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Research is essential when choosing disability insurance

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While many large companies still provide long-term disability insurance to their employees at no charge, others require employees to foot the bill via payroll deductions. Increasingly, employees are having to make their own choices regarding disability insurance, just as they are with retirement plan investments and health care plans. That requires some knowledge about this type of insurance that many people don't have.

People often underestimate the amount of long-term disability coverage they need, or decide they don't need any at all. Some assume that Social Security disability insurance will take care of their needs. However, even if you can qualify for SSDI, it can take some time before payments begin. Assuming that family and friends will care of you is a risk as well.

Interestingly, many of these people have life insurance but no disability insurance, even though their odds of becoming disabled for a long period are greater than those of dying early. One of the problems is that people think of disability insurance as something they would need if they were in a serious accident. However, most long-term disability results from more conditions such as back problems or illnesses.

According to industry experts, the chance of a person developing a long-term disability during their employment year is about 25 percent. The average period of incapacity is almost three years.

When shopping for long-term disability insurance on your own, think of it as "income replacement insurance." Policy terms vary, which is why it's important to research insurers if you are choosing a policy on your own. Most pay up to two-thirds of your income. They vary in stipulations regarding whether you are unable to work at all or just no longer able to work at the job you had when you became disabled. Premiums vary, but usually are one to three percent of your income. They may vary based on your health when you obtain the policy. Those purchased outside of an employer usually require a medical exam.

If you are selecting a long-term disability policy on your own, it's essential to do your research on insurance companies. In addition to the factors noted above, you want to choose an insurer company with a good track record for expeditiously handling their customers' claims. If you do have problems with denied disability claim, an experienced disability attorney can help you get the benefits you're owed.

Source: The New York Times, "Looking Out for Yourself With Disability Insurance" Ron Lieber, Sep. 12, 2014

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