What Does It Cover . . . And What Does It Not Cover?
Benefits are calculated as a percentage of gross income generally between 50% and 70% of that income. Benefits are based on Total Disability – the inability to perform any part of your work, and you are not engaged in any occupation for wage or profit. Periodic Physician Statements are required in order to initiate a claim and to substantiate continued payment of benefits. Underwriting is rigorous for individuals and claims for something deemed to be a pre-existing condition may not be honored for the first two years or so of the policy. Other typical exclusions for benefits would include acts of war, attempted suicide, intentionally injuring oneself, etc. With individual policies pregnancy might not qualify as a disability unless there are complications. When a beneficiary reaches a stage of partial return to work the benefit will be reduced accordingly.
When Does It Begin To Pay Out?
Individuals can select an “elimination” period of 30, 60, 90, 180 days, or a year. The policy will not pay benefits during the elimination period. The longer the elimination period, the lower the premium will be. With employer group short term disability policies benefits typically begin the first day after an injury, and 8 days after onset of an illness.
What Are The Pros And Cons?
Pros – You can take charge of protecting your home and family by insuring your income. Perhaps 40% of the working population will become partly or completely disabled for a period of time during their career. Individuals can select appropriate elimination and benefit periods to suit their needs and budget. Riders are available that allow for guaranteed right to apply for higher benefits as income increases over the years.
Cons – Underwriting for individuals can result in an increase in the anticipated premium, exclusion of coverage for specific conditions, and/or the benefit amount can be reduced.