Long Term Disability Tips

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What Are the Most Popular Long Term Disability Benefits Terms?

The Most Popular Long Term Disability Benefits Terms

Long term disability benefits should be examined from at least two primary perspectives

  1. How much money would you like to receive each month you are considered to be disabled?
  2. How long would you like your monthly income benefits to continue during a covered disability?
Sure, you'd like $35,000 per month for life and you intend to live to the wonderful age of 119 years. Naturally, a bit more realistic thinking is necessary to create the best long term disability insurance plan for you. Please consider the following ideas as part of your evaluation.

  • Common long term disability benefits provide for payment of 55% to 65% of your current income. Sometimes, supplemental long term disability options may include the ability for you to increase your monthly income percentage to 70% to 75% (a few plans even allow you to receive up to 80%).
  • Before you decide on the percentage of income you'd like to receive, consider the following –
    • Create a “minimum” budget showing the lowest amount of income you'd need to meet your basic obligations, and
    • Be aware of the monthly maximum income payment limitation in your coverage.
  • Determine which of the most popular benefit periods is best for you. There is a wide range of long term disability benefits payable periods. Typically, the most common benefit terms are –
    • Two years
    • Five years
    • Up to age 60
    • Up to age 65
    • Lifetime
  • Always remember that your regular monthly or annual premium cost will be directly affected by your desired long term disability insurance benefit level and payment period.
Your wish list should become an action plan when it is matched with your fixed expenses, budget, and current monthly cash flow. Your goal should be to achieve the best coverage when matched with your current budget. Let information websites, like ProtectYourIncome.com, help you turn information into action.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
What Are Some Common Tax Considerations of Long Term Disability Insurance Programs?

Common Tax Considerations of Long Term Disability Insurance Programs

The tax considerations of long term disability insurance programs can easily become convoluted and confusing. The best and most profitable advice is to consult with your trusted tax advisor before you make any decisions that may affect your personal tax situation. Having said that, here are some basic issues affecting your income tax requirements.

  • Who is paying the premiums on your long term disability coverage? Taxability normally is determined by who is paying the premiums for your coverage. If your employer is paying premiums, your monthly income benefits are typically taxable. If you are the owner of coverage and paying monthly premiums, generally your monthly income benefits are tax free.
  • Receipt of Social Security Disability Insurance (SSDI) benefits in addition to private insurance benefits. SSDI benefits are often tax free but this tax exclusion can depend on the level of your “other income”, as determined by Social Security.
  • Are your long term disability benefits being paid in conjunction with some workers compensation income? Depending on the language of your policy, the taxability of your benefits may be affected.
  • Are you receiving veterans or military disability income? Taxability often depends on a mixture of federal regulations and private insurance language.
Because of the myriad of potential tax considerations of long term disability premiums and income, always consult with your tax advisor before making major decisions or choices. Also, use effective websites, like ProtectYourIncome.com, to get more information about the best available choices.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
Should I Consider Having Both Short Term and Long Term Disability Coverage?

Why to Consider Having Both Short Term and Long Term Disability Coverage

You should definitely consider having both short term and long term disability coverage, particularly if you are a medical, legal, or other professional. Currently, five states and Puerto Rico have disability programs for covered employees, but the remainder of the working universe should consider both programs. The issue of cost versus benefit is always an issue, but you need to protect your most valuable asset, your current and future earnings, as completely as possible.

You should consider the following features in your evaluation of purchasing both types of coverage.

  1. Benefit periods. Ideally, you should want short term coverage to begin as soon as possible following a covered disability and have long term disability insurance begin providing benefits right after short term benefits cease.
  2. Elimination (waiting) periods. Consider the shortest waiting period you can afford for short term coverage and an elimination period that allows long term disability benefits to begin the month after the prior benefits end.
  3. Similar and/or reasonable definitions of disability. Having one policy that allows the common cold to be a covered disability and another that requires you to be disabled only while performing an activity worthy of Evel Knievel makes little sense. While you may want to opt for more liberal “language” in your long term disability insurance coverage, the entire process works more smoothly if the requirements for a disability classification are similar.
  4. Purchasing “own occupation” coverage in your long term disability contract. This feature can be an important component of long term disability coverage, providing much better protection than a standard “any occupation” provision. While there is a cost for this coverage, it would allow you to continue receiving benefits until you can resume performing the duties of your specialty.
  5. Your personal medical history. Even if you enjoy good health at the time of application, does your family history or other potential issues project possible medical considerations in the future? Purchasing adequate long term disability insurance protection now may give you security and peace of mind during your future career.
If you have an employer that provides group short term coverage for you, design a long term disability plan that complements your company sponsored program. If you are a medical or other professional, give serious consideration to including own occupation, residual (partial) disability, and presumptive disability (loss of eyesight, hearing, speech, etc.) coverage to your individual long term disability insurance package.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
What Are Some Common Differences Between Group and Individual Long Term Disability Insurance?

