at our free Disability Instant Quote Page, or call us at 1.866.899.4849.
