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	Disability Insurance

Disability Insurance has been available for a long time. It was previously called as income replacement insurance, by some insurance companies. As some definitions can be quite confusing, this article can give you a clear insight into these terms. Being aware of what you are purchasing can save you a fortune.

Definition Of Disability

If a person is disabled in any manner and consequently cannot continue in their regular occupation, they are regarded as disabled. There are some companies today that continue to define disability as inability to carry on with any occupation after falling sick. The frightful thing is that people harbor an illusion that they are protected by disability insurance. Take a careful look at how the policy definition before purchasing a policy. The policy must mention own occupation.

It is also very important that the policy cannot be cancelled and assured renewable. This shows the disability insurance policy cannot be canceled by the company except in case of non-receipt of premiums and the policy terms cannot be changed in any manner.

Elimination Or Waiting Period

The elimination period of a disability insurance policy is the amount of time needed to wait before you can start receiving the benefits. It is an agreement by contract that is chosen while buying the policy. You can select an elimination period of 30 days, 60 days, 90 days, 180 days, 360 days or 720 days. Lesser the elimination period higher the premium. An elimination period of around 90 days is common as people are quite confident that they can manage through that period before having to resort to extra cash.

Benefit Period

The benefit period is the amount of time that you will receive an income during your disability. This period may differ but many life insurance companies can pay a disabled person for 2 years, 5 years or up to 65 years. Higher the benefit period, higher the premium.

People are disabled, at least for a short duration as many as 5 times during their lifetime. In most cases, it implies a loss of income that can be very damaging to a person or a whole family. A disability insurance policy can offer protection against this event. The part of income that you can insure yourself for is 40%-60% of your gross income.

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