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You're busted: Exposing more myths concerning disability insurance

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Whether we realize it or not, we are surrounded by an avalanche of consumer myths whose hold gets stronger with each passing day owing to everything from the internet to simple word of mouth. As unfortunate as this reality is, the good news is that these myths can be effectively countered by a consistent dissemination of truth or, in other words, good old-fashioned myth busting.

By way of example, one needn't look any further than our very own blog, which is dedicated in part to helping debunk some of the more prevalent myths concerning disability insurance, such as "I'm too young to worry about disability insurance."

In keeping with this objective, today's post will examine -- and expose -- a few other myths about disability insurance that while perhaps not as well known are no less problematic.

My disability policy will pay out just like my life insurance policy.

While it would be nice to receive a one-time lump sum payment in the event you suffer a disabling injury, disability insurance is simply not structured in this manner. Rather, it's designed to substitute for a loss of income and, as such, is paid out in regular installments.

Should I become disabled, my benefits will start immediately.

Given all the immediate uncertainty that inevitably arises in the event you are diagnosed with a devastating illness or suffer a debilitating injury, it would be nice to know that a check for disability benefits is in the mail.

The truth is, however, that insurance companies carefully assess each case and, as such, it might take several months for a disability policy to start paying out.

I won't experience any diminished income thanks to my disability policy.

As we've discussed before, long-term disability coverage is not full wage protection, but rather is designed to help offset the loss of salary and provide some much-needed peace of mind. Indeed, the typical disability policy will provide benefits totaling 60 percent of your total wages up to a designated maximum benefit.

Source: MoneySense, "7 disability insurance myths to stop believing," Julie Cazzin, February 8, 2017

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