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What to consider when choosing a disability insurance policy

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If you're choosing an individual long-term disability insurance policy, selecting from among the various policies and options can seem overwhelming. You want to get the most coverage for your money. However, sometimes saving money on premiums can mean paying a lot more out-of-pocket down the road if you need to make a claim.

When younger employees work for a company that doesn't offer disability insurance or they are self-employed, many don't see the need to spend money on disability insurance. However, debilitating injury or illness can strike at any age, with devastating financial consequences. Insurance experts recommend getting a policy earlier rather than later and choosing one that has an "insurability option." This will allow you to increase the monthly benefit as your income goes up.

The monthly benefit amount is an important choice to make when selecting a disability insurance policy. Remember that this may be your only source of income for some time if you become disabled.

The waiting period is also a key factor. Obviously, if you choose a longer waiting period, you'll likely save some money upfront. However, this is the amount of time before the premiums kick in. Therefore, you could end up paying far more if you don't have other means of support, like a short-term disability policy. Generally, a shorter waiting period is more cost effective if you have to use the policy.

There are other factors to look at, including:

-- How "total disability" is defined-- Whether benefits end at age 65-- Whether the policy has a guarantee of renewability-- Exclusions (such as for substance abuse)-- What add-ons are available

Generally, the less restrictive the language, the better off you are. However, if there are gray areas, the insurer can take advantage of those when you file a claim. It can easily be worth the money to enlist an insurance professional to advise you on the best policy for your needs. However, if you are in a situation where an insurer isn't paying a claim that you believe should be covered, it may be worthwhile to seek the advice and assistance of a disability attorney.

Source: Physician's Money Digest, "Picking a Disability Insurance Policy: How to Choose the Right Coverage for You," Art Fries, Jan. 07, 2016

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