Know the Common Differences Between Group and Individual Long Term Disability Insurance

While both group and individual long term disability insurance policies share a great deal of common language, there are some potentially significant differences you should know. Some of the more important differences are noted below.

  • Group long term disability coverage is normally less expensive, per covered employee. Much like the preferred philosophy of banks, credit unions, and other lenders, spreading risk is of prime importance in calculating the cost of services. Insuring a typical group is statistically less expensive than insuring an individual.
  • Individual long term disability insurance coverage can be tailored to meet your specific needs. With your own policy, you can add or subtract features to create a custom long term disability program.
  • Long term disability insurance will be costlier with individual coverage but will give you better protection. Of particular interest to professionals, individual disability long term disability coverage will often better satisfy your needs and wants.
  • Group benefit income is often taxable while individual long term disability insurance coverage is often tax free. This consideration can become a major benefit when you're already attempting to maintain a certain lifestyle on a reduced level of income.
  • More advantageous definition of disability is available with individual long term disability insurance coverage. Instead of the common “any occupation” language in a group policy, you can select to have “own occupation” coverage included in an individual long term disability contract.
There can be other differences between group long term disability insurance and individual insurance coverage, but these are often considered to be the most important primary differences.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
What Are the Primary Differences Between Short and Long Term Disability Insurance Programs?

Primary Differences Between Short and Long Term Disability Insurance Programs

Short and long term disability insurance programs contain more differences than in name only. They are designed to provide different levels of protection and sometimes their contracts contain widely diverse language. Some primary differences include:

  • Benefit periods. Short term coverage typically provides benefits for one year or less, while long term disability income insurance provides benefits longer than one year, sometimes to age 65 or beyond.
  • Elimination (waiting) periods. A typical range of waiting periods for short term disability insurance is from 7 to 60 days. Long term disability coverage plans often include elimination periods of from 60 to 180 days. Those professionals selecting both types of coverage should “match” their elimination periods to avoid overlap. Both short and long term disability premiums are affected by the brevity or extended length of waiting periods.
  • Own Occupation definition and language. While typically not a factor in short term coverage, the definition of disability can be very important in a long term disability policy. If you have an “any occupation” definition of disability in your current coverage, you risk having your benefits terminated once you've recovered sufficiently to perform the duties of “any gainful occupation”, not necessarily your former occupation or profession.
These are just a few of the differences between short and long term disability insurance. Visit informational websites, like ProtectYourIncome.com, to get more information and ideas to help you understand both types of disability income insurance and build an effective insurance plan.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
Why Do Long Term Disability Insurance Premiums Appear to Vary So Much?

Why Long Term Disability Insurance Premiums Vary

Some professionals, at first, are concerned that long term disability insurance premiums appear to vary rather widely. If you use the Internet and excellent websites, like ProtectYourIncome.com, to give you the information you need to build your long term disability insurance package, you will realize that premiums for this coverage actually do not vary to the degree you first may assume. Here are some reasons premiums may appear to vary.

  • Are you looking at group or individual long term disability coverage? Group coverage will normally cost less because a) some of the risk is spread throughout the size of the group, and b) most group policies only include the standard coverage provisions. Much individual coverage is “customized” by the insured to achieve his/her income versus cost goals.
  • Are you comparing standard, boilerplate coverage with a plan that includes some valuable supplemental long term disability features? Long term disability companies tend to design standard plans with a sharp eye to cost to make their plans marketable to purchasers. While they try to include the best benefits possible, you often find longer elimination (waiting) periods, lower percentage of income benefits, and/or shorter benefit periods to keep the cost reasonable.
  • Are you evaluating a low end professional policy provisions or a high end professional long term disability insurance quote? While a stripped down long term disability product may be superior to most basic standard insurance coverage, it typically does not compete well with professional disability income protection that includes some valuable supplemental coverage.
  • Are you comparing “rated” coverage with standard issue long term disability insurance? Applicants with health issues may not suffer a long term disability denial of coverage but, often, are insurable at a somewhat higher cost. This often results in the quote for or issuance of a “rated” policy, which may outline similar coverage but a higher premium cost.
It's important to understand that long term disability insurance can be a “build it yourself” program, particularly coverage offered to medical and other professionals. This can be a wonderful and effective situation. Many professionals practice a specialty, which can be very different from other, more typical occupations. Therefore, having the ability to “tailor” your coverage to your specific needs and requirements can prove to be a huge benefit to professionals.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   
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